These days, everyone wants to work in an outcome-driven product organization where teams and individuals are empowered to deliver results. But, how can teams actually get there, what does it even look like, and how can you tell if a company is truly outcome-focused? I recently explored all of these questions and more in an episode of The Product Experience with Lily Smith and Randy Silver.
Here I’ll share some of the main signs that an organization is actually outcome-driven.
All levels of outcomes are considered
An outcome-driven product organization proactively plans for the three levels of outcomes and practices responsive product portfolio management. In doing so, they become resilient to a fast-changing environment and competitive landscape.
In recent years, the transition from a project to product mindset has led to companies being more customer-centric. Modern product managers are committed to solving customer problems and creating delight (Jobs-to-be-done, aka “JTBD” theory). An outcome-driven organization maintains focus on short and long-term customer needs to avoid becoming a feature factory.
While it’s important to focus on the customer’s needs, the product teams also need to focus on achieving economic business outcomes. Product leaders and individual product managers define their product goals and pursue ideas that are in alignment with what the company seeks to achieve.
The portfolio outcome is the holistic outcome for the entire product organization, between the near-term focus and long-term vision. Outcome-driven organizations take a portfolio approach even with a single product because the product may serve multiple customer segments, contribute to multiple goals, and need multiple teams to build it. To best achieve portfolio outcomes, product teams must allocate resources responsively across multiple dimensions to drive the best outcomes.
Tip: Want to bring all three levels of outcomes to your team? Find an executive champion to promote the change. Chances are they may have been waiting for this for a while!
Product strategies are connected with company goals
For a product organization to become outcome-driven, it’s important that the right level of alignment takes place — both vertically from execs to teams and horizontally across teams and departments. The vision and goals of the company should be set by the executive team during strategic planning. Product leaders then assess and define product strategies that best achieve business goals. These strategies then convert to product goals and initiatives.
For example, if the company-level goal is to grow revenue by 80% over the previous year, then one of many product strategies could be to improve the end-user experience to reduce the customer churn rate by 20%. With this product goal in mind, which ultimately maps to the product strategy, teams can prioritize which features to include in their roadmaps. They will also have the autonomy to decide what they want to test and learn, how to reduce the implementation time, and so on.
In an outcome-driven organization, there’s a strategic planning mechanism where top-down alignment is connected with bottom-up innovation.
Tip: Have you heard of product and company goal dualism? While they are not the same, they are tightly integrated where product goals are how to measure the success of product strategies, which are chosen to achieve company goals.
Goals have resources allocated
To achieve the greatest portfolio outcome, it’s vital to make sure to allocate resources to not only the short-term, but also the long-term goals. These goals are cross-functional in nature. They are collaborative bets that could help the company to transform, keep its competitive edge, and grow radically. Knowing that some of these big bets are on the long-term horizon, it’s fundamental to prioritize and allocate resources properly, or else they just become wish lists. Outcome-driven teams use the rock, pebble, and sand prioritization technique and apply it to portfolio management.
For example, a stable product org could take a 60/20/10/10 approach where 60% of efforts go toward the core product, 20% on new bets, 10% on planning and allocation, and 10% toward unplanned projects (like urgent customer requests). This way, the team knows that 60% of resources will be dedicated to the existing product (eg. making it faster to install, faster to receive payments, etc) in order to realize revenues that can provide a runway for the next couple of years. Then, on the other hand, there’s the necessary time and resources to understand, decide, and build the next big bet to further solve customer problems at a higher level.
A classic example of a company that failed to allocate toward its long-term goals was Blockbuster. While it focused on improving its brick-and-mortar movie rental experience, the executives failed to recognize new ways to solve underlying customer needs/outcomes. This, as we all know, paved the way for Netflix to better achieve the customer outcome by taking advantage of the internet and later, streaming technologies.
Tip: Getting alignment on allocation at the time of discussing and aligning goals is much easier than waiting until the goals are set. This is why strategic/quarterly planning is essential to the success of empowered product teams.
How to transition from feature-driven to outcome-driven
Don’t see these indicators within your company? It’s not too late to make the change from being feature-focused to outcome-driven. Like any organizational transformation, a top-down, bottom-up, or hybrid approach may be used to drive a lasting change.
Here are some steps you can take to facilitate the transition to being an outcome-driven product org:
- Find multi-level change agents. For example, you might have the Chief Product Officer at the executive level as well as one or more at the team level such as a Product Operations Manager.
- Plan an agile rollout. Be clear with the vision you have for your organization and make incremental changes. Make the transition to responsive product portfolio management by first mapping initiatives to OKRs. Then, expand to cross-portfolio dependency mapping, portfolio allocations, and closing the loop with feedback.
- Enable your team with the right tool. Rather than relying on a patchwork of disparate spreadsheets, find a tool that has the process and framework baked in to steer an outcome-driven product organization.
As you may know, process is a product itself. The “customers” (your colleagues and leadership team), have to feel the need to be open to changes. Understanding and articulating problems well are key for getting everyone on board.