Outcomes Over Output

Outcomes Over Output

Author

Josh Seiden

Year
2019
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Review

I have heard many product managers say "outcomes over output," but few have a clear definition of an outcome. Defining an outcome as a change in behaviour that drives business results is key to linking this principle to product practice. It anchors to the core of product management, which is all about the value exchange between customers and the business. The author does an excellent job of taking a great product management principle and almost creating a full-stack product management model based on it. Changes in behaviour are observable and measurable. Customer behaviour can be visualised on a customer journey map. Executives can hold teams accountable for hitting outcomes. Businesses can be transformed by using the same techniques.

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Key Takeaways

The 20% that gave me 80% of the value.

  • An outcome is a change in behaviour that drives business results
  • Don’t focus on your output, focus on outcomes and changing human behaviour
  • Features don’t automatically create value → so don’t use them as the centre of your planning process
  • Managing outputs → telling a team what to build
    • BUT features don’t always deliver value
  • Managing impact → telling a team to target some high-level value (growing revenue)
    • BUT that’s not specific enough
  • Managing outcomes → ask teams to create a specific human behaviour that drives business results
    • Gives them room to find the right solution, and keeps them focused on delivering value
  • Agile doesn’t tell us what ‘value’ means
    • When you combine outcome-based targets with a process that’s based on running experiments, you really start to unlock the power of agile approaches.
  • Setting outcome goals → gives teams room to try different approaches and experiment
  • Think of MVP as the smallest thing you can do (or make) to learn if your hypothesis is correct
  • There are only 5 things executives care about (by Jared Spool). These are impact-level metrics
    • Increasing revenue
    • Decreasing costs
    • Increasing new business and market share
    • Increasing revenue from existing customers
    • Increasing shareholder value
  • Finding the right outcome:
    • What are the customer behaviours that will drive business results?
    • What are the the things customers do that help us predict the thing we care about
    • Because outcomes are things people do, they’re observable and measurable. Making them suitable to be used as a management tool
    • Understand what your customers are doing that drives the results you care about
  • Leading vs Lagging indicators:
    • What is a leading indicator?
      • Things people are doing (human behaviour)
      • They predict the success we’re seeking
    • Leading indicators are therefore outcomes
  • Hypothesis
    • There’s uncertainty when we create outcomes…
      • Will the output create the outcome?
      • Will the outcome contribute to the impact?
    • Treat ideas like assumptions. Express assumptions as hypothesis. Run experiments to test hypothesis.
    • Hypothesis: What we believe & the evidence we’re seeking (to know if we’re right or not)
  • The Magic Questions
    • What are the user and customer behaviours that drive business results?
    • How can we get people to do more of those behaviours?
    • How do we know that we’re right?
  • Tracking progress is easier when teams are working on well defined outcomes and making their hypothesis clear. They are measurable → Are customer behaviours changing?
  • Outcomes help you write better OKRs → first consider the business result you’re trying to achieve, express that in easy-to-measure terms of customer behaviour
  • Think about your system of outcomes
  • Outcome-based roadmaps
  • Visualise the customer journey → what are people doing (customer, colleague, other players)
    • What behaviours at each step predict success and satisfaction?
    • And what behaviours at each step predict failure and dissatisfaction?
    • Write down and overlay success factors (boosters) and failure factors (blockers)
    • How might we encourage x?
    • How might we eliminate issue y?
  • Frame as a hypothesis
    • We believe that if we increase the rate at which buyers and sellers meet early in the process, it will lead to more successful transactions (as measured by X) and higher user satisfaction (as measured by NPS.) We think we can increase the rate of early meetings [with this idea] and [with this idea] and [with this idea.] We will work on testing these ideas in Q1 of the coming year.
  • Organisations are often setup in products/channels vs behaviours/customer journeys
    • Doing so favours outputs not outcomes
  • Teams should be clear about the value they are trying to create. They should specify:
    • the outcome they are seeking for the customer or user
    • the outcome they are seeking for the business
    • If we create this outcome for the user → it will deliver this outcome for the business.
  • Product managers should have dedicated teams, else they end up waiting to be allocated a team before they can start work
  • If stakeholders have to wait a long time for their project to be approved, they bloat their feature requirements, force everything in they need.
  • Companies might have to re-engineer the way they work in order to implement outcomes in their work
  • How can we change employee behaviour in a way that generates business results?
  • Apply an outcome-based approach to transformation:
    1. Your colleagues are your customers
    2. Everything is an outcome
    3. Everything is an experiment
  • Take a customer-centric approach with your colleagues
    • What are their goals? What value can you offer to them in order to get them to “buy” the change you are selling?
  • Frame organisational change initiatives in terms of outcomes.
    • What are the new behaviours you want to create in the organisation?
    • What will people be doing differently when your change program is successful?
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Deep Summary

