I have always believed that the difference between output and outcome is more fundamental and profound than just semantics. To put it simply, outcome is the difference made by the output and output is the way to achieve the outcome.
If I link this to “Leading with Why”, my previous article, the output is the “What” and in some cases the “How”, but the outcome is the “Why”. Having clarity about what is the outcome vs output helps ensure alignment across the board.
Creating and Measuring Impact through Output and Outcome
I am a big fan of creating measurable impact. This includes not only impact on revenues, products and services, but also impact on relationships, satisfaction and engagement.
However, in order to differentiate between the output and outcome, you need to place rock solid tools which can help you measure them distinctly. OKRs (Objectives and Key Results) is one of my favorite tools to drive the differentiation between output and outcome and align the company on it.
Objective = Outcome | Key Result = Output
According to a study by MIT Sloan, ~49% of the senior leadership team can’t name strategic priorities. This gap further increases to ~87% when we talk about frontline leaders. This says a lot about the importance of closing the alignment gap. OKRs can keep your teams connected, aligned and help them move towards the outcomes that matter faster and together. And after having created and managed OKRs for 18 straight quarters in one of my previous organizations, I can vouch that they can really work!
Used by Google, Co-Founder Larry Page credits them for its successful growth:
“OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of organizing the world’s information perhaps even more achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
At one of the companies I worked before, one of the company’s objectives was to become the best-in-class company in their sector. So as a leader for customer operations, I chose to make our objective to drive best-in-class customer engagement. This laddered very well with the company’s objective to become the best-in-class in its sector. The alignment helped the operations team to work towards a common outcome—to be the best-in-class within their scope of work. We then went on to deploy initiatives which would essentially drive better engagement for our customers and measured key results such as CSAT and NPS among others.
Shift Your Focus from Short-term Activities to Long-term Impact
Easier said than done, the shift of focus from output to outcome takes time, especially when the entire company is adopting something like this for the first time. We are used to measuring activities like:
Shipping a new product feature
Acquiring new customers
Launching a marketing campaign
All the above are examples of output.
However, we miss out on the outcomes that are achieved by undertaking these activities-
Shipping a new product feature, to deliver higher engagement
Acquiring new customers, to test a product market fit
Launching a marketing campaign, to establish thought leadership
When a team knows they are working towards an outcome, they can be more agile, think strategically, and perhaps even innovate at a more rapid pace. Focussing on outcomes helps you create value vs completing tasks!
So, what do you focus on more—output or outcome? Do you also use the OKR framework? If yes, has it helped you?
This is so timely, Ishan! I'm learning how to pivot an organization to this in Q1. Thanks for sharing your insight.