Outcome vs Output - The Real Value of Products
Companies always want to be as productive as possible, but does that always mean more of something? More items? More as far as quantity of production or output? The model that has been institutionalized by Wal-Mart for decades now is that they will make up for smaller margins on an individual item being sold by selling it to the marketplace “en masse”. But that is not always the right way to be approaching value based propositions. Output is definitely important even in a project professing to use Scrum or Agile. Without some type of output, we don’t have a working product or solution. Outcome suggests that not only is there output, but the output is accomplishing an intended purpose. Hopefully, it is accomplishing the intended solution or solving the problem we are trying to solve. However, in many ways, this discussion becomes a play on words. Let’s look at more than just the words, but what they truly represent.
The amount produced by a person in a given time; the information produced by a computer
Synonyms – handiwork, labor, produce, production, thing, work, yield
Something that follows as a result or consequence
Synonyms – conclusion, result, effect, fate, sequel
When looking at it strictly from a principle based approach, output is about the processes and tools used to ensure production happens. Outcome is about the individuals and interactions that ensure the right byproduct is being attained. Both are valuable, but without the emphasis on the outcome we will overwork people, use processes that should be defunct, do something just because it is in a contract and not truly have conversations that enable mutual success for a product or initiative.
A company recently ran into this issue when committing to work within a certain development team. The team had been working to become more cross-functional and cross-train one another to have redundancy in their roles on the team. The timeframe for a product delivery had been moved up by senior level management to accommodate client demands. The discussion came up in a sprint planning meeting about committing to more work than what the team was willing to commit to. The Product Owner even went so far as to suggest that the clients would be really pleased if these additional pieces could get into this sprint which would be closing out the release cycle. I waited patiently to see what would happen as everyone was silent. And then it happened, the senior developer asked…
“So, would they rather have these features we committed to that show up as higher priority or are there other items they would rather have in their place? What would be more valuable to them?”
The team knew they couldn’t get that much more output in the time at hand so the discussion became about maximizing the outcome for the clients. That becomes decision making time.
Outcome suggests that not everything is of equal value. As a matter of fact, value becomes a byproduct of three key things that clients or stakeholders are looking for in any venture they wish to have completed. They are:
All value propositions can be tied back to at least one of these three areas. The decision making capability of the Product Owner then becomes important to leverage the right balance in these value areas. There will be times that the value that needs to be generated is from a client knowing you are listening to their concerns and desires. There are other times when a client request is completely ludicrous and there is no way you will be doing it regardless of how passionately they ask about it. Remember, the customer is NOT always right. However, the customer is always right… in front of your face. How you balance client needs for satisfaction with saving money and generating sales helps a company and product be successful.
Custom Products – Value or Nightmare:
One company recently mused that they were sure doing a lot of “custom product requests” and it seemed to be resulting in multiple versions of their software specific to certain clientele that had to be updated in too many areas. The headache of maintaining multiple versions of their software was proving to fragment into highly specialized skill sets within the development group. This would not be sustainable if they continued to build their solutions this way. The decision, a very tough one, came from the Product Ownership Group that instead of just taking on a request because someone was willing to pay for it, each project would come through their weekly Pre-Grooming session to determine if it was even something that fit with the objective of the product offering. In doing this, the amount of heavy customization started to decrease but the features became something built in standard and could be turned on or off at the request of the client. Even the way everything could be displayed from a styling perspective could be adapted with some simple on and off buttons. Making something sustainable allowed the product to then truly be adapted for not just one customer need but the collective good and vision of the product.
There is always debate not just about prioritization methods in determining when a custom product should be made, but also when determining the product should be rolled off into a separate independent or supplementary product chain. When you make the decision to do what the custom wants versus what you want to do as a company, where does that lead you? For some companies that helps to get a product that is more responsive to custom needs. The relevant example that can be immediately thought of is what happened to Hollywood Video and Blockbuster. As customers requested a higher level of availability or on demand access to their favorite shows and movies, many competitors stepped in to match the desire and demand that was not being realized by Hollywood Video and Blockbuster. Without adapting to customer demands, the threat that exists is that someone else will take care of those needs. Hulu, Netflix, Redbox, Amazon Prime and other services stepped in to meet the customer demands in ways that Hollywood Video and Blockbuster couldn't adapt fast enough to be successful. Thinking about a phrase in the hallway of one of our clients it states:
“If we don’t take care of our customers someone else will”
There are times when implementing these types of requests helps our company and products capitalize for our competitive advantage. However, not every request is that clear and doesn't net the type of benefit that Hulu, Netflix and others realized. An example can be seen with The Clapper, Lawn Darts (Jarts), Sub-prime lending, AOL faster dial-up connections and many other products and initiatives. All good ideas in their own right and time (no need to laugh about The Clapper or dial-up quite yet... I still hear that whirring for my internet connection... "You've Got Mail"). However, the risks associated with the products or services initially being rolled out was monumental. In some cases, the initial wave of interest or value waned and other options were not implemented. With sub-prime lending, many banks continue to hedge their bets today because of the backlash that occurred in 2008 from the market crash heavily tied to their use of sub-prime lending practices.
Lee Henson recently talked about 7 steps to help you see if you are focused on Outcome or Output when he spoke to a meetup group in Tampa, FL. Feel free to read some additional thoughts here.
In the end, you want to get the best possible return for your investment (more than just ROI). Timing is important (IRR). Being responsive and determining what level of impact is also important (Customer Satisfaction). Another key aspect for Product Owners is having a knack for identifying trends in the marketplace before others do it. After all, for many companies it’s about being within the first or second to market instead of an also ran. What are you doing to ensure the best possible outcome? Share some ideas with us on our Facebook page or reach out via email at email@example.com and we are happy to discuss this or other topics with you further.