Outcomes Over Output: Why customer behavior is the key metric for business success

by Josh Seiden

an outcome is a change in human behavior that drives business results.

outcomes are the changes in customer, user, employee behavior that lead to good things for your company, your organization, or whomever is the focus of your work.

The problem with this approach is that features can be finished and delivered and “work perfectly” but still not deliver any value.

Outcomes, or the human behaviors that drive business results, are what happen when you deliver the right features. Ideally, they happen when you’ve delivered as few features as possible.

By setting our outcome as “villagers spend less time carrying water” we have an easier time assessing the quality of our work.

What you want is to manage with outcomes: ask teams to create a specific customer behavior that drives business results. That allows them to find the right solution, and keeps them focused on delivering value.

our highest priority is to satisfy the customer through early and continuous delivery of value.

When you combine outcome-based targets with a process that’s based on running experiments, you really start to unlock the power of agile approaches.

Takeaways for Managers You can manage a team by telling them what to make: that’s called managing outputs. It’s a problem, because features don’t always deliver value. You can manage a team by asking them to create some high-level value, like growing revenue. That’s called managing impact. It’s a problem because it’s not specific enough. What you want is to manage with outcomes: ask teams to create a specific customer behavior that drives business results. That allows them to find the right solution, and keeps them focused on delivering value. For our purposes, an outcome is “a change in customer behavior that drives business results.” Defining outcomes in terms of customer behaviors creates a more customer-centric and user-centric way of working. Outcomes and Agility: using outcomes to direct the work of your teams unlocks your team’s creativity. They will work to find the best solution to the problem at hand in order to create the outcome you seek. To figure out if your outputs create the outcomes you seek, you need to test and run experiments. MVP is just a buzzword that means “experiment.”

Finding the Right Outcomes To find the right outcomes to work on, we start with a simple question: “what are the customer behaviors that drive business results?”

You’ll notice something else: because outcomes are things people do, they’re both observable and measurable.

You just need to remember two things: first, that an outcome is a human behavior that drives business results, and second, to figure them out, we just need to understand what our customers are doing that drives the results that we care about.

We can express our assumptions as part of an hypothesis, and we can run an experiment in order to test our hypothesis and see whether our assumptions are right or wrong.

We believe that if people share pictures of our t-shirts at a greater rate, it will prompt existing customers to return to our site at a greater rate. We’ll know we’re right when we see a correlation between social shares and return visits.

These questions are my magic questions for finding outcomes. What are the user and customer behaviors that drive business results? (This is the outcome that we’re trying to create.) How can we get people to do more of those behaviors? (These are the features, policy changes, promotions, etc that we’ll do to try to create the outcomes.) How do we know that we’re right? (This uncovers the dynamics of the system, as well as the tests and metrics we’ll use to measure our progress.)

So in this case, a simple logic model would look like this: Impact: reduce costs Outcome: fewer people calling tech support Output: improved usability of confusing features

So how do you write better OKRs? One way is to think of Key Results as outcomes. If you express your Key Result as a measurable customer behavior, you almost automatically have a well-written OKR.

Takeaways for Managers Don’t mistake impact—high-level aspirational goals—for outcomes. Impact is important, but it’s too big for any one group to target. Use the magic 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? Remember that by “humans” we mean customers, users, employees, stakeholders, or anyone involved in the system that we’re building. 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. Use outcomes to track progress. Leading indicators tell you that you’re going to hit or miss your target. Lagging indicators show your target. Build an understanding of what behaviors lead to achieving the targets you seek. Use outcomes (not features) to plan initiatives. Ask “what new behaviors will this initiative create that will deliver business value? How can we deliver that value sooner?” OKRs can be improved if you think of the Key Result as an outcome.

planning a roadmap around a customer journey. You can also use methods like Impact Mapping, and Outcomes Mapping, (see Reading List at the end of this book) or any other method that allows you to break down big goals into component parts.

