Outcomes vs Outputs – Interview with Barry O’Reilly; sought-after speaker, author and business advisor.

Managing Outcomes Vs. Outputs : more than just semantics

 

One of the most consistent observations we have made here at Just3Things when working with our clients is the exponential difference in organizational culture, productivity and effectiveness when leadership and teams manage to outcomes over outputs.  

 

We spoke to one of the leading experts in this field, Barry O’Reilly.   Barry is the author of recently released Unlearn: Let Go of Past Success to Achieve Extraordinary Results, and co-author of the international bestseller Lean Enterprise: How High Performance Organizations Innovate at Scale—included in the Eric Ries series, and a Harvard Business Review must read for CEOs and business leaders. 

 

He works with many of the world’s leading companies, from disruptive startups to Fortune 500 behemoths, to break the vicious cycles that spiral businesses toward death by enabling culture of experimentation and learning to unlock the insights required for better decision making, higher performance and results.

 

 

J3T: Hi Barry! Let’s start at the beginning – what is the difference between outcomes and outputs?

 

Barry: It feels deceptively simple but can make a huge impact on how you, your teams and organization perform. Outputs are what you expect to ‘produce’, the products, goods and services which result from an intervention where as Outcomes are quantifiable changes in behavior you will have caused due to the output you created (see below). 

 

 

Output  Outcome
Launch newsletter signup Capture contact information of 25% of site visitors 
Certify 50 scrum masters  Reduce user story cycle time by 50% 
Invest $1,000,000 in online marketing campaign  Increase user activation rate per application download from 20% to 50% 
Add feature for ‘$50 Gift For Friend Signups’ to our user product page Increase our user growth rate by 20% in the next three months
Deploy scripts to automate software release to cloud infrastructure Reduce lead times for software releases by 50% 

 

J3T: So why is it better for teams and organisations to define Outcomes?

 

Barry: an outcome is the level of performance or achievement that occurred because of the activity, product, good or service your organization provided—most specifically the change in customer behavior that occurred. Outcome measures are a better indicator of effectiveness than output measure, for example if you completed the activity on time, on budget and scope but no customers use your product would you consider the effort a success? Outcomes quantify and assess how the product or process you created enable customers achieve the impact they are aiming for. 

 

Spending the time to define outcomes is always trickier than defining output but gives lots of advantages, including:

 

  • Allowing teams to create a shared understanding of why they are working on an initiative and what success looks like – 
  • Open up options for how teams could achieve the outcome they are aiming for 
  • Increase the meaningfulness of work because teams can tie their efforts to results and gauge if they moving towards the desired outcome they seek (or not)
  • Creating more of an experimental approach – defining customer outcomes and asking teams to take responsibility at this level opens up the opportunities to experiment with outputs. Did X move the dial? No? In which case let’s try Y? 
  • Balancing the need for long term planning with a ‘test and learn’ approach. Most large enterprises are adopting agile or lean ways of working based on the promise of delivering better customer outcomes faster—yet the majority still measure output as success. It can be daunting for stakeholders who are used to annual planning cycles and predictive controls such as time, budget and scope to switch techniques to manage uncertainty. Defining outcomes help engage stakeholders in valuable dialogue on what behaviors they expect to see from customers as indicators of success over  planning every feature that they will release that year with little real insight and limited customer feedback of they are useful, valuable or even needed. Ask stakeholder what they expect customers to be doing different as a result of the output you create, then measuring and monitoring it can be a great way to help them get started. 
  • Not creating a culture of ‘busy fools’ – in many output driven organisations we see lots of activity and people working really hard, but without stopping to ascertain whether what they are doing (output) is creating any value for the customer or organisation (outcome) until the output is full complete. Our mission to be to learn as quickly and cheaply as possible if our effort is driving the results we’re aiming for.

 


J3T: Sounds great! So how do organisations start?