Longer form notes, typically condensed, reworded and de-duplicated.

1. What are outcomes?

  • An outcome is a change in behaviour that drives business results
  • Don’t focus on your output (what you’re building), focus on outcomes and changing human behaviour
  • Don’t confuse shipping features with being done
  • Software isn’t like building a bridge. It’s harder to decide when it’s done.

The Planning Process

  • Features don’t automatically create value → so don’t use them as the centre of your planning process
  • Instead think about building as little as possible (as few features as possible) to achieve the outcome you seek.
  • Resources → Activities → Outputs → Outcomes → Impact
  • Managing outputs → telling a team what to build
    • BUT features don’t always deliver value
  • Managing impact → telling a team to target some high-level value (growing revenue)
    • BUT that’s not specific enough
  • Managing outcomes → ask teams to create a specific human behaviour that drives business results (DO THIS)
    • gives them room to find the right solution, and keeps them focused on delivering value
    • specific, small, measurable changes in human behaviour
  • Agile tells us we should deliver value early. But it doesn’t tell us how or what ‘value’ means.
  • If an outcome is a change in behaviour that drives business results, ask yourself:
    • What is the human behaviour change that we are looking for?
  • Outcomes, Experiments, Hypothesis and MVPs
    • Q: How can we be sure what we’re making is going to deliver value?
    • A: You can’t always know in advance, so you need to experiment.
  • Unlock the power of agile by combining outcome-based targets: with a process that is based on running experiments. This works really well in situations of high uncertainty.
When you combine outcome-based targets with a process that’s based on running experiments, you really start to unlock the power of agile approaches.
  • Setting outcome goals → gives teams room to try different approaches and experiment
  • Think of agile as a series of experiments and hypothesis, all designed to achieve an outcome
  • Think of MVP as the smallest thing you can do (or make) to learn if your hypothesis is correct

2. Using outcomes

  • There are only 5 things executives care about (by Jared Spool)
    • Increasing revenue
    • Decreasing costs
    • Increasing new business and market share
    • Increasing revenue from existing customers
    • Increasing shareholder value
  • These are high-level or impact metrics
  • Executives need to bread down ‘increase revenue’ into something their teams can work on. They should be talking outcomes not impacts.
  • Impacts are the sum of a whole lot of outcomes (human behaviours that drive business results)
  • Finding the right outcome:
    • What are the customer behaviours that will drive business results?
    • What are the the things customers do that help us predict the thing we care about
    • Because outcomes are things people do, they’re observable and measurable. Making them suitable to be used as a management tool
    • Understand what your customers are doing that drives the results you care about
  • Leading vs Lagging indivators:
    • What is a leading indicator?
      • Things people are doing (human behaviour)
      • They predict the success we’re seeking
    • Leading indicators are therefore outcomes (change in behaviour → business results)
  • Hypothesis
    • There’s uncertainty when we create outcomes…
      • Will the output create the outcome?
      • Will the outcome contribute to the impact?
    • Treat ideas like assumptions. Express assumptions as hypothesis. Run experiments to test hypothesis.
    • Hypothesis: What we believe & the evidence we’re seeking (to know if we’re right or not)
  • Experiments and MVPs:
    • What can we do to figure out if this hypothesis is true?
    • How do we know if we’re right?
image
  • The Magic Questions
    • What are the user and customer behaviours that drive business results?
    • How can we get people to do more of those behaviours?
    • How do we know that we’re right?
  • Tracking progress with outcomes
    • Impact: reduce costs
    • Outcome: fewer people calling tech support
    • Output: improved usability of confusing features
  • Tracking progress is easier when teams are working on well defined outcomes and making their hypothesis clear. They are measurable → Are customer behaviours changing?
  • How to start… Ask… What (user / employee / customer) behaviours has this initiative created that are driving business results?
    • Move conversations away from features and reorient toward value delivery
  • Write better OKRs with outcomes →
    • The point of OKRs is to make you think critically about what you’re working on
  • Outcomes help you write better OKRs → first consider the business result you’re trying to achieve, express that in easy-to-measure terms of customer behaviour

