Outcomes vs outputs: Understanding the difference and why it matters

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Outcomes and outputs have become common buzzwords in product management and business. This is not accidental - as more teams adopt remote or distributed work models, managers and leadership are searching for better ways to guide their employees and understand the breadth of their teams' influence. As a result, many organisations now prioritise outcomes over outputs.  

Managers can effectively oversee teams, catalyse productivity, and ensure employees focus on appropriate deliverables by rallying around targeted outcomes. Well-defined outcomes provide meaning and purpose to outputs, acting as a "North Star" to orient workflow. Therefore, it is crucial to distinguish outcomes from outputs in order to realise organisational goals. 

What is an outcome?

An outcome encapsulates the ultimate result or impact of an action, project, or strategic initiative

Outcomes refer to the broader goals and desired end results of a project, product, or process. They focus more on the "why" than the "what" and capture the long-term changes and real-world impacts that justify undertaking work in the first place. Common business outcomes include improved customer satisfaction, increased revenue, higher productivity, and reduced environmental footprint.

An outcome encapsulates the ultimate result or impact of an action, project, or strategic initiative. It reflects the change or benefit that materialises once the effort concludes. Outcomes typically result in enhanced advantages for end-users and the business alike. For example, the outcome of a marketing campaign might include increased sales, heightened customer satisfaction, or amplified brand recognition. Therefore, outcomes signify the primary goals one wants to accomplish. Organisations should define and quantify the desired outcomes before starting any significant project.

To monitor progress, teams often use key performance indicators (KPIs) - metrics checked at regular intervals to gauge progress towards a defined target over time. Well-formulated metrics make outcomes manageable.

Let's examine some of the key reasons why outcomes are important:

1. Clarity and prioritisation

Focusing on outcomes is critical to ensuring that your strategic efforts are aimed at making the most important changes for your customers. Every project and task should ultimately contribute to meaningful gains for the people your business serves. Outcomes also provide clarity, priority, and efficiency to your work. When teams rally around well-defined outcomes rather than vague directives, they retain autonomy to determine the best outputs while working together towards what really matters.

2. Gauging impact and ROI

Outcomes are essential to help leadership evaluate the impact and return on investment accurately. By tying budgets to genuine performance outcomes, accountability is established. This approach allows us to concentrate our resources on activities that create value, instead of relying on inaccurate assumptions. Additionally, monitoring outcome KPIs helps make data-informed decisions to shape better processes.

3. Employee engagement

Outcomes are also crucial in fueling motivation by helping people understand how their efforts drive real transformation. Seeing their work visibly improve experiences outside the organisation through clear outcomes is deeply inspiring. Employees feel re-energised as they realise how incremental outputs accumulate into something significant.

Example

A software company aims to reduce subscriber churn and improve customer retention as more competitors enter the space. They established the following key outcome:

"Increase current customer retention rate from 68% to at least 80% over the next 12 months."

To make this outcome actionable, they defined specific metrics like:

  • Customer renewal rate 
  • Net dollar retention rate
  • Average monthly recurring revenue lost to churn
  • Customer lifetime value

They also established baseline measurements for each metric to quantify progress.

Potential outputs to drive the outlined outcome could include:

  • Redesigning the onboarding process to boost product stickiness
  • Creating a customer success team focused on technical support 
  • Developing loyalty programs and pricing incentives 
  • Seeking customer feedback through surveys and interviews
  • Sending educational content/tips to users via email
  • Optimising messaging surrounding feature updates

This outcome provides necessary strategic alignment while teams retain autonomy over output mix.

What is an output?

Outputs alone do not hold much significance if they do not contribute towards achieving the desired outcomes

Outputs refer to the specific deliverables and tangible work products that are generated in the process. Outputs represent visible progress in the form of completed tasks, activities, features, or services. Some people refer to outputs as projects or milestones. Their help your achieve the defined outcomes.

Outputs are an essential part of the project as they provide structure and clarity to move teams forward. Their purpose is to efficiently transition from the "to-do" list to the "done" category. This helps in tracking incremental progress across teams. The delivery of outputs also boosts momentum and motivation by providing quick wins.

It is important to note that outputs alone do not hold much significance if they do not contribute towards achieving the desired outcomes. Merely completing an output without connecting it to strategic goals delivers limited value. Without a clear understanding of the desired outcomes, even perfectly executed outputs will fail to accomplish organisational imperatives.

Example

Consider the earlier example of a software company looking to boost customer retention and reduce subscriber churn (the key outcome). 

A potential output that could help accomplish this goal is redesigning and optimising their new user onboarding process. This would consist of:

  • Conducting qualitative research to uncover onboarding friction points: Customer interviews, user testing, support ticket analysis
  • Quantitatively confirm self-serve onboarding completion rate 
  • Mapping an optimised onboarding flow to address identified pain points
  • Developing any necessary textual content/tooltips to guide users
  • Creating updated tutorials, documentation, and in-app messaging
  • Adding highlighting/spotlights to showcase key features  
  • Programming the changes into the product UI flows
  • Ensuring thorough quality assurance testing is completed

Completing this robust output would directly address one of the most common subscriber cancellation triggers - struggling to achieve value due to suboptimal early experiences.

In this example, the team believes that by improving the initial interactions through an enhanced onboarding process, customers will be able to learn about the product more quickly. As a result, this should increase customer retention and recurring revenue compared to the baseline measurements. The most effective way to achieve this outcome is to combine the resources of research, engineering, product design, and marketing, and work together towards the shared goal. 

