Here is an attempt to establish a definition of Output, Outcome and Impacts! It is based on my interpretation of the work of Jeff Patton, Marty Cagan and Clayton Christensen, with some good input from Gojko Adzic, John Seddon and John Cutler.
Why is that remotely interesting? To bring clarity to important discussions! Output, Outcome and Impact are usually used interchangeably for each other in important discussions on strategy, goals and objectives. In my experience, this brings confusion over what we try to achieve and the criteria for success. Being specific on the meaning of these words, and when to use them, help us have the right conversations when discussion goals.
A clear definition helps us differentiate between three very different approaches to goal setting: Output focus, Outcome focus and Impact focus. These strategies are grounded in three widely different mindsets and mental models, each with its own models, processes and tools.
- Output-focus is about maximizing the number of “stuff” (features, epics, products) produced. This is a valid focus when you’re making a big bet that you’re pretty sure will have the right outcome and positive impact. It could be a pre-requisite to other bets or initiatives. When having an output focus, remember that customers do not want features; they want you to solve their problems!
- Outcome-focus is about applying yourself to understanding your customer needs, solving their problems and creating new possibilities for them. You know that you’re succeeding when your customers have changed, or adopted, behaviors that make their life easier.
- Impact-focus is about maximizing the bottom-line for the organization in term of revenues. Generally, actions here tend to be dictated by cost accounting, resource efficiency and economies of scale with the purpose of cutting costs. It may be a very valid focus for a while, but remember that an organization that focuses on solving its own problems doesn’t have time to solve its customers’. Do that for too long and you’ve lost sight of your customers; what was the purpose of the organization to start with?
Of the three possible strategies presented here, one really sticks out in our VUCA (Volatile, Uncertain, Complex, Ambiguous) saturated world where the customer is in the driver seat: a focus on Outcomes help organizations succeed better by achieving “customer centricity“. Indeed, “Good Things” (like greater Impact/revenues), will naturally come as a bi-effect from the relentless focus on customer Outcomes. That, is the foundation of Business Agility: organization/corporate success comes today from the ability to continuously innovate on behalf of your customers.
So, what’s your current focus? Is it the right one? Bring clarity to your important discussions at all levels by differentiating between Outputs, Outcomes and Impacts.
References
Jeff Patton
Marty Cagan
Clayton Christensen
John Seddon
Gojko Adzic
John Cutler
Love this, however, User Stories best serve product development when they are in terms of an outcome for the customer. Jeff Patton also positions User Stories as best framed as outcomes. See also Results Based Management… My notes on this here… https://twitter.com/antonymarcano/status/1124950736817860609
So many people miss out on the additional innovation that can result if a user story literally is a story a user will be able to tell, not a thing they will have.
Thanks for an inspiring blog!
What software do you use to paint the pictures?
Hi Caroline!
Great that this blogpost inspired you. I’m using Notability on my iPad to create this material. You can easily draw by hand and mix with text. There are certainly more advanced tools, but Notability does the work for me.
/Chris
The impact is not “maximizing the bottom-line for the organization in term of revenues”. There is deep misunderstanding of the concepts. Impact is the longer term effect of an outcome. The key differences between ‘impact’ and ‘outcomes’: reach, scope and nature. An outcome is a finite and often measurable change. On this basis, the reach of an outcome will be pre-defined and the scope of an outcome will be similarly limited. In contrast, impact refers to a much broader effect. The impact is sufficiently different, complex, non-linear and ultimately subjective to warrant a qualitative approach. The impact can be economic, financial, social, technological human, etc. I would not say that this is an impact approach. I would say that “Impact-focus” is a “monetarist-focus” or looking at the economic belly button.
In other words, the impact is not necessarily on the organization or on financial metrics. The distinction between output, outcome and impact is fine. Thanks for the post.
Thanks for your input Dario! You’re correct that there is more to “impact” than the potentially financial gains (brand building, positioning in a new customer segment or market, etc.). I’m more restrictive in my definition to better map how “impact” is typically used. The point being that focusing on financial impacts only is not a viable long-term strategy.
Hello Christophe,
I know you posted this a couple of years ago but this is a topic that my team and I have been discussing and in particular outcome vs output. And I kind of look at it a little differently. I define the output as the delivered software and if you don’t put enough thought into the outcome (satisfy customers, solving the right problems, etc.) and are just driven to a deliverable date you most likely won’t get the best outcome.
Regards,
Sarah
Hi Sarah!
Thanks for posting! This article is a couple of years old but I find it still super relevant. I’m find myself discussing daily about outcomes and how to generate them with my clients.
Yes, you are correct: the output is the software, feature, product, etc. Any of the ‘stuff’ we have to do to allow customers to do awesome things and derive value from (the outcomes). The thing is that succeeding creating outcomes is hard. Even if we have a great idea (i.e. addressing a real problem), it will probably require several iterations on the solution to really generate the outcome you’re after (satisfy the customer). So, if you have a hard due date you will need to start sufficiently early to let you iterate and find that sweet outcome. If not, you will probably deliver a ‘meh’ thing that will look good on a roadmap but doesn’t really help your business. In other words: you measure success not by how much output you produce (10 things, yeah!), but by generating the outcome you are after. This will require you to be clear on how you will measure this outcome _before_ creating any output.
Cheers!
/Chris
Thanks
Thanks
Thanks for an inspiring blog!
Very good content
Thanks for a good blog Christophe. Valuable to me when looking to set OKRs for our organisation.
A teaching and useful reading.
Thank you!
It was very useful