“The ultimate destination should be achievement of business outcomes”
Where do you want to go?
“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”
Lewis Carroll, Alice in Wonderland
Not that I am as amusing or as philosophical as the Cheshire Cat, but as the VP of Research at Technology Services Industry Association (TSIA) I am often asked a similar question by our members – “What metrics should I be measuring in my organization?” My typical response is “What are you trying to accomplish?”
Unlike the Cheshire Cat, my intent is not to annoy or baffle, or to engage in some perplexing conversation. Rather, it is to get an understanding of the business outcomes that the organization is pursuing. Metrics and operating key performance indicators (KPI’s) are not etched in stone. They change over time based on current capabilities, priorities, and opportunities. You definitely do not want to assess today’s business with metrics from an outdated business model. So, the real intent of my question is to ensure that the metrics are aligned with where they want to take the business.
And, it really doesn’t matter if you are developing an internal organizational scorecard or if you are trying to show how your product or service is going to improve a customer’s business – it’s all about the Outcome.
Alignment with your customer’s outcomes
One objective that is pretty consistent among all companies is the pursuit of profitable revenue growth. As a seller of goods and services, the best way to grow your revenue is to help your customer improve their performance. Said another way, your value proposition should clearly articulate how you help the customer achieve their business outcomes.
To keep it simple, your customer’s outcomes ultimately fall into 1 of 3 broad shareholder categories:
- Revenue: New sales, Retained revenue, Expand account sales, New market penetration
- Costs: Cost of Goods Sold (COGS); Selling, General and Administrative (SG&A) Expenses
- Risk Mitigation: Strategic, Financial, Operational, Reputational, Compliance Risk
Your ability to show a cause and effect relationship between your services and the customer’s business outcome will ultimately determine the success of your sales call. All too often, suppliers focus on the “bells and whistles”of their product and leave it up to the customer to determine how those features will help improve their business – clearly a recipe for disaster. After all, customers have to spend ‘real’ money to acquire your services and you should make it clear that there is a return in ‘real’ money, ie improvement in their business outcomes.
Alignment with your company’s outcomes
Not surprisingly, the same three broad business outcomes come into play when your organization / department is looking to develop annual plans and organizational scorecards. In addition to the three shareholder outcomes mentioned above, your company has two other constituents to focus on:
- Customers: Customer Satisfaction, Customer Effort, Loyalty
- Employees: Attrition, Employee Satisfaction
Even though you can make an argument that these outcomes are ultimately used to enable revenue growth, drive costs down, or mitigate risk; they are critically important to company success and should be viewed as business outcomes in their own right.
While not every employee has a direct connection to these outcomes, it is important for every employee to feel connected to the success of the company. This is no different in concept than linking your product and services to customer outcomes.
You know that you have done a great job deploying annual plans when every employee knows how what they do each day is connected to the company’s business outcomes.
It’s all about the Outcome
Whether you are for profit or non-profit organization, customer facing or back office employee, the ultimate destination should be achievement of business outcomes. It’s good for business. It’s good for morale.
In an earlier post I wrote about the importance of aligning everyone to business outcomes – the creation of a “business within a business”. This entrepreneurial mindset increases business acumen and improves performance because everyone owns their piece of the action and know how they contribute to the overall success of the company.
Knowing what your company and customers are trying to accomplish, and knowing how what you do and how your offer contributes to the achievement of these outcomes makes a significant difference in performance. After all, when you are on a journey, it’s important to know where you want to go.
About the series
- It’s All About the Outcome
- The case for pursuing outcomes
- Why it’s so difficult to align your organization
In future posts, I’ll be digging into engineering your outcomes with the following topics:
- The importance of having a framework around driving outcomes
- Engineering your outcomes
- New organizational capabilities required