Outputs vs Outcomes: how are they related?

Outcomes are the destination, while outputs fuel the journey

The main difference between outcomes and outputs lies in their respective implications. Outcomes refer to the changes or benefits that are ultimately achieved at the end of a project. They represent the "what" - the strategic goals and desired results. Outputs, on the other hand, refer to the tangible work products, services, metrics, and deliverables that are directly generated through the project. They serve as means to an end. In simpler terms, outcomes are the destination, while outputs fuel the journey.

Although some people view outcomes and outputs as completely separate concepts or opposing methods, the two are intrinsically linked. Outcomes are meaningless without the operational engine of outputs powering them. Conversely, outputs are often directionless and ineffective unless they are explicitly mapped back to aspirational outcomes.

In recent years, many companies have adopted an "outcome-driven thinking" approach to inform their processes. This mindset emphasises the importance of defining the "why" first before determining the "how" and "what". However, even advocates of this philosophy recognise the necessity of outputs in realising overarching outcomes. 

The optimal perspective is one that recognises that while outcomes should inform company-wide priorities, a commitment to output excellence remains imperative. Celebrating output milestones also helps to fuel team momentum. Finding this balance enables organisations to keep the big picture in sight while ensuring incremental progress through aligned outputs.

Putting it into practice

With the key differences between outcomes and outputs now clarified, let's explore some key steps for implementation. 

1. Align to organisational goals

The most effective approach involves first defining target outcomes that are aligned with organisational objectives. These outcomes should be quantified using key performance indicators that will indicate progress over time. The outcomes should challenge teams while still being realistically achievable.

2. Identify and prioritise key outputs 

Teams should map specific outputs to each outcome that they believe will drive measurable progress. They should prioritise outputs that deliver the greatest perceived value relative to difficulty and develop processes to regularly re-evaluate and adjust outputs based on emerging outcome data.

3. Link outputs to outcomes

While simple in theory, optimising this output-to-outcome linkage poses challenges without proper frameworks. 

The Objectives and Key Results (OKR) framework is a structured methodology that explicitly connects business outputs to targeted outcomes. OKRs achieve this by separating ambitious, qualitative objectives focused on outcomes from the measurable key results used to track output-driven progress over time.

Let's unpack this further using an example: 

A company has set a goal to expand its market share. However, this goal is not quantified enough on its own. To make it actionable, the leadership team has identified a key result - increasing new customers by 20% year-over-year. This serves as a North Star for teams to focus their efforts on outputs that will significantly impact the customer acquisition metric. Potential outputs may include revamping lead generation campaigns, providing new tools to improve sales team productivity, and segmenting prospect outreach, among others.

OKRs motivate frequently reevaluating output efficacy because key results demand tangible advancement every quarter or half. If the 20% customer growth metric stalls, executives can pinpoint whether specific outputs failed to deliver expected lift or if the objective needs reassessment.

The OKRs framework is designed to inspire and motivate people to achieve their goals. The objective should be challenging enough to make you feel slightly uncomfortable, as this will help you avoid setting output-only priorities that lack a bold vision. The objective acts as a fixed point for teams to focus their efforts towards, while the key results help to course-correct the team's progress towards achieving the objective. The synchronised cadence between the objective and key result conversations further enhances transparency.

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Organisations that lack OKR rigour often have mismatched assumptions between outputs and actualised outcomes. Leaders back projects based on gut instincts rather than objective data, and teams lose sight of the "why" as they become buried in executing tasks without a clear focus on key results.

OKRs help to forge direct linkages between critical outcomes and the output levers teams can pull to achieve them. This harnesses the best of lofty vision and accountable metrics into a cohesive strategy. The process accommodates dynamic business environments much better than fixed plans through regular re-prioritisation. This agility unlocks innovation potential as new outputs bubble up based on key results.

See how outcomes and outputs can be tied to OKRs

Becoming an Outcome-driven team

Outcomes and outputs have a close and interdependent yet distinct relationship. Outcomes represent the goals that a company aims to achieve, while outputs represent the tangible results that come from the work done to achieve those goals. Outcomes provide strategic direction, inspiration, and priorities for organisations, but they cannot be achieved without diligent efforts to build, measure, and interconnect the necessary outputs.

To become an outcome-driven team, it is essential to understand the relationship between the "why" and the "what." Leaders should clearly convey the most important outcomes for organisational success in a given period. With these outcomes defined, cross-functional teams have the freedom to constructively debate alternative output avenues to reach them.

An outcome focus also optimises decision-making for maximum impact. Initiatives are approved based on their perceived influence on the metrics that matter. Resources are concentrated on the outputs that best align with the objectives.

Monitoring performance through an outcome lens supports rapid course correction. When outcomes stall or regress, leadership can reevaluate underlying outputs instead of the outcome itself. This analytical rigour helps identify output gaps or opportunities early on, making adaptation more straightforward.

While few leading indicators can perfectly predict complex outcome trajectories, framing outputs and outcomes allows teams to continually refine and experiment. Viewing outputs as levers to pull gives organisations agency despite market ambiguity.

Conclusion

An outcome-focused mindset, guided by output vigilance, helps teams reach their highest potential. Wise leaders will foster a culture that prioritises outcomes as the ultimate goal while striving for output excellence to turn plans into reality. When everyone in the organisation shares this philosophy, it sets the foundation for long-term success.

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Bryan Schuldt

Co-Founder, Tability

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