Mapping The Customer Journey A customer journey is an idea from the world of service design. It’s a simple idea: you make a diagram that reads from left to right and describes what people are doing (their “journey”) when they interact with your product or service.

Building this diagram (sometimes called a “map”) lets you and your team visualize what people do with your product or service. It lets you visualize behavior. This makes it very useful for finding outcomes, because, remember: outcomes are the behaviors that drive business results.

So we created our map with three swim lanes: seller behaviors, buyer behaviors, and organizations/system behaviors. Then, in each lane, we laid out an end-to-end, step-by-step picture of the things people do as they interact with the service and with each other.

“What behaviors at each step predict success and satisfaction? And what behaviors at each step predict failure and dissatisfaction?”

With these insights, we were able to ask questions like “how might we encourage buyers and sellers to meet in person earlier in the process? And, how might we eliminate the problem of location, which is causing buyers and sellers to get stuck?”

We believe that if we increase the rate at which buyers and sellers meet early in the process, it will lead to more successful transactions (as measured by X) and higher user satisfaction (as measured by NPS.) We think we can increase the rate of early meetings [with this idea] and [with this idea] and [with this idea.] We will work on testing these ideas in Q1 of the coming year.

Takeaways for Managers Planning with outputs limits teams’ agility and problem-solving flexibility. Increase teams’ capabilities here by planning around outcomes Create outcomes-based roadmaps that list questions, themes, and outcomes instead of features. One way to find outcomes is to create Customer Journey Maps. These maps help visualize how systems work in terms of customer (and employee) behavior, and so can help you find important outcomes in the system.

If we create this outcome for the user, it will deliver this outcome for the business.

You might say, for example: If we reduce the bounce rate (the rate at which users are frustrated and give up during the subscription checkout flow), users will complete their purchases at a higher rate.

One of the appeals of output-oriented approaches is that stakeholders like the concrete certainty of the plans. They like knowing what features teams are working on.

To do that they broke the year into quarters, and began holding goal-setting meetings with the executive leadership. The idea was to understand and agree on the top three outcomes executives wanted to get to in the next quarter. “We have annual goals,” Hellweg said, “but we look at them each quarter to find the top three near-term goals.” After that, the product managers would share and discuss the Executive Goals for the quarter with functional stakeholders (marketing, sales, editorial, e-commerce, etc), then solicit their input regarding what to work on next. They asked stakeholders to make their initial requests for work by submitting tickets. A crucial difference this time was that they asked stakeholders to be more outcome-oriented. Instead of requesting features, “the ticket submission template asked for the problem, the hypotheses, baseline data, and what they hoped to achieve.” Emily told me. ”That made everything more problem-focused.” In other words, they were asking stakeholders to think about the outcomes they wanted to create.

“In the next meeting, I asked them to talk about what they were worried about. It was night and day.

In other words, by shifting the focus, the whole company was able to step back from feature conversations and consider the business problems they needed to solve—the outcomes they wanted to create. In doing so, prioritization suddenly became clear.

The point here is that you can apply the same thinking to the transformation of your organization—how can we change employee behavior in a way that generates business results?—that you use when setting goals for products. Outcomes-based thinking is, in fact, the key to transformation.

When you apply an outcomes-based approach to transformation I suggest you keep three rules in mind: Your colleagues are your customers. Everything is an outcome. Everything is an experiment.

In large organizations, where people operate very far from end-customers and end-users, we benefit when we use customer-centric approaches with our peers, colleagues, and stakeholders.

Takeaways for Managers When considering organizational change, take a customer-centric approach with your colleagues. What are their goals? What value can you offer to them in order to get them to “buy” the change you are selling? Frame organizational change initiatives in terms of outcomes. What are the new behaviors you want to create in the organization? What will people be doing differently when your change program is successful? Changing people’s behavior is hard, and not easy to predict or plan on paper. Instead, take an action-oriented approach: experiment your way forward to make progress.