ArticleFebruary 9, 2024 · 6 min read time
Increased competition and a dynamic operating environment demand more than traditional project management can offer. Consequently, companies are increasingly shifting from project-oriented approaches to continuous development, aiming to enable faster value creation, continuous learning, and adaptability.
Continuous value creation ensures competitiveness
Traditionally, projects have been seen as optimising the achievement of results. The goal has been to have a fixed solution to a problem and deliver this solution efficiently within the agreed budget and schedule.
In a changing environment, the sense of security that comes with project management is often false. Customer needs may change during a lengthy project, making the initially discussed benefits less significant. In addition, a project is often tied to a network of dependencies where parallel projects inevitably lead to changing plans.
Furthermore, projects also contain other predictability challenges. Technology and team performance always have some uncertainties that are difficult to eliminate, even with the best possible planning.
A constantly changing operating environment presents novel requirements for staying competitive. At the heart of these requirements is the ability to continuously create value for the customer as development progresses, which a rigid project-oriented model does not allow. In addition to delivering continuous value, incremental development enables learning and flexibility to make changes along the way.
As organisations recognise that adaptability that comes with agility is essential in a constantly changing business environment, the focus shifts from completing projects to continuous innovation, allowing the customer to receive value during the entire process. Harnessing agility's benefits is primarily about an organisation's cultural transformation. Constant learning is at the heart of the operations of teams and the whole organisation.
Outcome orientation supports continuous value delivery
In project work, goals are set beforehand, and making changes is difficult and expensive. 12-18 month-long projects have uncertainty regarding not only technology choices and resources but also the content of the work, which is also difficult to define accurately enough beforehand. Furthermore, customer demands will most likely change during this period. Incremental development presents an alternative that often provides the fastest and least risky option: each new version of the product builds on the existing and proven solution that the target customers have already tested. In the end, it all comes down to understanding customer needs and being able to react quickly in an ever-changing business environment.
For an organisation to continuously create customer value, the mindset and ways of working in teams must change. Customer needs must genuinely guide research and development, and the organisation must understand the outcomes the customers want to achieve through buying the selected product or service. Outcome thinking focuses on customer outcomes and is one of the critical tools in creating high-value services.
Outcome thinking makes us look at the world through our customers' eyes: Customer needs and wants are at the heart of product development, and new features and functionalities align with the essential needs of the chosen customer segment. A service creates meaningful customer value by solving customers' problems and helping them achieve their goals more easily.
What are the outcomes of outcome thinking?
Outcome thinking focuses on a specific outcome that the customer wants to achieve. A customer outcome can be defined as the customer's progress, change, gain, or benefit, which the customer perceives as valuable. The definition is long because the customer outcome can be many things. The common denominators are that the outcomes are for the customer and that the customer decides what is of value. An outcome can be something concrete, like keeping a sense of hunger away, or abstract, like adopting a new behaviour. What is essential in outcome orientation is that the customer feels they have gotten value out of the product or service and that the defined outcomes can be measured.
When we want to understand the core reasons why a customer selects a specific product or service, we can approach it through the following question: What meaningful job or task does the customer want to get done when they purchase a product or service?
Outcome thinking in practice
Introducing outcome thinking can be facilitated with a three-step hypothesis template. It brings customers and outcomes to the center. To test the customer-centricity of a solution in progress, you can run your work through these steps:
We believe that <this capability>
Leads to <this outcome>
We will know that we have succeeded when we see <this measurable signal>
The beauty of the hypothesis template is that it introduces the customer mindset through open-ended questions and helps to understand what the customer will achieve by purchasing the product. Through being more and more outcome-oriented, we grow our capability to create impactful and high-value products, which, in turn, impact more significant business outcomes.
Systems thinking is a good way to find measurable outcomes, and outcome-oriented work can be measured with the well-known PDCA cycle.
Make outcome thinking a habit
Outcome thinking is not easy for many practitioners if it hasn't become a habit. We have been hard-wired into thinking about problems and solutions all our lives, which makes it natural to look at our work as outputs instead of outcomes. The discussion about the solution's impact has been nearly non-existent.
Similar situations occur in professional settings. Sometimes, projects start from a backlog of problems, but the starting point is usually a specific solution idea. Our brains have a habit of solving problems; by default, the usual starting point is output.
When the organisational default is to use technical language to discuss solutions, designs, and outputs, the shift to starting the work from the customer outcome is neither spontaneous nor natural. A good approach is to adopt the new mindset bit by bit, reinforcing it using language that supports it.
Repeating habits and cycles transform our behavior into fully automated routines. However, habits can be reinforced to help us move from solving problems to delivering outcomes. The habit that we usually see in organisations is the problem-solution loop. The three steps of that habit are:
Solution, plan, implementation, release (action)
Problem solved and happy feeling (reward)
It is almost like automation. We routinely solve many problems. Often, the customers are happy. That, however, is not the same as outcome orientation.
What you want is reframing the loop into:
Notice possible outcome (trigger)
Create an outcome hypothesis and iterate to a solution (behavior)
Observe the outcome and feel good (reward).
Outcome thinking aims to change how we lead teams, projects, and programs so that customer value always remains at the heart of all activities. In practice, this means executing large programs in smaller parts, allowing testing each part, measuring the outcomes, receiving feedback, and modifying the product based on this feedback along the way. With careful iteration, the focus is always on the best possible outcome for the customer and the organisation. Early identification of necessary changes allows for cost-effective course corrections, avoiding the typical large expenses associated with project work.