Managing outcomes over outputs

Last post was about the perils of good ideas and the danger of managers steering teams with features and solutions. How then should a manager steer her teams? Answer: by managing outcomes instead of outputs. Managing by outcomes means managers let teams do the work of figuring out what user problems to solve in order to improve a prioritized product metric that in turn improves a business metric. 

The matrix below shows a simplified version of the responsibilities of different levels in the organization. The higher up, the more the work is around strategy and the further down the more the work is around providing solutions to customer needs. Middle management here refers to the one to several levels of management in the product organization. 

The management team are responsible for the vision and strategy of the company. They are also responsible for translating the strategy to prioritized business outcomes. Given that these outcomes are what the whole company should achieve, they are usually aggregated. Aggregated metrics (e.g. revenues) have multiple drivers and no single person can affect them by themselves. The management should not come up with solutions, see last post.

Teams (and most of all the PM) on the other hand are responsible for being experts in their customers and domain. Based on prioritized product outcomes the PM / team is then responsible for prioritizing which customer needs to try to solve. The PM prioritizes the customer needs based on a hypothesis on what product outcomes it will result in.  

Between the management team that works with aggregated business outcomes and the PM that needs to know what the prioritized product outcomes are, there is a translation job to be done. This is where middle management come in. This is not an easy job. To be able to successfully translate the prioritized business outcomes into product outcomes middle management need to have a good understanding of the product and its users. In a simple case this could be translating growth (business outcome) to a funnel conversion (product outcome). But the translation could also be alot less obvious and more specific e.g. more type of a certain content will increase the perceived value of one user group and therefore reduce churn.

Managing by outcomes therefore is all about working with the right levels of abstraction in the right place in the organization. By managing outcomes an organization can achieve alignment of their efforts while at the same time leave the decision of what solutions to build to the teams working most closely to the customers.