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The thought of consistently achieving business outcomes can be overwhelming. There are so many moving parts to manage: Technology platforms, business processes, and the skills of your employees are just the beginning of the considerations. The outcome engineering framework is a great tool to accelerate your transformation efforts.

Management by Fact

Successfully transforming your business model is difficult – if it was easy, anyone could do it. An organization with limited resources must be able to focus on initiatives that will drive the greatest improvement. While at Xerox, we used a method called “Management By Fact” (MBF) to help guide our strategic efforts. I was very fortunate to have Al Monahan, Corporate Senior Vice President Corporate Strategic Services (retired) as my mentor. Using the MBF approach, he would constantly challenge me to predict how much of the performance gap would be closed by a specific tactic that was being recommended. And then, during future quarterly business reviews, hold me accountable for the prediction.

“Management is Prediction”, W. Edwards Deming

The point of Al’s mentoring was not some method of management torture. It was an insistence that I fully understand the business that I was responsible for.  To know the drivers of performance. To know the interdependencies. To understand the root cause. Because, if we can predict, then we have knowledge.

Al’s MBF approach not only enabled consistent achievement of business outcomes, it also provided the foundation for a business process patent – “Method and system to manage achieving an objective”. My team at Bank of America used the MBF concept to move the largest bank in the country from worst to first in customer loyalty (see case study).

Management by fact and the business process patent are examples of frameworks that provide a conceptual structure to systematically address a strategic challenge. Frameworks play a key role in business transformation efforts because they allow you to focus your energies on solving the problem, not dreaming up how to go about it.

TSIA Service Capabilities Framework

For instance, the TSIA Service Capabilities Framework breaks down the solving of distinct business challenges facing technology companies by mapping the organizational capabilities, i.e. people, processes, and technology, a company will need in place to successfully address a business challenge. The effectiveness of any improvement effort can be monitored through key performance indicators that enable the result.

The power of this and any other well-constructed framework is that:

  • You don’t have to worry about recreating the basic process, which allows you to focus on identifying the right capabilities to reliably and predictably deliver results.
  • While an organization can generate an endless supply of ideas, most fail because they don’t think it all the way through. Frameworks identify the critical steps and checkpoints to enable you to predict the return on your activity.
  • The framework will give you a chance to objectively weed out the good ideas from the bad.

Outcome Engineering

Building organizational capabilities that consistently achieve targeted business outcomes is the premise of outcome engineering. It puts the strength of modern organizations to work on delivering a company’s key business outcomes:

  1. Increase Revenue
  2. Reduce Costs
  3. Mitigate Risk

Guide Your Outcome Engineering efforts with Outcome Chains Inc. 

TSIA operationalizes its service capabilities framework and outcome engineering efforts with Outcome Chains Inc., a business storyboard software. An outcome chain documents the key components required to engineer business outcomes through a series of cause and effect relationships organized in ‘link rows’:

  1. Business Outcome: The business challenge that your internal organization or customer is looking to solve.
  2. Financial Impact: The ultimate objective of your efforts directly related to increased revenue, reduced cost, or mitigated risk.
  3. Operating KPIs: The metrics that have been shown to influence the outcomes in the financial impact row. Constructing a driver tree is an invaluable tool (see Power Tools).
  4. Proven Best Practices: The pacesetter practices / initiatives that have been proven to improve the KPI’s.
  5. Roles: The key players required to execute the important business practices.
  6. Recommended Technology: Technology platforms that are used / required to implement the practices.
  7. Operational Capabilities: The service capabilities required to deliver business outcomes that can be leveraged to solve other challenges.

Outcome Chain Example: Develop Differentiated Field Service Offers

A very common business challenge for equipment manufacturers is finding new ways to generate and drive revenue through a variety of field service offerings. Below is an example of an outcome chain that guides organizations in solving this business challenge – “Develop Differentiated Field Service Offers”. (see the on-demand webinar)

The financial impact of developing differentiated field service offers is increased company revenue and higher service revenue growth rates. From the driver tree analysis, four operating KPI’s were identified. The people, process, and technology link rows describe the capabilities an organization will need to build.

As Al drilled into my head many years ago, establishing cause and effect relationships is the key part of any MBF / outcome engineering effort. In this example, I have highlighted the subset of organizational capabilities necessary to improve initial attach rates. While this “scaffolding” is important, the information inside the links is what will drive performance.

I’ll share some helpful hints on how to create effective outcome chains that can be used to consistently and predictably improve business outcomes in my next post.

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