The outside view is a methodology for thinking, problem-solving and prediction based on outside situations, examples and analogies. This differs from traditional thinking and approaches to problem-solving, also known as the inside view. The inside view takes a current situation or problem and seeks to understand all facts and information within our immediate world. In business, this is within the organisation itself. Repeated studies have found that the inside view typically leads to overconfidence in success, underestimates of cost and fewer solutions. Essentially, inside view thinking breeds over-optimism and wasted potential. Read on for more about outside view thinking and the benefits of management consulting.
Outside view thinking
Formed by Kahneman, he identified two modes of thinking when applied to problem-solving. The outside view and the inside view. These are useful models to understanding the thinking behind organisational projects. The inside view starts with a problem to solve and only uses internal thinking, data and perspectives to solve it. Unfortunately, the inside view falls victim to optimism bias, also known as the planning fallacy, that underestimates the time and/or cost involved. Since nearly 90% of large infrastructure projects experience delays and budget overruns, it seems that the planning fallacy is real.
The outside view turns this on its head. Rather than assuming that we possess all of the answers, resources and capabilities internally, we look externally. Essentially, this means comparing your project to other projects, real-life examples and analogies. Furthermore, this mode of thinking switches from a narrow view to a broad view. The broad view, sometimes called cognitive flexibility, allows us to leap to new solutions and ideas (borne of experience and free thinking) outside of the immediate problem or current situation. Various studies have found greater success in estimation, forecasts and projects leveraging an outside view. In summary, this is often more challenging the more specialised your field and experience.
Benefits of management consulting
The benefits of management consulting are plentiful. It is often cited that an objective, third-party or external perspective is helpful. The outside view cements the usefulness and one of the key benefits of consulting – the ability to bring an outside view and broad thinking. Experts within an organisation may have spent many years in that organisation or decades in the same industry. As a result, an inside view is perhaps more likely with more data, numbers and research unearthed internally to support a decision. However, the narrow internal view may miss viable alternatives, market opportunities or customer needs. Management consulting provides experience and exposure to other industries, organisations and projects. The outside view can help you to overcome implicit bias in organisational forecasts, plans and business cases.
Aside from the outside view, management consulting brings benefits from objectivity to frameworks and flexible resource to specialist solutions. Not only can you increase the outside view but you can bring outside insights, skills and time. Consultants are also free of organisational hierarchies, day-to-day operations and internal distractions. Furthermore, you can dial resource up and down much faster than hiring and firing permanent employees. Consultants can deliver organisational change over many months or work on a localised project, giving assurance in a matter of days.
Outside view and external research
Taking the concept a step further, we have the inside view which is focused on internal facets. We also have the outside view, which compares our situation, problem or project to others, examples or analogies to think differently. Finally, there is a research perspective which is helpful in re-framing the organisation, the context in which it operates and the opportunities available. Armed with a detailed knowledge of the external environment, competitors and customers, we may be trying to solve the wrong problem entirely. Whereas the outside view might suggest that a business case is underestimating the time or cost, research may suggest other opportunities. After all, why invest in a new system that will take 2 years instead of 1 year when the market is shifting to a new technology that makes it redundant?
Additionally, the inside view lends itself to optimistic assumptions via confirmation bias and belief perseverance. We will not go into detail on forms of implicit bias in this article. However, the important point is that an entrenched view of our internal organisational sphere makes us search for things that support our beliefs and then we stick to them. Armed with what we know, we ignore what we do not know. In fact, we become so confident that our internal view is right that we may ignore new information entirely. In summary, if we now repeat the fact that 90% of infrastructure projects take longer and cost more than planned, it is sensible to deploy the outside view and external research to fully evaluate projects and the possible alternatives.
Thinking outside the problem
Think Beyond is a management consulting firm in the heart of Cheshire. Formed of multi-disciplinary consultants with exposure to a multitude of industries and company sizes, we offer the outside view. With a range of research services to support organisational needs, we are ready to supply external research to support better decision-making. We offer a range of value-add solutions to help senior leaders find new growth opportunities and to accelerate business performance. In short, we aim to make life easier for boards.
If you would like an outside view, why not ask us to call you to discuss your needs. Alternatively, why not check why we do what we do and help businesses to think differently.
Finally, we think you might like this article about decision-making during uncertainty.