Why outcome management will shape the future of work

Sponsored by Workpath

Up against agile newcomers, traditional structures are failing long-lasting market leaders. The answer is outcome management

Closing the gap between strategy and execution isn’t just a big challenge for many companies – it’s also an existential threat. Failing to do so could reduce a company’s lifespan by 30 per cent over the next seven years.

The cause lies in an ever-growing market dynamic that’s forcing companies to change their thinking, especially when it comes to traditional process, management and organisational structures. New competitors with fewer resources are challenging established players, moving quicker and winning in the market.

Take the automotive industry as an example: while VW needed decades to cut its original 10-year innovation cycle for the Golf in half, Tesla allowed just four years to pass between the announcement of Model X and its delivery. Traditional success factors, such as efficiency and stability, are taking a back seat. Adaptability and speed are the core competencies of new market leaders.

For quick, adaptable strategy execution, a new anchor that metrics, projects and teams can center themselves around, and a shift in thinking – from output-driven strategy execution to customer-centric outcome management – is necessary. After all, the future of work is not only shaped by new technologies and work models, but also requires fundamental structural changes in how organisations, collaboration and leadership function.

Input, output, outcome: the impact is what matters

To understand outcome management, it is important to consider what an outcome actually is:

An outcome is primarily defined by the value it will generate for the customer
This means the outcome also includes the benefiting customer
However, it also includes the clear metrics that can be used to measure whether the desired value has been created
In this context, an outcome is usually aligned with a higher-level business goal and/or a business KPI to which the outcome will contribute
At the execution level, an outcome is also defined by the people and capacity needed for it as well as the initiatives that form the output and, as a result, the basis for reaching that outcome

Companies that practice outcome management concentrate on continuously creating value for their customers. This is because solved problems are what count for customers. To achieve this, goals, metrics, projects and teams are centred around shared outcomes. This gives communication and collaboration within and across teams a new anchor that ensures a common direction in the midst of change.

The four dimensions of outcome management.

What does it actually mean to implement outcome management? There are four specific areas that can be considered:

Setting a common strategic focus: while achieving strategic goals is a top priority for companies, studies show only 28 per cent of managers know the strategic priorities of their companies. A clear common strategic direction is vital. Markets are also becoming less predictable. Accordingly, companies need teams that understand the business strategy, quickly create independent outcomes and contribute to organisational goals, even when faced with constant change.

Aligning goals and teams: the biggest obstacle many CEOs face when it comes to successfully executing strategy is a lack of alignment and support from other teams. Unclear dependencies between teams and hierarchies often lead to serious capacity and prioritisation problems. However, with the proper processes and tools, alignment can be made simple and efficient. Aligning teams based on goals and capacity before the start of the strategy execution process can ensure optimal use of resources. This correlates with higher profitability and better fulfillment of revenue goals.

Working in an outcome-oriented manner: a lack of focus on strategic priorities during execution often means that the risk of not fulfilling outcomes goes unnoticed. This makes it impossible for management to course-correct early on. The key is to empower teams to concentrate on their most important results and learn from their progress. By continuously communicating priorities, identifying bottlenecks early and resolving them quicker, companies such as 3M and Roche were able to increase their performance by 20 per cent.

Continuously adapting the organisation: in many cases, executives fail to make the progress of their transformation efforts measurable. And while managers should be driving exactly this progress, they must often do so without support from a structured process. With the right information and a clearly structured transformation process, however, organisations can be empowered to work both within and on the system, and continuously develop the company. By consistently improving how they plan, align and execute around outcomes, organisations become better at achieving them.

At the organisational level, outcome management leads to strategies being quickly and reliably translated into business results, regardless of how market conditions and customer demands change. At the team level, shared outcomes lead to improved collaboration and clearer communication within and between teams. This, in turn, leads to less friction, more synergy, improved focus and, ultimately, increased efficiency.

Outcome-oriented work is becoming state of the art for any future-ready organization. Various methods and tools can help to implement this. Learn more about how outcome management can help your company turn strategies into real business results faster.