In agile management, “output” and “outcome” are often used interchangeably. These terms are not the same, as they represent distinct concepts. Understanding the differences between the concepts and how to use objectives and key results (OKRs) to transform the first into the latter is a goal that many companies aim for but never wholly reach.
Today, we’ll unravel the disparities between being outcome-oriented and output-oriented. We will illustrate how, if you commit to outcomes, you can reap substantial benefits for your company.
The Pitfalls of Output-Oriented Thinking
Are you stuck in an output-driven mindset? You’re not alone. Organizations often prioritize outputs. Do these initiatives sound familiar?
● Completing tasks
● Finishing projects
● Checking tasks off a list
While this approach may seem productive, it often leads to tunnel vision and short-term thinking. Achieving meaningful outcomes is more impactful to a company’s success.
Consider this output-oriented scenario:
A software development team hits all their project deadlines and produces a product on time, but it fails to meet customer needs. It may look like the team is doing a good job when they aren’t contributing to the company’s success. They may even be damaging its reputation and destroying customer relationships.
This is a classic example of output-oriented thinking, focusing on getting the work done rather than delivering quality and value.
Embracing Outcome-Oriented Thinking
Shifting your perspective towards outcomes is essential for sustainable success.
Unlike output-oriented thinking, outcome-oriented thinking centers around achieving desired results or impacts. It’s about creating value for customers, stakeholders, and the organization. Instead of merely completing tasks, the outcome-oriented approach focuses on your work’s actual impact.
Consider this outcome-oriented scenario:
Imagine the same software development team isn’t focused on deadlines and production. They’re now striving for a specific outcome. They want to exceed customer satisfaction expectations and increase their market share.
This shift in mindset ensures that every action is geared towards achieving a meaningful result.
Introducing OKRs – Your Transformational Tool
Uncover the power of OKRs in aligning your organization with outcome-driven goals and fostering a culture of accountability. Please note that today, most organizations I work with are still set the objectives are anchored on outputs, “completing activities,” and ignoring outcomes.
Objectives and Key Results (OKRs) can be a robust framework that helps organizations move away from output-driven and toward outcome-focused strategies. Consider pairing OKRs with Evidence-Based Management. OKRs help organizations transition to an output-oriented mindset by:
Clarifying Its Purpose and Priorities
OKRs require organizations to define clear and ambitious objectives supported by measurable key results. The problem is that Outputs are more easily measured, and Outcomes may be harder to quantify. So start by level setting that Outcomes require a measurable behavior change. Outputs are just an enumeration of the things that a team completed. Teams must articulate what they aim to achieve (outcomes) rather than just what they need to do (outputs).
By setting outcome-focused OKRs, teams gain a precise understanding of their purpose and priorities. If everyone is aligned with the desired results, they don’t focus solely on completing tasks.
Continuously Adapting and Learning
Agile practices emphasize adaptability and learning from experiences. OKRs align perfectly with these principles. Through regular check-ins and reviews, teams can assess their progress toward key results, make necessary adjustments, and use evidence-based management to measure the impact of the outcome. We should not assume we arrived just because a key result has been completed.
This iterative approach encourages teams to stay outcome-oriented by continuously refining their strategies to achieve the desired outcomes. It also fosters a culture of experimentation and innovation, which is fundamental in the agile mindset.
Enhancing Cross-Functional Collaboration
Agile practices promote collaboration across different functions and teams. OKRs provide a shared language and framework for these cross-functional interactions. When teams set OKRs that are interconnected and mutually supportive, it encourages collaboration and interdependency.
Shifting from siloed efforts toward collective achievement of outcomes enhances cooperation and fosters a more holistic understanding of how various parts of the organization contribute to overarching goals.
OKRs are designed to set clear, ambitious objectives and measurable key results that the team believes define success. They encourage transparency, alignment, and accountability at all levels of an organization.
OKRs vs. Traditional Performance Metrics
Traditional performance metrics, such as key performance indicators (KPIs), often emphasize output-based measurements. In contrast, OKRs focus on outcomes, aligning everyone’s efforts toward the same objectives. If we are not careful, OKRs can mistakenly default to traditional performance metrics.
Flexibility and Adaptability vs. Rigidity
Traditional metrics can lead to rigid, set-in-stone targets, which may not adjust well to changing circumstances. OKRs embrace adaptability. They encourage regular reviews and the ability to pivot if needed. This flexibility allows teams to respond effectively to shifts in the market or unforeseen challenges (a hallmark of agile thinking).
Transparency and Alignment vs. Siloed Metrics
Traditional metrics can often be compartmentalized, with each department or team measuring its own performance in isolation. OKRs foster transparency and alignment by connecting objectives and key results and impacts of associated outcomes across different levels of an organization.
This interconnectedness ensures that everyone understands how their work contributes to the broader company objectives, promoting a more cohesive and collaborative environment.
Continuous Improvement vs. Static Goals
OKRs are inherently designed for continuous improvement. They encourage regular reflection and adaptation, making them a dynamic tool for driving innovation and growth. In contrast, traditional metrics often involve static goals that may not evolve with changing circumstances. OKRs promote a culture of constant learning and innovation, which is vital in today’s constantly changing marketplace.
Transforming an Output-Oriented to an Outcome-Oriented Requires Dedication
The distinction between output and outcome lies in the critical difference between activity and creating real, substantial value that is measured by a change in user/customer behavior. It’s this value that propels a company forward to success.
OKRs must be consistently framed with an outcome-centric approach. Formulating OKRs that prioritize outcomes equips teams with a time-bound objective yet allows them to employ methods and tools that align with their strengths and expertise.
By implementing OKRs and focusing on outcomes, you’ll position your organization for sustainable success. It’s time to make the leap – are you ready to join us on this exciting journey towards a more impactful, outcome-driven future?
Contact me to discuss how you can pair your OKR initiatives with Evidence-Based Management to ensure a focus on outcomes.
