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

Note: This is Part IX of the series on Outcome Centricity, focusing on outcome centricity maturity. 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, and the eigth part here.

It’s been around a year since I started systematically thinking and writing about outcome-centric organizations. Since then I had the opportunity to discuss, explore and implement outcome-centric practices across a wide variety of organizations - from startups to big corporations.

Here's the good news: They all buy it. Just about anyone I speak to can relate to the value of outcome centricity. The not so good news: The majority of organizations still have a good way to go on their journey to become stronger outcome-centric organizations.

So I figured it would only be fitting to reflect about what I learned over the course of the last twelve months: Where do companies stand today when it comes to outcome centricity?

From my experience the reality in most companies today looks as follows:

1. Outcomes over outputs: 3/5. A lot of companies are starting to make the transition from “output to outcomes,” particulary when it comes to agile delivery. They understand that the value of so-called feature factories is limited at best. Check out this and this article for real-world case studies on this (in German). I'd say most companies are a 3/5 along the maturity curve.
2. Outcome centricity beyond innovation and delivery: 2/5. Outcome centricity is much bigger than outcome-centric innovation and delivery, as some of these examples demonstrate. It cuts across the entire value chain, including commercial management, operations or support processes such as recruting & staffing. "Everything we do is about maximizing meaningful outcomes" - it's fair to say that very few companies can truly claim that for themselves. By way of contrast, check out this wonderful example to get a sense of how Tesla's outcome-centric mindset helps them when constructing a new factory. Overall, I'd say a 2/5 for most companies.
3. Relevance of customer vs. business outcomes: 2/5. If you ask the majority of organizations what they have in mind when it comes to outcomes, you'll likely hear them speak about business outcomes. About outcomes, which are a good for them - rather than customer outcomes. As a matter of fact, most of them aren't even aware of the difference between these two types of outcomes (by way of reminder, check out this article). Furthermore, they spend way too much energy thinking hard and long about how to capture value rather than how to create value for their customers. Up to this day, it's still a lot of inside-out vs. outside-in. Again, 2/5.
4. Customer outcome-centered strategy: 1/5. As a corollary to (3), most organizations focus on business outcomes and output during their strategic planning retreats. In essence, they're always asking the same two questions: What do we want to achieve (business outcome) and what do we need to do in order to get there (output). Alas, the "missing link" is the customer. Customer outcomes are typically just one of the four inputs when it comes to strategy development (think the famous 4C's - customer, context, company, competitor). So even if you start your strategic planning process with the customer, you're likely to have lost sight of him by the end of the process. 2/5.
5. Precise and meaningful customer outcomes: 1/5: Ask any given company which customer outcomes they're tracking and they're likely to respond: NPS! Usage and adoption rates! Alas, these are typical examples of fake customer outcomes. They are customer outcomes we'd like to see, but they're typically not meaningful for customers. What's more, most companies are not particularly precise or rigoros when it comes measuring, tracking and validating whether they've achieved their customer outcome targets. (As a side note, it's interesting to see how a lot of managers and employees get uncomfortable when you tell them that it's their job to change people's behavior. You know, how people actually behave. After all, that's what customer outcomes are - a meaningful and observable change in customer behavior.) Again, 1/5.
6. Clarity regarding the output-to-outcome relationship: 2/5. The "ABC formula of success" makes it very clear: successful businesses are all about (A) delivering relevant outputs which (B) drive meaningful customer outcomes and which (C) positively affect business outcomes (cf. this article). Now the majority of organizations have yet to make the transition to being very explicit about the assumptions they're making during decision-making and how it relates to the ABC formula. Will this output actually move the needle when it comes to customer outcomes? Will this customer outcome actually bring about the anticipated business outcomes? The majority of companies are still not accustomed to this type of hypothesis-based thinking and validation. 2/5.

Based on these six reflections we created an easy-to-use maturity assessment when it comes to outcome centricity. Just test yourself: To what extent do you agree with the following six statements? Where does your company or your team stand today?

Test yourself: Where do you stand in regard to outcome centricity?

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