3. Outcomes-based planning

  • When you start to string outcomes together, you have to be honest about what we know and what we don’t know
  • Think about your system of outcomes
  • Outcome-based roadmaps
image
  • Visualise the customer journey → what are people doing (customer, colleague, other players)
    • A customer journey visualises behaviour
    • Remember… outcomes are behaviours that drive business results
    • Helps you see what behaviours you want to encourage, eliminate or that might be missing
    • Customer journey map → the behaviours of the people and systems that make up the experience
    • Boosters and Blockers
      • What behaviours at each step predict success and satisfaction?
      • And what behaviours at each step predict failure and dissatisfaction?
      • Write down and overlay success factors (boosters) and failure factors (blockers)
      • How might we encourage x?
      • How might we eliminate issue y?
    • Frame as a hypothesis
      • We believe that if we increase the rate at which buyers and sellers meet early in the process, it will lead to more successful transactions (as measured by X) and higher user satisfaction (as measured by NPS.) We think we can increase the rate of early meetings [with this idea] and [with this idea] and [with this idea.] We will work on testing these ideas in Q1 of the coming year.
    • Use the same method for impact level targets too..
      • Asked to increase sales? Create a customer journey map, and then review it with the magic question: “what are the behaviours in the system that predict higher sales, and how can we go about encouraging those behaviours?”

4. Organising for outcomes

  • Organisations are often setup in products/channels vs behaviours/customer journeys
    • Doing so favours outputs not outcomes
  • What is the better project name:
    • A: Product details page re-design
    • B: Boost sales by 10% from the product details page
  • How to re-organise product teams around outcomes
  • Teams should be clear about the value they are trying to create. They should specify:
    • the outcome they are seeking for the customer or user
    • the outcome they are seeking for the business
    • If we create this outcome for the user → it will deliver this outcome for the business.
  • Product managers should have dedicated teams, else they end up waiting to be allocated a team before they can start work
  • If stakeholders have to wait a long time for their project to be approved, they bloat their feature requirements, force everything in they need.
    • Requests get larger → waits to start projects get longer → requests get larger … etc
  • Shift the focus, get the company to step back, not to focus on features, but on the business problems you need to solve
  • Outcomes are more abstract that outputs (which are more concrete). You’re not sure what the team is going to work on (which can be scary). Giving up control.

5. Outcomes for Transformation

  • Companies might have to re-engineer the way they work in order to implement outcomes in their work
  • You can apply the same techniques to think about organisation transformation…
    • How can we change employee behaviour in a way that generates business results?
  • Apply an outcome-based approach to transformation:
    1. Your colleagues are your customers
    2. Everything is an outcome
    3. Everything is an experiment
  • What happens if we think of these leaders as our customers?
  • What mix of policy and action could we put in place to get them aligned?
  • What change in behaviour on the part of the leaders could we observe to see if we’ve succeeded?
    • e.g. We want our leaders to recite our strategy in 3 bullet points
  • Take a customer-centric approach with your colleagues
    • What are their goals? What value can you offer to them in order to get them to “buy” the change you are selling?
  • Frame organisational change initiatives in terms of outcomes.
    • What are the new behaviours you want to create in the organisation?
    • What will people be doing differently when your change program is successful?