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.

Getting to Done: The Problem with Features

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.

Project Goals: Output, Outcome, Impact

Outcomes for Managers and Executives

Setting goals as outcomes sounds simple, but it can be hard to do in practice.

we need to ask our teams to work on outcomes—the smaller, more manageable targets that, taken together, will create the impact we want.

focus on changing customer behavior in a way that drives business results.

features don’t always deliver value.

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.

Early Value Delivery

The first Agile Principle says, “Our highest priority is to satisfy the customer through early and continuous...

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

in order to deliver value early and often you have to have clarity about what “value” means.

Outcomes, Experiments, Hypotheses, and MVPs

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.

Combining experiments with outcomes is a really powerful way to work, especially in situations of high uncertainty.

When teams are facing this kind of uncertainty, outcomes are a great way to set goals because they allow teams to experiment—to try different solutions—until they hit on the one that works.

that, in turn, allows your team to be agile: you set a goal, design an experiment, then you test and learn, test and learn, test and learn, until eventually, you figure out the best solution.

An MVP is NOT version 1.0 of your product. Instead, think of MVP as the the smallest thing you can do or the smallest thing you can make to learn if your hypothesis is correct.

an MVP is simply an experiment.

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...

outcome is “a change in customer behavior that drives ...

Defining outcomes in terms of customer behaviors creates a more customer-centric and us...

Outcomes and Agility: using outcomes to direct the work of your teams unlocks...

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.”

Jared Spool asserts that there are only five things executives care about: increasing revenues, decreasing costs, increasing new business and market share, increasing revenue from existing customers, and increasing shareholder value.

move from talking about impacts to talking about outcomes.

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

because outcomes are things people do, they’re both observable and measurable.

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.

Leading vs. Lagging indicators

First, they are measures of what people are doing—in other words, they measure behavior. Second, they predict the success that we’re seeking.

our indicators are the customer behaviors that drive the business results we’re seeking.

Hypot...

If we don’t have the data to support our hunches, then we have to treat the ideas differently than if we know our ideas are true. We have to treat them as assumptions.

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.

A basic hypothesis has two parts: what we believe, and the evidence we’re seeking to know if we’re right or wrong.

Experiments and MVPs

When I say MVP, this is what I mean: it’s the smallest thing we can do or make to see if our hypothesis is true.

Outcomes are natural partners with hypotheses.

If you want to use outcomes in your work, these questions are fundamental.

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.)

What are the customer and user behaviors that drive business results?

instead of focusing on what you intend to make, you’re setting your focus on the people you’re trying to serve. It is a huge step to take if you’re trying to make your business customer-centric.