When working with different businesses, I’ve seen a lot of confusion around the difference between outcomes and outputs. The short answer to the question, “is there a difference that matters?” is that yes, there is a big difference, and if you don’t get it right, you risk wasting time focusing on the wrong things when trying to improve your business. You’ll waste many hours trying to improve outputs when you really need to be focused on the outcomes.
So what is the difference?
Outputs are the direct product of your processes and systems. For example, if you sell a course on how to improve a business’s Facebook ads, and output that you would have is “number of courses sold.” While this is something you want to know and understand, it’s less important than understanding the outcomes.
Outcomes are the results that come from getting the outputs. Another way to say it is that outcomes answer the question, “why does getting these outputs matter?” If you’re selling courses on Facebook ads, this means understanding how you’ve helped people improve their businesses. What are you trying to achieve with your course? You might answer this with something along the lines of, “helping business owners transform their ads from an annoying expense to a fountain of revenue.”
Why does it matter?
The most important reason is that outputs by themselves will not create the results that you’re looking for most of the time. If you are overly focused on the outputs, your outcomes won’t get any better.
Outputs closely align with the concept of productivity while outcomes closely align with the concept of effectiveness. It is very possible to be highly productive but completely ineffective in what you and your business are doing. Have you ever worked tirelessly for weeks or months on a project only to have it not do what you were hoping it would do? You put in hundreds of hours of work and were very productive, but you were not effective. If you focused on outputs, you could spend many hundreds more hours but not improve your outcomes at all.
Back to the example of selling the course on Facebook ads. Would you rather sell 100 courses that ended up doing nothing of value for your customers or would you rather sell 80 courses that completely transformed the way your customers run ads and get new business? Which one will be better for your business long term?
Getting a perfect output doesn’t always give you the outcomes that your business needs. In fact, you can get many outputs right and still end up with poor outcomes. You could build the perfect course and have the perfect lead generation and sales systems that sell thousands of courses, but if your delivery is poor, and your customers can’t get through the course in a way that helps them improve their business, your mostly perfect outputs will not sustain your business long term.
It is helpful to understand your outputs, measure them, and improve them, but only when done looking at the greater context of outcomes.
Outcomes are what people want
Ultimately anything we do, we do for the outcomes. The outputs are a means to an end. Why do you have a business? It’s not because you love running systems or because you enjoy doing accounting. You want money, freedom, and personal fulfillment that comes with running a healthy, profitable business. You don’t want to hire and fire people and you certainly don’t want to deal with unhappy customers, but these are things you must do to get the outcomes that you want.
Other problems with an output focus
An output focus is a “build it and they will come” mentality. If you build the wrong thing nobody will come.
You can waste time over-optimizing outputs that don’t give you better outcomes. If you focus on getting more and more sales but don’t improve your delivery system and improve your customer’s ability to absorb and use the information your teaching you are over-optimizing your output and not getting better outcomes. The opposite is also true. You could spend too much time over-optimizing your course delivery system but that won’t help you get better outcomes if you don’t have sales.
With a focus on outputs, you run the risk of tricking yourself that you’re being highly productive and successful even though your business is soon to fail. If you focus on the output of sales and see some sales coming in that’s great but it could give you a false sense of security. You might have sales today but if you’re not getting the right outcomes the sales will disappear tomorrow. You will see yourself as productive but really what you need is to be effective.
Focusing on outputs can lead to many hours sunk into your business that don’t improve your outcomes. This will lead to frustration and self-doubt, questioning your own ability to make your business work.
How do you stay focused on outcomes and not outputs?
First, start thinking about your business in systems. Systems are the people, processes, and technology that get things done. You have a traffic system to generate interest in your company. You have the leads system to identify quality leads from your traffic. You have a conversion system to convert qualified leads into sales. These are just a few examples of some of the systems any business has. You can use our Outcome Optimization Framework as a template to start mapping out the systems in your business.
For each of your systems identify the key inputs and outputs as well as the desired outcomes. It’s good to be detailed about the outcomes that you want. For example, you could say that you want the outcome of having lots of leads to sell to from your lead generation system. A better outcome would be to generate 100 good quality leads each month that are ready to buy now. Having this additional detail will be helpful in understanding where things aren’t working the way you need them to and make adjustments to the right areas.
With these things mapped out you can start thinking about what you are doing within the system and how those activities align with the outcomes you’re looking for. For example, in your sales conversion system you might be spending time doing research on potential customers that doesn’t actually help you close sales. This would be an opportunity to improve the efficiency of what you’re doing by stopping the research as it doesn’t help you achieve the desired outcome of the system.
To summarize the key points
- Outputs are what you produce
- Outcomes are why you produce
- Outputs are a means to get the outcomes
- Getting outputs does not guarantee you get the outcomes
- Outputs can give you a false sense of productivity
- Focusing on outcomes produces much better results than focusing on outputs
- Aligning your business to outcomes will make you more efficient
What to do next?
- Identify the core systems in your business
- Use our output optimization framework to help
- Think in outcomes, not outputs… Not just what, but why?
- Define outcomes for each of your systems
- Align outcomes across systems
- Ensure people, processes, and technology are focused and aligned to producing the outcomes
- Measure key outputs and outcomes and improve where needed
Check out Brian’s latest writing on systems thinking for entrepreneurs and small businesses.
Here are a few other articles on the importance of focusing on outcomes.
Read my book, Optimize For Outcomes, available from Amazon in paperback or Kindle formats