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.