Outcome Centricity: The next frontier for agile organizations (Part XII)

Note: This is Part XII of the series on Outcome Centricity, focusing on tactical business model design. You'll find the first part of the series here, the second part here, the third part here, the fourth part here, the fifth part here, the sixth part here, the seventh part here, the eigth part here, the ninth part here, the tenth part here, and the eleventh part here.

"From output to outcomes": The mantra's well known by now. But what exactly do we mean by that?

A couple of things, really. It's about thinking things through. It's about being clear why you're doing certain things and not others. It's about being crystal clear not just what you're pursuing, but also what you seek to achieve by pursuing just that. In a RACI sense (yes, RACI still exists), it's about teams not just being "responsible" for producing a given output, but also about being "accountable" for delivering certain outcomes. According to the Agile Fluency Model by Fowler, it's about moving from "delivering" to "optimizing" teams. So in a sense, it's about getting away from merely executing something to assuming ownership for what you're doing.

Now all this should be fairly clear. But here's the interesting part: If you take the mantra to its logical conclusion, what you find is that what you're really saying is the following: Are you, as a team, aware of the tactical business model behind what you're doing?

Let me explain by taking a step back first. Let's look at two extremely popular business model frameworks:

The St. Gallen Business Model Navigator basically asks the following three key questions:

• What (Value Proposition): What do you offer to the customer?
• How (Value Chain): How is the value proposition created?
• Value (Revenue Model): How is revenue created?

You'll find the same three key questions in Osterwalder's Business Model Canvas:

• What: Value proposition, customer relationships, customer segments, channels
• How: Key activities, Key resources, key partners
• Value: Cost structure and revenue streams

These two frameworks may very well be helpful if you're thinking in terms of business model innovation and/or during your strategy development process. From my experience, however, they're not particularly helpful for the majority of what organizations do, which is not strategy or innovation, but day-to-day operations and incremental changes and developments. In a sense - and this is really unfortunate - business model thinking to this day is still very much detached from daily business processes and activities.

So well, so good, but how does this tie back to our previous discussion regarding outputs and outcomes?

Here it is: Moving from "outputs to outcomes" means that, particularly on a team level, you should be aware of the (tactical) business model behind what you're doing. Alas, most teams don't have the right framework to help them "think things through" in just that way. That's why we created the following framework which has proved extremely helpful to get teams think harder about their tactical business model.

You'll likely recognize some of the key aspects regarding outcome-based planning I've written about extensively in previous posts. In a sense, the framework asks teams to consider the same three key questions as above:

• What: What outcomes are your customers seeking?
• How: What output are you producing to deliver this customer outcome?
• Value: What's the anticipated business outcome of what you're doing?

In contrast to the St. Gallen & Osterwalder frameworks, however, this framework is (a) very specific / more tactical (say, related to a given feature as in the example above), (b) typically time-bound (say, for the coming quarter if you're using OKRs) and (c) hypothesis-driven (thanks to the the "formula" character of the framework). It's intuitive enough to permit teams to easily reflect what they're doing and how it all fits together - outputs, customer outcomes and business outcomes.

Teams which use this framework are able to move from "output to outcomes" because they're able to reflect and articulate the following: "This is our tactical business model for the coming quarter - this is how we believe our output is driving meaningful customer outcomes, which in turn we assume will drive the following business outcomes." Of course, that's exactly the kind of discussion you should be having as you're moving to an outcome-centric organization.

(By the way, the framework is actually "fractal" in the sense that it can be about something small - a new feature, as in the example above - but also about something very big and strategic - a key strategic pillar, for example. But that's a discussion for another post.)

As always, I'd love to hear your thoughts and feedback! And thanks Robin for your help with this article.