Jorn Lyseggen sees the world a little differently.
In his new book, Outside Insight, the CEO of media intelligence company Meltwater encourages executives to stop their navel-gazing exercises and, instead, start making decisions based on third-party information available to everyone. Focusing on internal data, he argues, holds company leaders back, forcing them to make reactive decisions based on outdated information as the market changes before their very eyes.
“Outside Insight shifts the focus from internal data and what you are doing to external data and what your industry is doing, allowing you to benchmark against competition and discover new threats and opportunities in real time,” Lyseggen writes.
Lyseggen’s new decision-making methodology goes beyond marketing and communications, speaking to the core of executive responsibilities. Board members, C-suite leaders, marketing managers, product developers, investors, and risk management teams can all benefit from external data.
Following the Breadcrumbs
Thanks to the internet and social media, markets can change dramatically over the course of just a few hours. By turning to outside information, leaders can prepare their companies to respond to those shifts, identify upcoming trends, and proactively prepare for changes before they occur.
Every time companies make a move — whether that’s hiring a new team, expanding to a new market, or testing a new product — they leave behind what Lyseggen calls digital “breadcrumbs.” These breadcrumbs are the obvious public clues that reveal their intentions to anyone who cares to look.
Imagine one of your competitors starts aggressively hiring for salespeople. Such an investment can be discovered online through job postings and social media chatter. If you were only looking at your internal financials, you would not discover your rival’s new initiative until your sales start to suffer a few quarters down the road. By paying attention to your competitors’ breadcrumbs, you can discover new initiatives as they are launched and take suitable countermeasures in real time.
Job postings are just one type of breadcrumb that companies leave behind. Social media posts, patent applications, and blog topics can all reveal pieces of information that combine to indicate critical market changes.
Currently, most executives don’t see these breadcrumbs in time because they are too busy focusing on last quarter’s financial review. Indeed, according to a report from KPMG, 60 percent of company leaders completely disregard external drivers of business performance when they chart financial forecasts — a mistake that ultimately skews their projections by about 13 percent and drains their revenue by approximately $200 billion.
Leaders who rely on external data see more than their internally focused colleagues, enabling them to drive innovation while others scramble to react. Case in point: Companies that incorporate external data have a “market value indicator that’s 200-300 percent higher,” writes Lyseggen in Outside Insight.
Turning Away From Internal Info
The problem with internal metrics, according to Lyseggen, is that they’re already outdated by the time executives begin to review them. Industries change from moment to moment, not on a quarterly schedule. Outside Insight offers a new decision-making paradigm in which decisions are based on what the market will do, rather than what it has done.
No one can predict the future, but by stepping back and seeing what companies across the industry are doing — instead of what just one company has done — leaders can make educated guesses on what actions to take next.
Outside Insight is kind of like an agile methodology, in which a series of A/B tests and market feedback dictate strategy. The traditional approach is more like the waterfall methodology, with a designated schedule and little wiggle room.
How to Stay Two Steps Ahead
Adopting the Outside Insight methodology starts at the top. Board members and executives must acknowledge the importance of following the breadcrumbs and then encourage others within the company to adopt the same mindset.
The transition comes in three phases. First, leaders identify the external info that directly affects the company and start incorporating that data into their decision-making processes. Next, that information becomes part of the company’s foundation, contributing to forecasting models and acting as a metric to track the effectiveness of new strategies.
Finally, the company converts fully to the Outside Insight paradigm, giving external info precedence over internal measurements. This allows the business to set trends instead of following them, putting the company in an optimal competitive position.
Unless the internet disappears tomorrow, external data will continue to provide leaders with real-time information that tells them more than outdated internal measurements ever could. As more companies begin to recognize the importance of Outside Insight, the ones that make the transition first will hold a competitive advantage over the rest.