 

Barry: I encourage teams to think big but start small, and learn fast as they explore how to deploy an outcome-based approach to their portfolio of work. Don’t change everything all at once—start small, tiny in fact. Identify one product, or new feature or backlog item, start there by trying the following:

 

  • Keep asking ‘why are we doing X’ – for example why are we releasing this feature? What difference will it make and to whom? What change in customer behavior do we expect to see? 
  • Don’t get hung up searching for the one perfect metric or baseline data—start where you are and define what you customer behavior you would expect would be different if the output was available to the world, model and measure it
  • Try to measure rates and ratios over totals—iaming for a percentage increase is better than saying ‘we can’t define this outcome and so we will see if we can get five customers use it. Instead, say 60% of customers must use the feature to test is valuableness, and support an experimental approach’
  • Don’t forget that outputs can also be constraints to foster innovation – we typically think about outputs as control metric (e.g. deliver this project with $1,000 or release this feature by this date) which force feedback cycles to happen, and reflect on our results. Use output metrics as a forcing function for innovation within reason, for example an outcome a customer success team might be responsible for could be increasing customer retention by 20% in the next month. 

 

J3T: What do you see as the key challenges to organisations defining outcomes?

 

Barry: One of the biggest challenges is that people are so used to managing to deadlines, budget and scope they don’t know how to measure value in any other meaningful way. 

 

When I present the idea of looking at outcomes they can see the benefit but don’t know how to start writing outcome based measure of success—it is daunting.. 

 

Another barrier is trust between ‘business’ and technology stakeholders in organizations. Sometimes business partners can feel that you are trying to trick them, plus they to feel comfortable managing to output because it’s the way they have always managed initiatives. 

 

When people are time poor, the pressure is high and they have been sold new process as the way to succeed, their appetite to experiment is much lower. This is why thinking big but starting small is key, and showing people how the method works and could a better approach. The breakthrough comes by working learning and unlearning together. Review your existing initiative dashboards, notice if the measure all output or outcome based. Try to identify and introduce one new outcome based measure on your dashboard that you can use as a pilot for a new way of work—then scale from there.

 

What if the metric is lagging indicator?

 

When people start to embrace outcome-based methods they often use metics such as revenue, profitability and customer satisfaction as a measure of success—but these are all lagging indicators. 

 

Businesses and teams need to think about how to also create leading indicators as the outcomes they are aiming for, and behavior they know mean the customers is on the path of success.

 

For example, at Netflix increasing revenue through customer retention of the service is a key outcome for the business. But if you’re working there waiting each month for customer retention results, and even colerating your work to such a top line metric as customer retention is challenging. That’s why creating leading indicators for the outcomes you aiming for is important and more actionable for the team. Therefore, if you’re working on the Search team at Netflix, and know retention is important you can ask a question such as, “what customer behavior in search would be a leading indicator for retention?” Maybe you’ll say the lead time from searching to starting a movie. You can then model and measure how quickly people can search for, discover and starting movie via your search functionality and see if that impact lagging indicators like retention rate of those customers. 

 

This takes work and skill but ideally you would look at a mix of leading and lagging indicators— need to be thoughtful and have checks and balances. But getting started is the first step, so start small and learn fast when works for your context. 

 

 

What other behaviours can stand in the way of teams focusing on outcomes?

 

Leaders struggling to devolve decision making – or on the flip side, teams being afraid to make decisions. 

 

The incentives in place in a business make a huge difference too – leaders can say that  the team should experiment, try out their ideas to succeed and work together toward outcomes but if leadership behavior shift when bonus are on the list, or paid individually on completion of projects on time, budget and scope this is totally mixed messages.

 

For me, the trick is to find  the cadence for your context; how do we get into the rhythm of making smaller more frequent bets and outcomes with leading indicators rather than creating big upfront plans with the output predicted in terms of time, budget and scope ? Every company has different requirements for different levels of fidelity of plans and some of this will also vary by stakeholder. 

 

Figure out how best your teams can keep stakeholders updated with the bets that they have made and whether this has moved the dial on the outcome metric you’ve agreed together matter. This is a very different way of working than planning everything out at the beginning of the year but the benfits you can realize in terms of organizational culture, productivity and effectiveness once you learn can be extraordinary. 

 

J3T: We hear a lot about psychological safety – how important is this?

 

The quality of safety in organisations is the quality of information you get. 

