Outcome Focused Performance, or Performance Driven Outcomes? (Updated)
I was involved in a research effort where we explored industry “best practices” in achieving “Outcome Focused Performance.” In a nutshell, we were trying to discover how the best organizations subjugate what they do to the Outcome (with a capital O) that they hoped to achieve.
One of the first issues we had to grapple with, however, was our task. We were tasked initially to look at this with the title “Performance Driven Outcomes. (PDO)” I was convinced that the phrase was wrong. It wasn’t a simple disagreement of semantics. It was a fundamental way of viewing the problem. It seemed to me that the PDO approach focused on what you do, and that the outcomes derive from that. If we let our performance drive the outcomes we achieve, we will have high marks but may not ever be successful.
At the time, I wrote (in discussing the DoD):
…we see clearly why we have this disconnect. The politicians and the media are looking for outcomes, and we are actively measuring and providing outputs. Congress wants to read about enemy forces overtaken and a war won. We want to talk about sorties flown, numbers of bombs dropped, and parts avail-able on the shelf.
This is, of course, not a problem limited to DoD. It’s a problem that faces every organization (and dare I say it, even our personal lives.) The problem is that often we use surrogates for the outcomes (dollars spent, dollars earned, customers served, students enrolled) and we don’t focus on the Outcome.
Generally, the outcome tends to be amorphous, and thus harder to nail down. That doesn’t mean we SHOULDN’T nail it down–just that it is more work. For instance, Nike is conducting an overall review/restructuring of their operations, and apparently they have the “outcome” in sight:
“In light of the current economic climate, it is more essential than ever to sharpen our focus on the consumer to maximize opportunities for product innovation and brand management in the marketplace,” he said. “The decision to reduce our workforce is a difficult one, but it will put our business in the strongest position possible to continue to deliver long-term profitability and growth.”
Of course, the devil is in the details–specifically how they operationally define “focus on the consumer.” In fact, if you read carefully the quote, you will read that they are focused on the customer to “maximize opportunities for product innovation and brand management.” Do you think they will “get it right?”
I am actively seeking your thoughts on this. specifically in three areas:
1. What do you see as the difference between these two phrases (or do you even see a difference?)
2. Does your organization focus on the “Outcome” or are they distracted by measuring outputs?
3. Do you think in a time of economic crisis it is more, or less, important to focus on “Outcomes?”
I asked question #1 to a few of my Supply Chain/IT collegues with the following responses:
From the Mfg Eng: Performance Driven Outcomes rely more on the process and will be measured on a “range of acceptable goals such as 90 to 95%. Outcome Focused Performance are generally rated as Pass/Fail. Only 100% is acceptable.
From Quality Mgr (Ex SC Mgr) : Performance Driven Outcomes are based on process while Outcome Focused Performance is based on the result, ie a quality product.
From the manufacturing supervisor: What’s that? Can someone explain this?
It’s very interesting to hear the responses from different people from the different areas.
This will be a condensed version of what I tried to post earlier….
“outcome focused performance” indicates goals were clearly defined by the leadership team (C-level and directors) with KPIs/metrics implemented by management, while “performance driven outcomes” connotes the goals are amorphous and management is left to its own devices.
Regarding #2, the ideal situation is to have no delta between outcome and measure output, but that is hardly ever the case. Particularly when the upper echelons of management have bonuses and stock options to think about — the more easily achieved metrics tend to be implemented, and not surprisingly, achieved. It may be somewhat cynical of a worldview, but I’ve seen enough to know that people tend to look out for number one first.
In a time of economic crisis, focusing on outcome is more important than ever. The challenge for the leadership team is getting all stakeholders on board when the goal/outcome is too “strategic”. For example, how do you get buy-in for personnel cutbacks so your company can expand into a new geographic market ?