An outcome-focus is critical for successful business change.
One of the fundamental tenets of how Veriteer drives business change is keeping a laser focus on target outcomes. This is surprisingly challenging in big, complex, change programmes, with teams often feeling more comfortable focusing on activities, outputs, or timelines.
However, that’s not exactly what this article is about. A more interesting, and often ignored, topic is how to define good target outcomes in the first place.
There is a lot of content out there that defines and compares different objectives frameworks (e.g. OKRs, balanced scorecards, OMTM), but there is less discussion about the magic required to make sure that these frameworks are populated with good outcomes.
What makes a good outcome?
Firstly, our use of the word ‘good’ isn’t about good vs evil, it’s simply about good vs bad. And generally speaking, we tend to see more badly-defined outcomes than well-defined outcomes in business change projects, so we think that this is an important topic.
Our approach defines a set of criteria for good outcomes, and each criteria has a little methodology attached that you can use to help identify good outcomes. The criteria are:
Good outcomes are within the control of the change agent.
Good outcomes contribute to the organisational purpose.
Good outcomes can be felt and proved.
Good outcomes make intuitive sense (to people that understand the business and the strategy).
Good outcomes address the root of a challenge or opportunity.
Good outcomes don’t prioritise short-term gains over long-term business viability.
Criteria 1: Good outcomes are with the control of the change agent.
One of the main constraints used to avoid generic outcomes is that a target outcome for any change agent (i.e. the individual, team, or department responsible for making the change) must be within their sphere of control. In other words, in order to be accountable for an outcome, you must also be responsible. In this way, root cause analysis of an outcome can never progress beyond the control of the change agent - and the outcome is therefore specific. In an ideal world, this is also modelling in the layers of the objective tree.
This criteria also avoids the introduction of the great outcome killer: dependencies. Where a change agent depends on other individuals or teams (outside of their control) to deliver an outcome, the likelihood of that outcome being delivered shrinks exponentially.
So in order to comply with this criteria, simply do not progress in your root cause analysis past the point where you would become dependent on others to achieve the outcome. And if you cannot deliver any outcome without being dependent on others, then the organisational or programme setup should be redesigned to facilitate delegate accountability and responsibility for good outcomes.
Criteria 2: Good outcomes contribute to the organisational purpose.
It is an unfortunate fact that many organisations’ purpose has been designed purely for public relations. In these instances, this commonly results in a deep disconnect between change project outcomes and the organisational purpose. For example, if your organisational purpose is to create a better world but your project outcomes are to maximise profit by increasing consumer pricing, then it is impossible to create a sensible objective tree with your purpose at the top.
So in this way, we believe that in order to define good outcomes, you must first have an authentic organisational purpose. And that every good outcome can be connected to this fairly directly.
How to implement this criteria is simple: it is a logical test. If a target outcome contradicts, or has no relationship to, your organisational purpose, then it is not a good outcome. If this is the case, you really have to reflect on why it is that you are proposing to make the change…it is likely to be a distraction.
Criteria 3: Good outcomes can be felt and proved.
Most people are familiar with SMART criteria / goals. This is a useful way of making sure that objectives can be measured, and return on investment calculated - and we fully support this. However, it is not enough to make an objective a good outcome.
For us, a good outcome can be felt. When it is achieved, something is tangible different for those affected. For example, customers could have a markedly better experience, or staff could achieve substantially more in the same time. This criteria recognises that the ultimate outcome of any change is an improved experience for the affected stakeholders (whether this be the executive board, the facilities manager, patient, student, or customer).
And when it is felt, it should be able to be proved. That, when we made this change in our business, the world changed as a result. This chain can involve measurement - but it also involves belief. This nuance extends beyond ‘measurement’ to include stakeholder buy-in and sponsorship. A critically under-invested-in element of business cases and benefits realisation.
The method for this is two-fold:
Make sure that you have defined all of the stakeholders that will be affected the change, and linked outcomes to discrete stakeholders. They will be the arbiters of success.
Ensure that the relevant stakeholders agree with the outcome, and how it will be proven, in advance. This is not something that you can do after you have made the change.
Criteria 4: Good outcomes make intuitive sense (to people that understand the business and the strategy).
Hmm…this is an interesting one, because it cuts both ways. A good outcome will always make sense to someone who understand the business (and what you’re trying to do), but it is your responsibility to make sure that people understand what you’re trying to do.
Just like Criteria 4, this is an attempt to help you understand that the change is not the thing. How your stakeholders perceive the change is also a part of it. And therefore, a good outcome is one that makes sense to the people that will be affected, that will pay for it, that will do it, and so on.
And the method for this is simple: communication. Stakeholder and customer communication during objective setting is a critical part of defining good outcomes. Talking solves most problems, and prevents many more.
Criteria 5: Good outcomes address the root of a challenge or opportunity.
One of the most challenging parts of defining good outcomes is to move beyond addressing symptoms, and address the root cause. This is really common in fields like conversion rate optimisation (CRO) where a focus on superficial outcomes like individual click-rates will often have limited positive impact. More expert CRO professionals will always start with the overall goal in mind (e.g. completed purchases) and evaluate the end-to-end journey before making enhancements.
In terms of methodology, there are many ways to do a root cause analysis - but one of the simplest and most effective is Five Whys. It also has the advantage of working well for both problems and opportunities.
However, it does need more thought. Too much root cause analysis can lead to generic outcomes, such as every project’s outcomes being defined as some version of ‘Improve business profitability by X%’. To counteract this risk we use objective trees [LINK TO ANOTHER ARTICLE] and the second criteria for good outcomes.
Criteria 6: Good outcomes don’t prioritise short-term gains over long-term business viability.
This is almost a double-up on Criteria 2. But it’s so important that we’re happy with that. The temptation in operational teams to define outcomes linked to next week’s sales figures is strong!
It is important to realise that business change outcomes are not about changing the business, not doing the business. And whilst operational teams will undoubtedly have a focus on the latter, it generally leads to incremental improvements or just treading water.
Good outcomes should be aligned to a strategy (i.e. a long-term direction), and be long-lasting. So a useful way of complying with this criteria is to test whether the change would still be important 2-3 years after the change has been made. If so, it is likely to be a good outcome. And if not…then it probably won’t be.
Good outcomes are sticky.
If you manage to define a good outcomes for a business change project, they are likely to be useful again and again. This means that they can form part of a slowly-changing objective tree, which can be used as a framework for many business change projects over time.
So in addition to good outcomes facilitating good business, they also make things easier for business change teams in the short- and long-term.