 

Ensuring that individuals and teams know how to design safe-to-fail bets is as important in them feeling they can learn from mistakes. How openly and honestly team can and are willing to share this learning so that others can jump up the learning curve more quickly an outcome every organization and leadership team to be aiming for, modeling and measure to achieve extraordinary results. 

 

You can think big, start small and learn fast tomorrow by asking your teams on a scale of 1-10, how safe do they feel to share open and honest information? Accept the score they give, and start small to improve. Ask what you can do as a leader to help improve that score by half a point. Pick one suggestion for a week, try it and learn fast what works and doesn’t. Role model your efforts to unlearn outdated behavior and thinking as you seek to create a create of experimentation and learning to help others succeed. 

 

 

To learn more about Barry you can;

 

Read Barry’s blog at: www.barryoreilly.com

See what he has to say on Twitter: @barryoreilly

Subscribe to Barry’s podcast at: www.barryoreilly.com/podcast

Join Barry’s newsletter at: www.barryoreilly.com/newsletter

Just3Things offers you £100 off your booking for the L&D Influencers, Europe Conference

Join Kim Atherton, Chief People Officer from OVO Energy, as she discusses the challenges and opportunities presented by organisational transformations.  In an effort to bring more transparency across functions and ease the anxiety associated with any “re-org”, Kim actually built and implemented a new platform, Just3Things, to drive alignment and clarity of purpose.  She’ll be discussing OVO’s journey with Just3Things at this session.

 

For £100 off your booking, simply use the “FriendofKim100′ promo code and visit the website here.

Transforming Volkswagen Financial Services

Inspirational CIO, Christian Metzner, is transforming Volkswagen Financial Services to deliver better customer outcomes, faster

A couple of weeks ago I was lucky enough to be invited to join VWFS’s two day PI planning session, alongside SEACON organiser Barry Chandler. I found the sessions hugely inspiring – the team were hugely excited about working in new ways to deliver value to their customers faster, and Christian placed huge emphasis on the importance of culture in achieving these aims. Read Barry’s blog about the two days here… 

Click here to view the content

£50 off tickets to Europe’s leading conference on Enterprise Agility, SEACON

On Tuesday 12th November 2019, leaders and practitioners from across Europe are coming together in London to share best practice and actionable insight on organisational transformation, entrepreneurial leadership and design thinking. 

 

With fantastic speakers including the CIO of Volkswagen Financial Services, Christian Metzner,  Deloitte’s Head of Enterprise Agility, Jon Smart, and Adventures with Agile’s founder, Simon Powers, it is going to be a really interesting day. Just3Things CEO and Co-Founder Kim Atherton will be joined by OVO Energy’s CTO, Ed Conolly, to talk candidly about the highs, lows and moments of near tears associated with implementing a network of customer journey teams whilst scaling one of the UKs fastest growth unicorn companies. 

 

Just3Things are offering £50 off tickets – please use the link below to book yours and we would love to see you there!

 

https://www.eventbrite.co.uk/e/seacon-2019-the-study-of-enterprise-agility-conference-tickets-52387178461?discount=J3T@SEACONUK.COM

 

Missed our webinar? “Turning the Tanker”

Organisational transformation programmes in the financial services industry

 


Sandy Scales
Head of Agile Adoption
Royal London

Aaron Clift 
Head Of Digital Strategy, Portfolio and Innovation
Royal Bank of Scotland

Kim Atherton
Co-founder & CEO
Just3Things

Missed our webinar?

Not to worry! If you’re still interested in hearing from experts at Royal Bank of Scotland and Royal London about the realities of organisational transformation, you can access the recording now below.  Topics we tackled included getting employees “comfortable with the uncomfortable”, coaching leadership on how to “hold their nerve” in the face of setbacks, the road to building additional capacity as a business.
Give it a listen and drop us a line if you have any questions.

 

Want to download instead? Right click and press save here to download.

