When implementing OKRs, many organizations struggle to try and shift their mindset away from measuring how employees work toward the impact those employees deliver to the business. For example, if you're a leader within an organization, you may base your success on completing a project or initiative. The project went smoothly, was delivered on time, and is in front of your customers. The output of your team was flawless, but was it a success?
Many leaders would stop there and celebrate, but what value did your initiative bring to the business? Is it popular with customers? Did it increase total revenue or activation rate? Did it improve your user retention rate or LTV/CAC? These are all questions that you should ask yourself after you've gotten your product in front of customers.
An outcome represents the impact that initiatives taken by your teams have made on the bottom line of your business. Thinking about outcomes vs. outputs means prioritizing what your teams accomplish rather than how they accomplished it.
There are many differences between outputs vs. outcomes. One of the most important is that measuring your output will only tell you what has been done, not whether it was achieved or not. To know if an outcome was achieved, we need to measure the results.
Outputs help get projects or initiatives in front of customers but don't inherently mean that they were effective or valuable for your business.
An outcome can show us how much impact these initiatives had on the bottom line of our business and can indicate success even when there are flaws in execution.
For example, if a product is delivered late and without proper testing - but still succeeds at increasing revenue by 10 percent - it's considered successful because the result outweighs the flaw in implementation.
Measuring output, or how much work employees have completed, is a vanity metric. However, when we measure the outcome of an initiative or project, the output becomes irrelevant.
The difference between outputs and outcomes impacts the way that we should manage our teams. So it's essential to shift your mindset away from outputs and towards practical resources to achieve successful outcomes. Outputs are byproducts of success; they are not success itself.
Leadership teams often track the amount of activity in a quarter or year as a success indicator. While there's nothing wrong with being proud of your employees, it is essential to recognize that output isn't directly tied to success. Organizations making decisions based on outputs may not be tracking the impact directly related to the value of their product or services. Output measures do not address the value or impact of your services for your clients. The output of your employees should be used as a starting point for tracking progress and verifying successes but shouldn't stand on its own.
Focusing on outcomes gives us insight into how our initiatives could improve without unjustly placing blame or focus on those that made them succeed or fail. Tracking outcomes means looking at what worked and what didn't, even if some parts of the execution weren't flawless. For example, two teams can have entirely different work styles but a massive impact on your business.
Instead of comparing outputs, your leadership team should understand the different outcomes that came from two completely different approaches.
There are a few ways to evaluate outcomes without micromanaging the work your employees are doing.
Focusing on the underlying data will help teams measure success over time and understand their expectations. It will also help leaders focus on customer value rather than on the processes of teams. Ground-level teams often have the most context of customers' value and what experiments to run within a given vertical. Giving your teams autonomy and the ability to iterate on their own terms means that they can own their own process, and leaders can focus on improving cross-team collaboration.
Before putting any resource into an initiative or project, ensure that everyone on the team understands the desired outcome and how your company will define success. Ensure that you focus on measurable data, user perception, and the value you're delivering to your customers. Identifying trends in data before What's most important about outcomes is that everyone involved agrees on what they mean and how success is measured - so be sure to spend time making this definition clear before beginning any work.
Create a mechanism for communicating with stakeholders: Make it simple for those interested in learning more about projects, ideas, and initiatives at your company to easily learn more without having their questions bogged down by extraneous details. For example, keeping an updated roadmap of current initiatives with links to relevant documentation or presentations can help teams keep track of progress without needing face-to-face meetings every time they have a question.
Outputs aren't inherently wrong. It's just essential to view them as precursors to outcomes. When looking at both outputs and outcomes, you'll want to ensure that your desired outcomes are linked to the effort or outputs of your teams.
Before tracking anything, think about what the purpose of the data will be. Make sure that there's a clear connection between a specific output and a customer-centric business objective. Be sure that anything you track aligns with your company's mission and values - otherwise, it might lead people down paths that aren't in line with what's most important to your company (and could even hinder progress). It can be helpful to break out different reasons why you're pursuing an idea - there could be one reason that is more easily measured than others.
Your company shouldn't aim for a siloed system - instead, the entire team should understand how their work impacts other parts of the business.
When measuring project outputs, think about how they might compare with other teams across your organization, and don't be afraid to look at failures as opportunities for improvement. Sharing what didn't work for your team may help inform other teams of what they shouldn't work on, which is just as important as sharing success stories.
Using Objectives and Key Results (OKRs) is a way to keep productivity and business value at the forefront of everyone's minds. Objectives are missions or high-level goals that you want your team to achieve within a certain period of time. Key Results are measurable outcomes that your team works on to achieve the parent Objective. In many organizations, a Key Result is the unit of measurement by which all impact is tracked.
Managers can use OKRs to provide direction for their teams and be transparent with their own progress tracking so that all employees are clear on how they're expected to deliver on an initiative or what success looks like. This sets expectations for each team member, ensuring that customers come first and output really isn't the most important thing.
Many great organizations measure outcomes over outputs with OKRs. Commonality is here for you with our free OKR software to start experimenting with new ways of thinking about performance management and make real progress towards turning your company into a high-performance engine.
First published Aug 4, 2021, 4:52 AM, updated August 11, 2021
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