Overview
In the first article in this series, we looked at bringing purpose, vision, and mission together to tell a compelling and authentic story about your business. In Part II, we will look at how strategic outcomes and strategic planning go together to create a road-map for achieving the vision.
Key Takeaways
Let’s revisit our framework. It’s important to note that while it is presented as a cascade, these activities don’t necessary happen in a linear, sequential fashion. We wouldn’t advise crafting your strategy without defining your purpose and vision, but outcome and strategy formulation is an iterative process that usually happens together.
Strategic Outcomes
An outcome can be defined as the end result of a preceding set of activities and events (some within your control, and some not). An organisation’s strategic outcomes are the impacts of the organisation’s activities, products and services on its customers and stakeholders.
To keep it simple, when we talk about customers and stakeholders, we’ll consider a customer as someone who pays for your product and a stakeholder as someone who has an interest in your product, e.g., a regulator. While having the customer at the centre of your strategy and outcomes makes sense, failing to consider the value and impact for other stakeholders could have unintended consequences. For example, building something that is brilliant for the customer but a nightmare for the employees (also stakeholders) that have to produce it is probably not a good outcome.
Defining Outcomes
When defining outcomes, we find it helpful to start by asking three questions:
These three questions help frame your initial high-level outcome definition and start the process of determining the different components that will be required to achieve it. We’ll cover some ways to approach the analysis and planning for those sub-components in a future article.
It doesn’t really matter whether you call them outcomes, strategic objectives, OKRs or another term that works for your organisation – the same questions apply.
The same approach is also useful further down the organisation from functional to project specific outcomes provided they are aligned to the organisation’s strategic outcomes. For Agile organisations this is a process of aligning top-down and bottom-up objectives versus a more traditional command-and-control style “cascade” from the top.
What Makes a "Good" Outcome?
The first thing to appreciate is that “good” is a subjective term. A good outcome for a start-up might look very different from a good outcome for a large organisation so the context is important.
In our example. the leadership team of our electric car charging company have decided that one of their important strategic outcomes is:
“The end-to-end experience of using our services delights our customers”.
Regardless of the size or maturity of your organisation, there are three simple tests you can use when starting to evaluate outcomes.
1. Targeted
The right level here depends on your organisation however it will be difficult to rally your stakeholders and cross-functional teams around a common goal if people can’t make some kind of personal connection with the outcome.
An example that is too specific might be: “deliver phase I of the Module X project”. That’s a deliverable, not an outcome. Another example might be: “achieve an NPS score of +50” – this is a measure, not an outcome. See below for some further clarification.
2. Important
Getting to the heart of why something is important is key to ensure you are prioritising between outcomes and sub-components within them. If it’s not clear why you are doing something, then you probably need to re-work your outcome definition.
Everyone will agree that delighted customers are important but “why” questions help unpack what you are really solving for. For example, is it customer stickiness or the ability to sell add-on services? Or do you need to prioritise foundational infrastructure to support an improved customer experience?
3. Measurable
Once you have decided on what you would like to measure it’s important to be realistic about whether you can actually get the data. If not, then you can either invest in the ability to capture the information you need or consider different measurements. It’s also much better to evaluate this up front than after the outcome is delivered.
When thinking about measurements, consider what the best mix of leading and lagging indicators would be between your shorter-term objectives and longer-range outcomes.
Reviewing Our Example
Let’s apply the three tests to our example outcome and see how it stands up.
Targeted
There is a clear target around the end-to-end customer experience
It’s easy for people to understand and most people will relate to an outcome that results in delighted customers
Important
As a start-up, even if you are relying on investor capital to build your product, strong cashflows will eventually be needed to deliver returns on that investment.
It therefore makes sense to have very customer-centric outcomes at this point. Delighted customers are much more likely to remain customers.
Measurable
There are a range of metrics you can use to measure customer satisfaction and happiness – both leading and lagging.
Some of these could be integrated into your product so feasibility is high and complexity relatively low.
Is it a perfect outcome? Probably not, but it doesn’t need to be. If functioning correctly, your internal and external feedback loops should provide the insights you need to make course corrections and trade-offs as you learn more, or circumstances change.
Additional Clarification
If you are still a little confused by the difference between a deliverable and an outcome or a leading versus a lagging indicator, we’ve included some additional definitions at the end of the article.
This simplified visualisation is another way to represent how these elements interrelate.
Strategy
Strategy is the action plan or roadmap required to achieve the vision and mission of the company. It is principles-based because it doesn’t specify the tactics and activities required to achieve the strategic goals.
Each organisation has its own approach to developing strategy and a one-size-fits-all approach isn’t necessary. This article isn’t a detailed look at how to develop strategy, however in the context of our framework, strategy provides the necessary structure and inputs to facilitate decision making on prioritisation, trade-offs, and investment that aligns to the purpose and vision.
The process of strategic planning brings together all the elements we have discussed in this article and as an outcome of these efforts, a good strategy should provide you with a long-term roadmap for realising your vision underpinned by analysis, facts, and data.
The challenge with “long-term roadmap” is that it implies a set-and-forget approach. Organisational agility and adaptability are vital to enable appropriate shifts in strategy where needed while minimising disruption. That agility comes in part from the continuous feedback loops we referenced in the previous section, but the information needs to flow to decision-makers for this to be effective. It can also be an intimidating level of change for an organisation not used to working in this way.