Re-Defining the Office Perk


Kim and I were recently asked our view on the changing landscape of “workplace perks” for a Yahoo Finance piece exploring the impact of those trends on companies outside the tech sector (where a mind-boggling array of perks have been on offer for years).  Whilst the term “perks” now seems to cover everything from free cereal for breakfast to higher-impact offerings like work-from-home arrangements, it’s clear that businesses see these benefits as levers for improving both work-life balance as well as employee retention figures. And in a world where an average career now spans sixty-plus years but average job tenure has dropped to four and a half years, the war for top talent is becoming more critical  – and costly – than ever.

A recent McKinsey study focused on the components of organisational health across 1,700 businesses concludes that, “among the many ways that companies create meaningful workplaces, the ability of leaders to connect daily work to a grander goal stands out”.  Interestingly, those leading the study found that the traditionally-referenced motivations for employee attrition – salary, job title, etc – were actually far less correlated to the exiting employees’ decisions to move than were their attitudes toward several core determinants of organisational health:

  • Direction from leadership (helping to connect employees’ daily work to the company’s vision)
  • Sense of ownership (increased accountability and autonomy in daily work)

Though at first glance these conclusions seem logical and even obvious, we hear remarkably little in the tech and business communities about creating scalable solutions to address and improve these components of organisational health.   Certainly it is much more straight-forward to arrange for catered lunch, or increase paid holiday time, but with recruitment and on-boarding costs associated with new hires remaining stable or increasing for most professions, surely it’s worth considering how we might address these powerful – if complicated – organisational dynamics?  

At Just3Things we talk quite a lot about the empowering force of transparency, and how employees that understand the full organisational and strategic context of their daily work are more energised and less distracted in pursuing their goals. Understanding how your projects and priorities align with those of other teams, of your leadership, and of the business’ long-term vision not only brings comfort and reassurance that your efforts are understood and appreciated, but can help reduce the anxiety associated with cross-functional politics.  Everyone loves some snacks in the kitchen and a bike-to-work scheme, but perhaps the time has finally arrived to balance those more tactical perks with a cultural shift towards shared purpose and distributed autonomy?

Interview with Paul Niven, OKR Expert & Author

It makes for depressing reading that 40% of global CEOs cite failure to align as the single greatest challenge to executing strategy, and yet over 90% of employees don’t understand their company’s goals or the part that they need to play in order to achieve them.*

Paul Niven is no stranger to businesses who are facing these issues; a consultant and noted speaker, he is the author of six highly acclaimed books. His most recent (co-authored with Ben Lamorte) is “Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs.” Paul’s six books have been translated into over 15 languages around the globe. Paul also delivers keynote addresses at conference events around the world and has published in a number of respected journals.

Just3Things is very pleased to be partnering with Paul to deliver a series of OKR accreditation programmes, launching in Austin in June with dates to be confirmed in London in September.

We caught up with him to discuss how OKRs help organisations to align their people to their strategy.

*Harvard Business Review, 2017

J3T: Hi Paul, thank you for taking the time to speak with us! Let’s start at the beginning – where do OKRs come from?

PN: If you will indulge me in a brief history lesson – for those who think that OKRs are a new idea, they really aren’t. We can trace them back to 1954, in a book written by Peter Drucker called ‘The Practice of Management’, where Drucker introduced a concept called ‘Management by Objective’ – every Manager should declare every year what they are accountable for, what they would rely on others for and what others could depend upon them for. This idea became popular, but like a lot of ideas it was not always implemented well and so fell out of favour. OKRs were resurrected by Andy Grove when he was CEO if Intel; he saw the latent power in this idea but thought we could simplify it. It is basically two things – where we want to go as a company and as individuals and how do we know when we have got there. And this is really the modern idea of OKRs as we know them today. Grove had an intern, John Doerr, who is now a Venture Capitalist in Silicon Valley and has funded a lot of well-known corporate names today, including being an early part of the Google story. So John bought OKRs to Google when they were a small start up of 10-12 people – and the organisation still uses OKRs to this day with their 70,000 employees.

A lot of people think OKRs are specific to Silicon Valley but that is not the case – we work with many different companies of all shapes and sizes. Public sector, start ups, tech businesses, huge enterprises – all can benefit from using OKRs.

J3T: So what are OKRs?

The acronym stands for Objectives and Key Results. An objective is a broad qualitative goal designed to propel an organisation forward – what do we want to do?

