From Outputs to Outcomes
GUEST POST from Art Inteligencia
In the world of innovation, we often find ourselves caught in the trap of measuring what’s easy to count: outputs. We tally up new ideas generated, patents filed, prototypes built, or features launched. While these metrics offer a semblance of progress, they often obscure the true impact of our efforts. The real game-changer isn’t how much we produce, but what difference that production makes – the outcomes.
It’s time for a fundamental shift in how we approach innovation measurement. Instead of focusing solely on the tangible outputs of our innovation processes, we must pivot our gaze towards the meaningful outcomes that those outputs are designed to achieve. This isn’t just a semantic distinction; it’s a strategic imperative that can transform how organizations foster, fund, and ultimately succeed with innovation.
Why the Shift Matters: The Limitations of Output-Centric Measurement
Measuring outputs alone can lead to several pitfalls:
- False Sense of Progress: An abundance of ideas doesn’t necessarily mean valuable ideas. A high number of prototypes might just indicate a lack of clear direction or rigorous testing.
- Misguided Incentives: When individuals or teams are rewarded for outputs, they naturally prioritize quantity over quality, potentially leading to wasted resources on initiatives that lack true market fit or user value.
- Lack of Strategic Alignment: Without a clear link to desired outcomes, innovation efforts can become disconnected from broader business objectives, failing to contribute meaningfully to the organization’s strategic goals.
- Difficulty in Learning: If we don’t measure the impact, how do we learn what truly works? Without understanding outcomes, it’s challenging to refine our innovation processes and improve future endeavors.
The goal of innovation isn’t merely to create something new; it’s to create something valuable. This value is almost always found in the outcomes – whether that’s increased customer satisfaction, improved operational efficiency, new revenue streams, or enhanced brand perception.
“Innovation isn’t about the number of ideas you generate, but the value those ideas create for your customers and your organization.”
Defining Outcomes: What Are We Really Trying to Achieve?
Before you can measure outcomes, you must clearly define them. This requires a deep understanding of your customers, your market, and your strategic objectives. Ask yourselves:
- What problem are we trying to solve for our customers?
- How will this innovation improve their lives or work?
- What business results do we expect to see as a direct consequence of this innovation?
- How will this innovation impact our competitive position?
Outcomes should be specific, measurable, achievable, relevant, and time-bound (SMART). They should go beyond simple financial metrics and encompass a broader view of value creation, including customer experience, employee engagement, and societal impact where relevant.
Consider the difference: instead of measuring “number of new features released,” measure “increase in user engagement with new features” or “reduction in customer support calls related to previous pain points.” The latter two directly reflect the value delivered to the user and the business.
Case Study 1: Transforming Customer Experience in Banking
The Challenge:
A large retail bank was struggling with declining customer satisfaction and an outdated mobile banking experience. Their innovation team was measured on the number of new app features released quarterly – a pure output metric.
The Old Approach (Output-Centric):
The team consistently delivered a high volume of new features, including minor UI tweaks, new calculator tools, and incremental additions. Despite this, customer satisfaction scores remained stagnant, and app usage, while present, didn’t show significant shifts in how customers managed their finances.
The Shift to Outcomes:
Recognizing the disconnect, the bank redefined its innovation objective for the mobile app. The new outcome goal was to “increase active mobile banking users by 15% within 12 months by enabling frictionless self-service and personalized financial insights, leading to a 10% reduction in branch visits for routine transactions.”
The innovation team began focusing on features directly tied to these outcomes: a simplified bill pay process, AI-driven spending insights, and integrated chat support. They measured:
- Outcome Metric 1: Percentage increase in active mobile banking users.
- Outcome Metric 2: Percentage reduction in branch visits for specific routine transactions (e.g., balance inquiries, transfers).
- Outcome Metric 3: Net Promoter Score (NPS) specific to mobile banking users.
The Result:
Within 10 months, active mobile users increased by 18%, and branch visits for routine tasks decreased by 12%. NPS for mobile banking saw a 20-point jump. This success wasn’t due to more features, but better, more impactful features driven by clearly defined customer and business outcomes. The team learned to prioritize based on potential impact rather than sheer volume.
Implementing the Shift: Practical Steps
Making this transition requires intentional effort and a cultural change:
- Start with the “Why”: For every innovation project, clearly articulate the problem it solves and the desired impact. Why does this innovation matter?
- Define Key Outcome Indicators (KOIs): Identify the specific metrics that will tell you if you’ve achieved your desired outcome. These are distinct from Key Performance Indicators (KPIs) that track overall business health. KOIs are directly linked to the specific innovation.
- Embed Outcomes into the Innovation Process: From ideation to commercialization, constantly ask: “How does this contribute to our desired outcome?” Use outcome-based criteria for project selection and stage-gate reviews.
- Embrace Experimentation and Learning: Measuring outcomes requires a willingness to test hypotheses and learn from failures. If an innovation isn’t delivering the desired outcome, pivot or iterate.
- Communicate and Celebrate Outcomes: Share stories of how innovations have positively impacted customers and the business. This reinforces the importance of outcomes and motivates teams.
Case Study 2: Developing Sustainable Packaging Solutions
The Challenge:
A global consumer goods company aimed to reduce its environmental footprint by developing more sustainable packaging. The initial innovation mandate was to “develop 5 new sustainable packaging materials by year-end” – another output-focused goal.
The Old Approach (Output-Centric):
The R&D team generated several promising material prototypes, including biodegradable plastics and recycled content designs. They met their target of 5 new materials. However, many were either too expensive for mass production, lacked the required durability, or didn’t significantly reduce overall carbon emissions across the product lifecycle once tested in real-world scenarios.
The Shift to Outcomes:
The company realized that simply developing new materials wasn’t enough; the true goal was measurable environmental impact and economic viability. Their refined outcome goal became: “Reduce the carbon footprint of our top 3 product lines by 25% within two years by adopting commercially viable and scalable sustainable packaging solutions that maintain product integrity and consumer appeal.”
Innovation efforts shifted. Instead of just developing materials, teams focused on:
- Outcome Metric 1: Life Cycle Assessment (LCA) scores showing percentage reduction in carbon footprint per product unit.
- Outcome Metric 2: Packaging cost-per-unit impact (ensuring solutions were scalable).
- Outcome Metric 3: Consumer acceptance testing (maintaining or improving perception of product quality).
The Result:
By focusing on these outcomes, the team prioritized innovations that offered the best balance of environmental benefit, cost-effectiveness, and consumer experience. They adopted a single, highly innovative recycled plastic solution for one product line and completely redesigned the packaging for another to eliminate unnecessary material, exceeding their 25% carbon reduction goal for those lines within 18 months. The shift ensured that sustainability innovations were not just developed, but actually adopted and impactful.
Conclusion: The Future of Innovation Measurement
The journey from output to outcome measurement is a critical evolution for any organization serious about driving meaningful change and innovation. It demands discipline, a deeper understanding of value creation, and a willingness to challenge traditional metrics. By focusing on the true impact of our efforts, we move beyond simply doing things right to doing the right things, ensuring our innovations not only exist but thrive and make a tangible difference in the world.
Embrace this shift, and watch your innovation efforts transform from a series of activities into a powerful engine of sustainable growth and competitive advantage. The future belongs to those who measure what truly matters.
Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.
Image credit: Pixabay
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