For example, for digital transformation projects 78 percent of enterprises fail to scale and sustain projects, and 73 percent fail to realise sustained returns on investments, according Everest Group’s digital services annual report. And it’s the same for bigger ‘mega’ projects which also systematically fail to deliver, according to Oxford Saïd Business School.
There are lots of potential reasons; from poorly defined scopes and poor project management, to a lack of effective communications. But an often-overlooked problem lies at the very start of a project with what David Cotgreave calls ‘outcome blinkers’, or the tendency to focus on project outputs rather than business outcomes.
Outcomes over outputs
Whatever the type of project, one of the biggest traps is to focus on outputs rather than outcomes. In product planning terms, an output is the product or service solution that we want to create, whilst the outcome is the effect of resolving the problem we’re looking to solve with that solution.
The Neilsen Norman Group (NNG) sums it up in a similar way; all too often we discuss “what to build, before clearly defining its purpose”. Resist the urge to lead with implementation. Once you know what the problem is, you’ll have a much better idea about what to build to solve it.
The distinction between outputs and outcomes can be thought of as building features (what the product or service does) vs generating benefits (what the customers actually gain). And while the risk of becoming a ‘feature factory’ is a particular challenge when developing product roadmaps, when embarking on any project, you need to start by thinking about current problems, and what solving them might look like.
The difference between outputs, outcomes and benefits can be seen in this classic explanation from PRINCE2 [Source: Mplaza].
Turning a blind eye
Whether it’s because business outcomes aren’t set at the start, or forgotten about during, or even upon completion of a project, it’s easy for managers and stakeholders to keep the ‘outcome blinkers’ on and focus too much on project outputs rather than outcomes.
According to the Harvard Business Review, too many projects measure success based on two metrics: time and budget. It’s easy to measure time and budget quantitatively; it’s not always so easy to measure business outcomes or whether you’re on the right track to meet them. Matthew McWha, Group Vice President of Sourcing, Procurement and Vendor Management Research at Gartner notes that stakeholders often struggle with how to ‘realise their business outcomes’ [Source: HBR].
This is backed up by The Project Management Institute, in their Pulse of The Profession report (2016). 83 percent of organisations lacked maturity with their benefits realisation process – “the means to determine ROI as well as to identify the many intangible benefits that projects and programs enable throughout the business” - and only about half indicated that project benefits are well aligned with business strategic goals.
Removing the ‘outcome blinkers’
All too often projects start with what Ash Maurya (creator of the Lean Canvas) call’s the Innovator’s Bias - a premature love for the solution, even to the extent of looking at problems in a way that makes them fit the solution in mind. Take the streaming service Quibi for example. It will go down as one of the largest and quickest collapses of a highly financed startup in history. $1.75 billion backing and two famed executives were not enough to ensure the success of a solution that consumers simply didn’t want.
Richard Fenyman, the Nobel Prize-winning quantum physicist said, “the first principle is that you must not fool yourself – and you are the easiest person to fool”. The job is to liberate yourself from focussing unobjectively on solutions. The job is to focus on the problem. On understanding the problem and then proving that solving the problem would help the customer to progress better than the alternatives (and be viable if creating a sustainable business offering is the intention).
Removing the outcome blinkers is easier said than done. It’s a mindset shift. Ask yourself, how equipped is your organisation at designing for outcomes and identifying the problems to build your future business around?
To help, there are a number of models and processes. For example, NNG’s 5-step approach for ensuring valuable outputs focusses on:
- Understanding the problem: This needs to be a shared understanding of the problem you’re trying to solve, who you’re solving it for, and crucially, how solving this problem will help your business. Often part of the problem is a misalignment or misunderstanding of what you’re creating and why. Clarity and alignment at this stage is imperative.
- Proving the problem with data: Remove the innovator’s bias with hard facts. You might love your idea, but do your customers? Remember Quibi. Perform user research, field studies, competitor analysis, and early rapid testing of potential ideas to build up data that will help you to (in)validate the problem and what potential solutions are worth backing further.
- Defining your competitive advantage: Understand what your competitors are offering, and how your product or service improves on current options (you might not be competing in the same sector, or even with another product at all). The way to achieve this is to understand what your core competencies are; knowing who you are and what you’re good at in relation to solving your customer’s problems.
- Setting goals and defining success criteria: Your outcomes should have goals aligned to them. Smart goals. This will make outputs more focussed and allow testing against your desired outcome. Define success criteria so you clearly understand when that goal has been achieved and be tough about failure or the need for more evidence.
- Test multiple ideas: We’re still not talking solutions yet. We’re talking testing ideas. One effective way is to give your team the established outcome as defined earlier on in the process and encourage them to think creatively in their approach to generating a range of testable solutions. The key here is to develop feedback loops to understand early on what’s working and not so that you can manage the portfolio of experimental ideas.
Identifying and managing business outcomes will help your organisation to better understand the problem for which you’re looking to solve, and more importantly will help to deliver the solution that your customers are looking for.
Removing the outcome blinkers isn’t easy. Inherent biases foster a culture of solution-orientated thinking, not problem-orientated thinking. Understanding problems and getting to business outcomes requires time, relentless dedication and sometimes, a point in the right direction.
An outside-in process using expert facilitation can help organisations to reach consensus on the right business outcomes faster. Facilitators, coaches and mentors from outside the immediate team can bring objectivity, reflection, decisiveness, and should help you focus on what matters next.
A firm focus on business outcomes over outputs and solving a valid problem will ultimately contribute to the increased likelihood of success from your efforts.
To discuss how Etch can support your business or project, get in touch.
This article was co-written by Seth Campbell, Head of Innovation, Etch Horizon.