Outcome vs Output - Escape from the Feature Factory!

You may have noticed recently that the difference between output and outcome is on everyone's lips in product management. So today, let's take a look at what exactly the two terms mean and how you can improve productivity by being aware of this topic.

Product Delivery

Table of Contents

What are outcome and output?

The two terms can be explained perfectly using the simple example Sebastian gives in the video. Imagine an archer shooting his arrows at a target.

In this case, the number of arrows shot is the archer's output, the result of a specific activity.
The arrows that actually hit the mark are the archer's output.

In the everyday life of us product managers, the delivered features are the arrows that the archer shoots, i.e. the output. The outcome is the impact that a feature actually has for the customer in the end.

Why are outcome and output important for you as a product manager?

First and foremost, be aware of the distinction between the two terms. In their professional lives, many people are trained to produce and deliver a lot. They often forget what the actual result of all this work should be in the end.

This is precisely why it is particularly important that you keep a close eye on the desired impact. A measurable outcome from your output creates clarity and helps your team to become significantly more productive and create more value for the customer.

How to work in an outcome-oriented way

In order to work in an outcome-oriented way, you need to know what outcome you are aiming for. For example, your company's goal may be to retain your existing customers. In measurable figures, i.e. as a KPI, this would be the reduction of churn.

An OKR framework can help to measure the outcome by clearly defining the role of output and outcome in the measurement of key results.

Once the goal is clear, your team can experiment with different solutions and try out how to achieve a measurable improvement in the defined KPI. This allows you to focus on the features that really hit the mark.

1. make the outcome measurable

Whether the outcome in your company is already measurable is an indicator of whether the organization is output- or outcome-focused. For the former, Thomas uses the appropriate terms 'output organization' and 'feature factory'.

"If I simply deliver without measuring afterwards."

Key results can help to measure the success of outcomes. They are an essential component of OKRs and make it possible to determine when a goal has been achieved and how it affects the results.

If this is the case for you, think together with your stakeholders about what the goal is for you as an organization and how you and your team can contribute to these goals. You should link this to meaningful KPIs so that you can measurably improve your product.

With this basis, you can measure and compare figures before and after rolling out a feature - so you can reliably say whether you have achieved the desired outcome. These figures can also help you when communicating with internal stakeholders, such as your boss.

2. good outcomes instead of a lot of output

Regardless of whether your organization is still output-oriented or already outcome-oriented, as a product manager, become aware of what benefits the features (output) really bring and how they bring you closer to your goals (outcome).

Ask yourself:

For which backlog items are we already quite sure that our customers really need this feature (validation)?
For all other backlog items: Can I test the IMPACT with the customer in advance so that I only have to develop strongly validated features?

Thomas' rule of thumb is this:

"I want to generate as much outcome per output as possible."

In other words: Only develop well-validated features!

The most important facts in brief

Outcome stands for the impact of your product on customers.
Output stands for the effort required by your team to achieve the desired outcome.
Measure and compare your figures before and after an implementation to see whether you are really achieving the desired impact and whether the actual changes are visible.
Your team will work much more efficiently if it has to create less output in order to achieve the actual outcome.

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