Key Results are quantitative determination of whether you achieve the objective – how will we know when we have got there? One objective can have multiple Key Results to define success.

Each key result also has initiatives or actions associated with it – what are we actually doing to move the needle on the measurable key result.

J3T: Why, in your opinion, are OKRs better than using conventional goals?

PN: OKRs help entire companies communicate company strategy and align employees around their strategic goals. Alignment happens naturally in that different departments or teams might be accountable for different key results within their department. OKRs should, as much as possible, be transparent to all employees giving everyone the context and ensuring that all are on the same page.  

J3T: So how would an organisation start to implement OKRs?

Every company is different but there are some standard steps:

  • Start with Why – why are we doing this, what are we hoping to achieve? I joke with my clients you can’t say that you are implementing OKRs because Google uses them – that’s not a legitimate reason. If you don’t have the “why”, it’s difficult to gain traction with your OKR programme.
  • Next thing: do we have an executive sponsor who understands OKRs?  We need to ensure that the senior team aren’t talking a good talk on OKRs and then simply focusing on financial performance only.
  • The next step is for the organisation as a whole: it is essential that you confirm or develop your mission (which I define as core purpose), your vision (a description of the ideal end state), and your strategy. These are the foundation and give context when you develop your OKRs.
  • Following on from that, it’s time to start defining OKRs.  If possible start at the top. I don’t use the word ‘cascading’, but I do often talk about connecting OKRs from one level to the next – connecting OKRs allows everyone to be on the same page.
  • As you are developing your OKRs it is essential to find alignment with other groups. Think about “who do we depend upon to deliver this objective”? “Who depends upon us to deliver their objective”. Having alignment with other teams so important – if we don’t connect with other teams we can overlap or fail to deliver.
  • Once you have created your OKRs, you need to think about how you incorporate them into your working rhythm – many companies make the mistake of putting effort into creating OKRs but then not looking at them again for 90 days. They need to be living and breathing to be effective.

J3T: What cadence should organisations be using to set OKRs?

The company level strategic OKRs, aligned against strategic pillars, can be set annually. However one of the core advantages of OKRs is that they shorten the cadence to quarterly – in today’s ever-changing world, a lot can happen in 90 days so having a shorter time horizon increases focus and likelihood of achieving goals.

J3T: Why do you think that it is a good idea for organisations to consider using software to embed their OKR programme?

PN: For organisations to realise the benefits of OKRs they need to think about transparency and alignment across teams – if not, they run the risk of duplication or confusion. Software can be hugely helpful here. Also, keeping OKRs live and updated is tough to do in a transparent way without software.

J3T: You have seen a lot of software tools out there, what is it about the J3T platform that you like?

PN: We’ve seen a number of tools designed to support OKR and we are extremely impressed with the intuitive functionality of Just3Things.

J3T: Why did you choose to start an accreditation programme?

PN: For your OKR effort to succeed, your organisation needs an internal OKR Champion and knowledge expert to guide and synchronize the effort, inspire and motivate your employees, push the effort forward, and collaborate with the C-level suite on progress.  It is crucial for the success of your OKR effort that your Champion, Ambassadors and Team Leads receive the best training available and we are the global leader in OKR Training.

J3T: How can we find out more?

PN: Please do take a look at our website for more details.

Celebrating International Women’s Day 2019

For my very first International Women’s Day as a female founder, I had the distinct pleasure of taking part in a panel discussion with some amazing women at Facebook’s London office, topped off by an inspiring keynote from  Kubi Springer of SheBuildsBrands.

Check out the video below for a sneak peek of some of the candid, heart-warming, and inspiring chat that was had from a range of inspiring ladies forging their own paths in the business world. Topics ranged from how we define and carve out “balance” in our daily lives, to how to know when to make the leap to a new opportunity. Special thanks to Maria Purcell, Dana Muntean, and the amazing Workplace team for hosting! See you next year.

How do Co-Founders meet?

In the modern workplace, careers are not so straightforward. The Economist featured Kim & Erinn’s journey together in becoming Co-Founders of Just3Things (spoiler alert – like all successful relationships, it is all about having similar values).