What is an “outcome” and why does it matter?
Outcomes are the new hotness in product development and it’s pissing me off. I’ve been talking about them for years and now more prominent people are doing it so it looks like I’m following a trend.
An outcome in this context is a result of something the team has done. Ideally the result is favorable for the business (increasing revenue or keeping more customers longer) or the customer (reducing effort).
Historically most teams are rewarded for their outputs and not the outcomes. I was on a big CMS project once with about 36 people. About 30 of them were measured on how much code they created, two were measured on how well we hit scope and time targets, three on how much design work was done and one how the project increased member engagement. Who do you think wins when it’s one against 35? My design team was pushed to get things to the engineers so they could keep their numbers up instead of spending more time on tricky problems.
Outputs are easier to measure (how many points did you do? how many mocks? how many defects?). They are also easier to control. It’s much scarier to be held to a revenue target because you can’t control the buyer’s behavior, all you can do is influence it. Output doesn’t matter if no one wants what you’ve made.
If we can get teams focused on outcomes they can move more quickly, be more creative and more engaged in the work but it’s not going to be easy.
If you want your team to focus on outcomes, it helps to set some targets that you are willing to bet will generate an output. For example, if the outcome you want is to increase revenue then you might set a target to increase monthly recurring revenue (MRR) by 5% in three months. With this target teams can look at a bunch of levers and start pulling them.
Setting targets on them is hard. I’ve spent hours in rooms with leaders either guiding them through this process or being involved in the decision with my leadership teams.
We need to pick just a few (no more than three) targets to focus the team on these need to be:
- Clear – So we all understand what we’re trying to do
- Measurable – So we know what the baseline is and if we’re making progress on
- Time boxed – So we have time to learn without too much waste
Where I see people get stuck is on what to target. It can take hours, weeks or more to decide and all the while teams are wandering looking for direction. That idle time will generate far more waste than picking the wrong metric. Chances are you are going to pick the wrong one a few times. If you are moving, you’ll see quickly what needs to be changed.
Image: With two small children I don’t get to paint much but I managed a get an hour or so to do this. It’s not my best work but I really enjoyed making it.