Where to Start When it's Not Working
Developing strategy isn’t an academic exercise and shouldn’t happen in a silo. Multiple internal and external influences determine how you go about developing a strategy and how effective it will be in delivering the intended outcomes. If your current process is feeling cumbersome and ineffective, we recommend starting with some diagnostics in the following four areas.
Clearly this is not an exhaustive list, but these are all potential factors that can make developing an effective strategy and delivering on it challenging. In our next article we’ll explore some of these elements in more depth.
So, back to our example. After analysing the facts and data relating to the end-to-end customer experience, the company decides to prioritise three areas to invest in that supports the outcome, “The end-to-end experience of using our services delights our customers”.
The new customer sign-up process: Process optimisation.
The mobile payments app user experience: App UI upgrade.
The call centre help desk operations: Customer experience training program.
Like the outcome, the strategy doesn’t specify exactly how this should be done. However, based the analysis, we now have three specific areas to build hypotheses around. The strategy work is then the is the launchpad for the following example activities.
Bringing it all Together
With the strategy work done, our company assembles some cross-functional teams to focus on building out the solution hypotheses. Let’s look at how this all comes together.
In our next article we’ll explore how to ensure your strategy is relevant, inspiring, and engaging throughout your organisation.
Last Word - You Don't Need to be Perfect
When developing your strategic framework, there is always the risk of letting perfection be the enemy of good. Building competencies in things like defining outcomes, objectives and OKRs takes practice, however building an operating cadence around these processes with a test-and-learn mindset is still valuable even if it is not textbook perfect.
Consider your organisational readiness for change and evaluate opportunities to experiment with new approaches in lower-stakes areas to build mastery before scaling up.
Take a test-and-learn approach when telling your strategic story across different stakeholder groups. Like any good story - it must be believable, relatable, interesting, and inspiring in some way.
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How Alpin Partners Can Help
Talk to us about the services we provide that help companies build compelling visions and robust, outcome-focused strategy.
Appendix - Summary of Key Terms
Term | Explanation |
Outcome | The end result of a preceding set of activities and events. For organisations, it is the impact of the organisation’s activities, products and services on its customers and stakeholders. |
Customer | The person(s) paying for your product.For simplicity, we’ll consider everyone else stakeholders. |
Stakeholder | A person with an interest in your product i.e., with some sort of stake in the outcome. Examples of stakeholders are regulators, employees who produce the product, consumers of the product who don’t pay for it, or journalists. It’s important to understand why different stakeholder groups matter to your organisation and to what extent, so you can prioritise their needs and your investment accordingly. |
Deliverable | Something that must be completed as part of a project. Project objectives are made up of a series of deliverables and outcomes are the end result of achieving a combination of project objectives and other factors. In our earlier example we said “deliver phase I of the Module X project” is a deliverable not an outcome because delivering phase I is only part of what’s needed to achieve the overall outcome.If you find it hard to distinguish between deliverables, project objectives and outcomes, you may need to break down your deliverables and project objectives into smaller components. |
Measure | A way of quantitively or qualitatively assessing the performance of something against a target or baseline. Again, back to our earlier example, we consider something like “achieve an NPS score of +50” to be a measure not an outcome because the end result is not to achieve a certain score, but to have delighted customers.NPS (Net Promoter Score) is one way of measuring how effective we have been in achieving that outcome. |
Activity Measure | Measuring the performance of, or completion of, an activity. An example of an activity measure might be the number of articles published per day. It’s important to ask, “so what?” because measuring activity for the sake of it is not a good use of resources. That said, measuring activity is not a bad thing per se (useful in operational metrics for example) but it shouldn’t be confused with measuring the value and impact of your outcomes and you must always be able to take some action based on the metric.If measuring outcomes is new to you then it’s normal to have a mix of activity and outcome metrics, provided you are clear on the difference. |
Outcome Measure | Measuring the value and impact of achieving the outcome over a defined time horizon. A common confusion here is equating the completion of a project with achieving the intended outcome.Delivering the project is the beginning rather than the end from a value perspective.If we go back to the question of ‘what do we want to improve?’, outcome metrics tell us how effective that improvement is over time (see TTV). |
Leading Indicator | A leading indicator is a predictive measurement.For example, the number of calls into the customer service centre could indicate increasing problems somewhere in the system. |
Lagging Indicator | A lagging indicator is an output measurement.For example, the quarterly number of 5-star services ratings customer gave following a support call. |
Key Performance Indicator | A KPI is a specific and quantifiable measure of success that allows you to track performance over time. Consider which key metrics you could track on an executive dashboard versus operational metrics more appropriate for functional leaders. |
Time-to-Value (TTV) | Time-to-value (TTV) is a measure of the length of time to deliver an outcome and realise the value from it. If there is going to be a lag between delivery and value realisation, leading indicators can be helpful to confirm if things are on track. The longer the timeframe, the less reliable TTV estimates will be.Agile organisations use feedback loops to continually adjust priorities to maximise value realisation.Breaking down larger outcomes and objectives into smaller increments (e.g., quarterly) is an important part of this process. |
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