Although the majority of modern businesses now run on software platforms, they’re often still managed with Industrial Era philosophies. In fact, the majority of leadership training, books and advanced degrees still focus on case studies from manufacturing and industrial production. It’s no wonder, then, that nearly every organization continues to focus its management, rewards and incentives around creating output.
In today’s world of continuous change at a pace no Industrial Era manual could imagine, producing a product is just the beginning of the conversation with our customers. On its own it’s not a measure of success. We need, instead, to measure what people do with the products we make.
Don’t Build Things People Don’t Want
Just because your company made a product – digital, physical, service or otherwise – doesn’t mean it meets a real need for your customers. When you produce something your customers don’t want (or need), you’ve wasted the resources needed to create it. Your teams worked on the wrong thing.
This isn’t necessarily their fault. They were explicitly asked and funded to produce this product. What if, instead, you challenged those same teams to change customer behavior in a meaningful way?
Focusing teams on a specific behavior you’d like to see change with your customers – for example, more people visit your furniture stores on the weekend with their partners – ensures that whatever the team ends up building meets the customer’s needs and achieves the behaviors you want.
Changes in human behavior that drive business results are called outcomes. Teams that target outcomes reduce waste by spending less time on ideas that aren’t going to work in the market.
As leaders, we tend to focus a lot of our time on the overall impact our teams’ work will have on the business – revenue, profits, customer satisfaction, etc. We also tend to pay special attention to the outputs coming from the teams. Outputs are tangible so it’s easy to discuss them. They’re also binary. They either were created or not. However, when competitors can get ideas into market in hours or days, perhaps we’ve been focusing on the wrong parts of the system.
Outcomes tell us who does what by how much. Measuring changes in human behavior (or outcomes) forces us to understand the answer to a simple question: “Who does what by how much?”
Your teams know they’ve come up with an outcome when they can answer all three parts of that question:
- Who? Who is the customer or user whose behavior you think should change, indicating that we’ve delivered value to the market?
- Does what? What is the specific behavior we want to see change in our product or service?
- By how much? How much change – yes, use numbers – is going to indicate success for us? In other words, what’s the goal for the team to achieve?
Using our furniture store example from above, we can fill in each part of the question:
- Who? Middle-aged furniture buyer
- Does what? Comes to our store more frequently with their partner
- By how much? A 35% increase in visits with partners on weekends
Your teams may come up with a lot of ideas of how to drive this behavior – discounts on the weekends, couple’s events, etc. These are their outputs. However, if none of those outputs drive the behavior you’re seeking then they were the wrong idea or poorly executed, or perhaps both. Anything that doesn’t move the needle in the direction of getting middle-aged furniture buyers to come to the store on the weekends with their partners at least 35% more frequently than they do today is a failed experiment and a waste of time and resources. As such, it needs to be learned from and discarded in favor of a different solution.
Behavior Change vs. Making Stuff
That simple question, “Who does what by how much?” changes your team’s focus and mindset. Their focus on changing customer behavior for the better ensures they’ll produce fewer products and solutions that don’t work. It also ensures they get to know their customers better. It won’t be enough to just say, “It didn’t work.” They’ll need to understand why and, in doing so, they’ll make better decisions on how to iterate their work to a more successful result.
Finally, as they learn what works and what doesn’t, they can change course more quickly and objectively. After all, this evidence-driven increase in organizational agility is the superpower of successful companies.
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