Not all outcomes are the same
June 14, 2022 . 4 min read
All organizations struggle width the endless debate over outcomes and outputs.
What should we prioritize? Should we focus only on outcomes? Or should we only consider outputs and delivery whatever is being asked?
From a product management perspective this is super important mostly because resources are finite and one should prioritize outcomes over outputs as they will be the driving force of long term value for an organization. A couple of weeks ago I put a couple of thoughts on paper on a post about the topic Outcomes or Outputs but this continues to puzzle me, and I suspect that I am not alone.
“An outcome is a change in human behavior that drives business results” by Josh Sheiden, Outcomes Over Outputs
No one disagrees about the importance of driving business results or business outcomes in an organization, the big challenge is translating that across the different functions of the company in a sensible manner. Normally Commercial teams focus on deals and revenue, Marketing thinks about organic and inorganic traffic and market share, Product looks at match rates and utility... they all have different KPI's and despite the fact they are related, they are different, they move at very different speeds.
Business Outcomes and Product Outcome
Normally companies start with business outcomes they what to achieve such as revenue, cost reduction, market share and penetration. These are great and everyone can understand those, the challenge is how can we translate those into KPIs on the product side of things that will move / impact that business outcome - enter product outcomes.
It short you can think about the business outcome as metrics that measure how well the business is progressing and product outcomes as metrics that measure how well the product is moving the business outcome.
It seems simple, but we often get it wrong and same times we need a little bit discovery work to better understand the correlation between them so that we can try to move the product in the right direction.
Business outcomes typically measure something after it has happened and because of that it is hard to use them to guide any product teams work. If we do that, we will be putting the team in a reactive mindset, as a result business outcomes are consider lagging indicators.
Let's think about revenue in a particular product that you sell online and let's say you would like to increase that by 10X (who doesn't). If you give that outcome to your product team they might try to improve that with a couple of things around conversion, market depth (in case of a marketplace) or engagement on a particular filter that allows users to select your products... anything really. There will be a lot of things that the team could do, and that is great but some of this product outcomes could be more impactful on your business outcome.
One of the biggest challenges that a product team will have is to discover what would be the product outcome (or leading indicator) that will better lead the business outcome that we actually are aiming for.
By continuing the previous example one might think that conversion rate will be the quickest way to actually achieve our business outcome, but is that true? What is you and your team had evidence that there is a new product that you could onboard where demand is crazy and the price of such product is 10X other products in your marketplace?
Sometimes it is not clear where to play and Product and Business will need to discuss and align.
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