Outcome over Output: The Formula for Organizational Success
All successful businesses are driven every day by one common factor — the customer. In the many years of my corporate journey, I’ve seen one key differentiator in how successful organizations operate…they focus on driving outcomes, not outputs.
The difference is in making an impact on the customer, versus simply being productive, or apparently so.
Quite recently, I came across a very common situation that reflected this need:
An India-based execution team felt like they were working on an infeasible — technically, financially, and timeline-wise — project plan for a web-based system. They predominantly worked with a Customer Experience (CX) team based in Europe, who understood the client’s focus on the system. Of course, the senior client management had approved the initiative to achieve specific business goals.
The problem was apparent: there was no communication and setting of expectations regarding the outcome among the team doing the execution.
What stood out was a comment by a developer that was working on the system: “Why are we doing this?”.
And this is true in many organizations — a relentless focus on outputs and performance clouds the actual outcomes and the ultimate impact.
Joshua Seiden’s framework adds great perspective here:
He defines outcomes as “A measurable change in behavior that drives business results” and as I see it, that’s the epitome of a successful metric for any business.
So, how do successful organizations keep the focus on outcomes?
In my experience, there are three things that successful organizations do:
1. Change the way they measure success — from process-based metrics to measuring business outcomes
Process-based metrics such as the meeting of timelines, or in the case of a software product, the identification and resolution of bugs, and so on cloud the team’s vision from what’s really important. This causes them to focus on false productivity — the habit of getting more work done, rather than getting more impactful work done.
Outcome-based metrics, on the other hand, such as an increase in revenue/profitability, or the actual usage of the product/service…these are metrics that keep the focus on the customer and the end user, making them more authentic markers of success.
An article published by the digital agency Fusion, provides insight into how tech company Atlassian navigates this approch:
“… team in Atlassian stopped celebrating when code pushes went live (an output). The team realized that they were celebrating a situation that the customer had nothing to do with, even though the customer was the audience the team built the code for. Atlassian realized that a much better metric for success was to measure the outcome of that code push.”
2. Establish constant feedback-loops with the end customer
What doesn’t work for the customer can’t possibly work for the company. The only way to know what’s working and what’s not working for your customer is to establish an ongoing feedback loop with frequent communication. Or, as Mr.Surya Panditi, GM, Agile Management, CA Technologies, suggests: the Net Promoter Score.
In his article for HBR, Mr. Panditi mentions:
“A very common way to measure the outcome of that process — customer satisfaction — is via NPS (Net Promoter Score), a measurement of customer experience and improved quality. More often than not, happy customers = higher revenues.”
3. Coach leaders to distinguish and reward outcomes
The leader needs to modify his/her behavior to bring focus to business outcomes. A great way to do that, as my mentor had once told me, is to “appreciate efforts and reward outcomes”. The leader must clearly appreciate the effort put in by the employee, while making it clear that the outcome is what will be rewarded.
This helps create a culture that focuses on outcomes, and aligns outputs with respective goals.
In conclusion -
I know that it’s a big challenge for leaders to change from using predominantly output-based success measures to using outcome-based success measures and can be a large-scale undertaking.
However, these changes provide more context and meaningful information about performance. In my experience, leaders need to clearly and consistently communicate the project/initiative’s impact across all stakeholders and drive the change from the top-down.