We’re all familiar with the famous quote from Albert Einstein that ‘Insanity is doing the same thing over and over and expecting different results’. More recently, Jeff Bezos preached: Be fixed on the vision but flexible on the journey”. Both are critical to how you successfully run and set out the strategy for your business. Too many traditional organisations continue to fall into common pitfalls and become fixated on outputs, but shifting your focus towards an outcome-focused approach will enable a more progressive culture and ultimately better results.
The pressure of shareholders
Most organisations are set up to maximise value. Be that profit and shareholder value in many large corporates, public and ministerial opinion and policy in the public sector, or charitable impact in the not-for-profit sector. For ease, I’ll use the former in the remainder of this example.
Under these circumstances, it is very easy for the pressure exerted on the CEO, board, and business leadership to infiltrate its way down through the organisation. Where money is involved, people (shareholders) typically exhibit:
- A desire for certainty (a sense of ownership and confidence in commercial gain)
- A fear of risk (prospect of commercial loss or lack of gain)
- A lack of patience (in achieving the desired commercial gain)
Overcommitment to outputs
CEOs, board members, and business leadership typically inherit this mindset when producing the business strategy. Rather than saying “we will grow revenue by improving the customer experience”, they stretch one step further to say that, for example, “we will grow revenue by improving the customer experience by creating an app.”
They do this because it allows them to:
- Provide more certainty on the ‘How’ – money will be spent and profit returned
- Better quantify the cost associated to achieving the revenue promise (seemingly mitigating risk and increasing certainty)
- Produce a timeframe over which returns will be seen (managing expectations).
When public commitments are made, pressure increases, driving blind commitment to achieving the stipulated outputs, which leads to tighter governance and more of a command and control culture within the organisation as the promised app is developed. There is a microscope on the teams responsible for creating and launching the app, with strict deadlines, long hours to meet them, and a culture of fear at the prospect of failure. Meanwhile, there is little focus on the customer-facing sales and service teams who interact with customers daily and could be continuously understanding and improving the customer experience.
The power of an outcome-focused approach
But what if we shifted the focus away from the predefined output and instead concentrated on the broader outcomes being pursued?
- Without a predetermined output, there is less constraint upon how the outcome is achieved, and a more inspirational vision can take root. In pursuit of a vision, teams can take more ownership, feel empowered, and ultimately approach the problem with greater creativity and propensity to innovate.
- The outcome and vision is shared and ideas of how it could be achieved start to form both top down and bottom up from those who actually drive the customer experience day to day.
- The outcome is shared as a collective purpose, invigorating people across teams and driving natural collaboration and improved relationships rather than addressed in silos with a toxic focus on accountabilities for specific output and risk of a blame culture.
- The less prescriptive approach to arriving at outcomes manifests itself over time into day-to-day practices with greater levels of trust, autonomy, and purpose with cross-functional teams united behind an outcome as a goal they can identify with much more closely than any given output.
The outcome approach is also much more resilient against change than the output method. By focusing on outcome, there is more of an appetite to test and learn.
- Success can be achieved through many smaller and often iterative approaches distributed across groups, expediting the rate of change and de-risking the desired outcome through early testing of hypotheses as to what will achieve it.
- If there is need for a significant change in strategy, this model also reduces waste rather than having upfront public or commercial commitments to achieving a given outcome.
A historical example of an outcome-focused approach in action
A great illustration of these two mindsets and the benefit of taking an outcome-focused approach is set out eloquently by Simon Sinek in his book Leaders Eat Last in which he profiles the relative success of Jack Welch at GE and Craig Jelinek at Costco.
Jack Welch’s approach focused on short-term shareholder value associated to outputs or incredibly tightly-defined and time-constrained outcomes to drive key metrics and short-term performance. This delivered the KPIs and optics of success and shareholder value in the short term, however, in reality, the approach drove high levels of volatility and was not sustainable.
Craig Jelinek was willing to sacrifice short-term profits and success in pursuit of a longer-term vision for Costco, prioritising sustainable change and success, including decisions that indirectly improved outcomes and performance even if that meant sacrificing near-term gains.
Over the long term, Costco, under Jelineks’ approach, has significantly outperformed GE from a growth perspective. A particular dichotomy of the two approaches was the treatment of people and the culture that was created. Welch’s model was high risk, high reward with the top 20% of performers rewarded and the bottom 10% released annually. This created a toxic short-termist culture that limited the company’s ability to innovate and grow absent psychological safety. Jelinek’s model focused on creating the best possible environment for its employees, paying a living wage and generous benefits packages, fostering a culture of psychological safety and passion for the company. These motivated and secure employees ultimately delivered the desired outcomes of innovation, growth, and brilliant customer experiences that drove Costco’s growth.
Some techniques to help you make the transition from outputs to an outcome-focused approach:
How can you continue to meet the needs of shareholders and retain their confidence in these environments without relying solely on trust in this less prescriptive outcome-focused method?
- Sell the outcome, not the output – this allows you to be more aspirational and inspire a vision for what might be possible that others can get behind and buy into above and beyond the numbers.
- Monitor the right things over the right timeframes – focus on stability and sustainable growth and highlight these trends and figures alongside the shorter-term (annual), more profit-focused KPIs that shareholders expect and often focus on.
- Focus on the underlying business performance and not the progression of any single output – by focusing on the holistic business performance and outcomes, there is less scrutiny on specific outputs and how growth is achieved.
Conclusion
In conclusion, embracing an outcome-focused approach can pave the way for a progressive culture in your organisation. It allows for greater flexibility, creativity, and adaptability, fostering a culture of trust, autonomy, and purpose. By shifting your perspective from outputs to outcomes, you’ll position your organisation to thrive in the face of uncertainty and change.
By following these principles and adopting an outcome-focused planning strategy, you can embark on a journey towards a more progressive and innovative organisational culture that stands the test of time.
If you want to talk more about improving your employee engagement please get in touch.
