“nearly $8 billion of product revenue “disappeared” for the 19 hardware companies in the third quarter of 2015 alone”
Has there ever been a business concept so well understood, but poorly implemented than focusing your organization on achieving outcomes?
If you’re an external sales organization, it sounds like “Solution Selling” (or strategic selling, insight selling, customer centric, consultative selling, etc.). You know the talk track, companies should sell based on delivering business value and not on features.
Or, if you are part of a large organization, the concept of Total Quality Management (or six sigma, lean, balanced scorecards, Hoshin Kanri, etc.). You know that talk track too, organizations should focus on customer requirements and develop supplier specifications to organize around.
Clearly, the idea of focusing on business outcomes is not a new concept.
Unfortunately, we still have sales reps using sales collateral delivered by the product marketing group that sell product features, explaining why their ‘widget’ is better than the competitions ‘widget’.
Amazingly, we still have consultants and organizational strategy teams that talk about that one new, magic metric that everyone should be measured on from top to bottom.
You would think that focusing your organization on achieving outcomes would be as fundamental as getting up in the morning. But it’s not. Business has not done a good job of operationalizing the concept and there are still some people that don’t really believe in the pursuit of business outcomes as a way to drive organizational performance.
The Case for Pursuing Outcomes
Selling Customer Outcomes
In the groundbreaking book, Complexity Avalanche, JB Wood predicted that the traditional proliferation of bells and whistles intended to differentiate the product and lead to more sales, would actually lead to less sales.
The problem was rooted in the reality that customers could not consume, ie take advantage of, the new features. Wood called this the Consumption Gap.
So guess what happened – they didn’t buy the next version, or upgraded model, and sales began to decline.
How big is the problem? In my State of Field Services 2016 research paper (get your free download here), I noted that nearly $8 billion of product revenue “disappeared” for 19 hardware companies that TSIA tracks as part of the Technology and Services 50 Index in the third quarter of 2015 alone.
Presenting customers with features that they can’t consume or that have no clear path to helping them deliver business outcomes is a going out of business strategy.
Delivering Organizational Outcomes
Within any organization, an undeniable fact is that what you measure gets improved. It doesn’t matter if the metric contributes to improved business outcomes or not. I have even seen metrics that are actually detrimental to the organization “improve”. People will do what they are measured on and they are pretty good at it.
For instance, in an effort to drive a Just-In-Time initiative, the factory I just assumed responsibility for [see The Factory Case Study] was being measured on the number of part numbers that were delivered to the assembly line in daily quantities. This stopped the day I saw a material handler breakdown boxes of screws to deliver handfuls to each station, each day. Great concept, bad metric. Allowing your organization to work on initiatives that are not in line with organizational outcomes is career limiting.
Why outcomes? No outcome focus = no success
The days of selling complexity and features instead of simplicity and outcomes are long gone. Sales organizations and product marketing teams need to start with their customer’s outcome and clearly articulate how their product and services impact that outcome.
The days of having enough staff in an organization to spend time working on initiatives that don’t contribute to business outcomes are long gone. Managers have to start with their business objectives and identify key drivers of the current system so that they can achieve current objectives.
Bottom line: if you don’t align all of your activities to business outcomes, you won’t survive.
In upcoming posts in the series, I’ll discuss why organizations get off track and the importance of a framework around outcome engineering. Stay tuned.
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