Going Beyond Features: Maximize Outcomes, Minimize Outputs

What does “outcomes over output” mean?

In the world of business, the terms outcome and output are often used interchangeably, causing a bit of confusion. However, it is important to have a clear understanding of the distinction between these two terms. Although they may seem straightforward, let's define them to ensure we are all on the same page.

Let’s imagine you’ve been feeling exhausted lately, so you start working out in the gym to feel more energized. Some people might say that the outcome of your gym routine is the hours you’ve spent working out and the amount of weight you’ve lifted. But the real outcome of your routine is much more significant than that. The outcome is that you feel stronger, more confident, and healthier. The outcome is the way in which your hard work (the output) has translated into a better quality of life and a more positive self-image. The outcome is the way in which your problem was solved by the output.

In a business context, an outcome refers to the impact your product has on the organization and its customers and stakeholders, while an output refers to the tangible things your (development) team produces, like documents, software, and tests. Focusing on outcome over output means defining success based on achieving a specific outcome and measuring progress based on how close you are to reaching that outcome.

The goal of your team is not to produce outputs; it’s to reach a specific outcome. A successful team strives to maximize the desired outcome while minimizing the amount of work produced.

The benefits of an outcome-driven approach

1. It helps you escape from the build trap

The first Agile Principle states that your top priority is to make your customers happy by delivering valuable software as early and consistently as possible. As agile practices are adopted in various fields, people have rephrased this principle to emphasize the importance of delivering value to customers quickly and consistently.

When you measure success based on an outcome-driven metric, like “increasing newsletter click-through rates by 15% within six months”, you immediately connect your team's efforts to the value for your organization and customers. This helps you understand the impact you're making and when you're truly making a difference.

In contrast, when you measure success by looking only at the things you produce, such as “the number of features delivered” or “the number of completed points in a scrum sprint”, you risk running into what Melissa Perri (product management expert, speaker and author) refers to as “the build trap”. This trap involves focusing solely on creating features without considering the desired outcomes. When organizations prioritize output over outcomes, they risk getting caught in a cycle of building more and more features without truly understanding if they are solving customer problems or driving business value.

By fixating on feature delivery as a measure of success, you may lose sight of the bigger picture. It doesn't tell you if you're building the right things. So, it is essential to shift your focus to the outcomes that matter. This requires a mindset shift that places the customer's needs and desired results at the forefront. By defining success based on outcomes, your team can escape from the build trap.

2. It helps you focus on learning and iterating

When you start thinking critically about value delivery instead of feature delivery, you quickly run into the problem I’ve addressed previously: how can you be sure that the features you’re building are actually going to deliver value? An outcome-driven approach recognizes that you may not have all the answers from the start and that learning is an important part of the process. This is why, when working with outcomes, you need a companion tool: the experiment.

When you combine outcome-driven thinking with a process that’s based on running experiments, you really start to unlock the true potential of agile approaches. This is especially valuable in situations where there is a lot of uncertainty. For example, when creating a new software product, you may not be sure if it will have the desired impact on your business or if all the fancy features you came up with are necessary. By focusing on outcomes, you can set goals that allow your team to experiment and try different solutions until they find what works best.

In an agile context, we treat each step as a hypothesis and an experiment aimed at achieving a specific outcome. This is where the concept of an MVP, or Minimum Viable Product, comes in. Think of MVP as the smallest thing you can do or the smallest thing you can build to learn if your hypothesis is correct. This iterative process of testing, learning, and adapting allows teams to experiment, to try different solutions, until they hit on the one that works.

3. It helps your team reach more autonomy

Employees often find it challenging to feel a profound sense of purpose and motivation solely from the output they produce. What truly drives individuals to show up at work each day is not the specific tasks they engage in day by day, but rather the meaningful outcomes their work will ultimately contribute to.

An emphasis on outcomes helps align your team around a common purpose and shared goals. By providing clarity on what needs to be achieved, you can motivate and empower your team to work together towards clear goals that the product should achieve. This allows your team to prioritize their work, and build features that contribute to achieving those goals. Allowing them to make decisions about the features they build, will give a greater sense of ownership over the work they do.

Defining the outcomes for your product and implementing them

By now, you might agree that focusing on outcomes sounds like a good idea, but actually implementing them in our business practices is not as straightforward. Every methodology has its drawbacks. One challenge is that outcomes are less easily measured and quantified compared to outputs. Secondly, many companies face pressure to quickly move on to the next project once one is completed. Unfortunately, the iterative process of testing, learning, and adapting is still not commonly practiced. 

Finally, one thing that makes it hard is that we often set goals that are too high-level. For example, when you ask the team to make the business more profitable or reduce risk, it is too complex because those challenges consist of many variables to influence. These impact-level targets are too complex for teams. Instead, you should focus on smaller and more manageable targets. To do this, you need to ask your team to concentrate on changing customer behavior in ways that drive positive business outcomes.

In his book “Outcomes Over Output: Why Customer Behavior Is The Key Metric For Business Success”, Joshua Seiden presents three magic questions that can help you identify suitable outcomes:

1. What are the user and customer behaviors that drive business results? (This is the outcome that you’re trying to create.)
2. How can we get people to do more of those behaviors? (These are the features, policy changes, etc that you’ll do to try to create the outcomes.)
3. How do we know that we’re right? (This uncovers the experiments and metrics you’ll use to measure progress.)

Let me provide you with an example of how this works. Imagine that you run an e-commerce clothing store, and you’re facing tough competition from a rival company. Your objective is to improve customer loyalty, so you set a broad goal to the team of increasing the frequency of customer visits from once a month to twice a month.

To achieve this impact, you need to identify specific customer behaviors that correlate with visiting your site. For instance, you observe that customers tend to visit the site after opening the monthly newsletter showcasing new items. Therefore, one possible outcome could be to increase the newsletter click-through rates.

Additionally, you notice that customers also visit the site after a friend shares an image of one of the items on social media. Hence, another outcome to consider is encouraging customers to share images of items more frequently.

By focusing on these customer behaviors that drive the desired outcome of site visits, you ensure that your goals are both observable and measurable. This is crucial as it allows you to effectively manage and track progress.

I hope this example highlights how outcomes can be specific and easily broken down. Remember, an outcome is a behavior exhibited by customers that directly influences business results. By understanding these behaviors, you can align your efforts with the outcomes that truly matter to your business.

Takeaways

• An outcome refers to the impact your product has on the organization and its customers and stakeholders, while an output refers to the tangible things your team produces, like documents, software, and tests.
• The goal of your team is not to produce outputs; it’s to reach a specific outcome. A successful team strives to maximize the desired outcome while minimizing the amount of work produced.
• By fixating on feature delivery as a measure of success, you may lose sight of the bigger picture. It doesn't tell you if you're building the right things. So, it is essential to shift your focus to the outcomes.
• An outcome-driven approach recognizes that you may not have all the answers from the start and that learning is an important part of the process. This is why, when working with outcomes, you need a companion tool: the experiment. When you’re planning work, be clear about your assumptions. Be prepared to test your assumptions by expressing work as hypotheses. Test your hypotheses continuously by working in small iterations, experimenting, and responding to the data and feedback you collect.
• Don’t mistake impact—high-level aspirational goals—for outcomes. Impact is important, but these targets are too complex for teams as they consist of many variables to influence.
• Use these questions to define outcomes: what are the human behaviors that drive business results? How can we get people to do more of these things? How will we know we’re right?

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