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Red pill vs Blue pill -Outcome not output

After more than 15 years in the IT industry, working on both small and large projects in multiple industries and companies, I  have to make the following (unfortunate) observation:

Although the raise of Agile and Product thinking, most organisations still operate in a project mindset not product mindset.

To explain the difference between the two, I have to talk about outputs vs outcomes.

What are outputs?

Outputs can be seen as deliverables, something like a feature or a new product release. The succes of a project oriented team  is measured in output(e.g. Velocity; how much story points did we deliver in this sprint?).

Did the team succeed in delivering features according specification and on time?

A consequence of this mindset is that the team is not focussed on whether a delivered features got used or if the feature really solved the business problem. We may assume that the delivered features will lead to specific outcomes. We may even share those assumptions with our teams. But, ultimately, when we ask our teams to deliver specific outputs, we are managing by outputs.

The clearest indicators that you are managing (or being managed) by outputs are roadmaps that list a fixed set of features or functionalities such as ‘new benefit type’, ‘SEPA payment’ with release dates.

What are outcomes?

Outcomes describes the expected change resulting from an output, such as an improvement of a process, increased productivity or revenue. The success of a product oriented team is measured in outcomes.

Did the team succeed in solving the users problem?

Another way to phrase it, is a product oriented team will measure success by the extent to which a feature solved users problems.

An indicator that you are managing (or being managed) by outcomes are roadmaps that list business objectives or customer pain-points such as, ‘Improve member onboarding’,  ‘Enhance user experience’ or ‘Decrease number of manual corrections’.

Why we still manage so much by outputs?

If you read my explanation above it would feel logical that we all should switch to a product mindset and manage by outcomes not outputs. So why are still so many organisations operating in a project mindset?

The answer is ‘Trust’, or better ‘The lack of Trust’.

Organisations don’t trust their IT teams and operate them in a contractor-control model. They don’t trust that those teams can reach outcomes on their own. Therefore, organisations focus on what they can control and  micromanage their teams’ outputs. As a result, teams put their main focus on the outputs and don’t communicate their progress toward their outcomes. Which leads to the organisation continuing to mistrust their teams’ ability to reach those outcomes. And we end up in a vicious circle.

The question is how do we get out of this endless loop? That is something I’ll try to answer in another blog post…

Outcomes vs outputs, which pill would you prefer to take?

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