When we start to think about the shift from output to outcome, what we are really trying to drive is an unlock of value from initiatives, programs and projects. Too many projects focus on producing stuff (aka outputs) without understanding who the customer is and problem that is being solved.
Many projects start with defining the solution upfront. This does not take into account that the work that we are doing is complex and uncertain. In today's world of work, we need to test/learn to discover the solution. We need to sense make along the way to guide the how. We need to be led by an outcome hypothesis. An outcome is a clear goal to achieve that creates focus and yet written as a hypothesis as we need to place small bets to test and learn along the way. OKRs are a tool that help to enable the shift from Output to Outcome.
Let's start with what are OKRs.
OKRs are a goal setting framework used by organisations to define measurable goals (aka their bets) and to track their progress.
Structure of an OKR:
Objective ▶ Outcome Hypothesis ✍ Written as: Due to… (this insight, feedback or belief) We believe that… (this bet) Will result in… (this outcome)
Key Results ▶ 3-4 Leading Indicators + 1 Lagging indicator to success ✍ Written as: <Verb> <measure> from <x> to <y> by <z>.
OKRs are not KPIs.
A common misconception when organisations and its leaders start using OKRs is they think that OKRs are the same thing as KPIs. No! They are different.
An analogy that can be helpful to use is: Going on a road trip. OKRs are your GPS. KPIs are the dashboard indicating car health.
OKRs vs KPIs
🎯 An OKR defines the outcome (what bet do you want to place, where do you want to go) and the key results (are we on the right track with leading measures; when will we know we have been successful with lagging measures).
🚨 A KPI is a business health measure. Often there are LOTS of these on a scorecard and they likely exist in your organisation.
One of your KRs in an OKR might be a KPI! As you might need to improve your business health. This KPI would be your lagging measure and would need to describe how you will improve that KPI (e.g. improve KPI metric from x to y). This is a helpful way to get started with OKRs. But don't forget to define your outcome and your leading measures! Otherwise it isn't an OKR.
OKRs are not outputs. Measurement is key.
Jeff Gothelf provides a great definition to distinguish between Outcomes and Outputs. In his words, "outputs are the stuff we make." Examples include features, products, content, services, policies, etc. Outputs without the desired behaviour change are not valuable.
"An outcome is the measurable change in human behaviour we see when we give the output to our users and customers." Outcomes tell us if we have delivered something of value.
This is why measurement with outcomes is key. We need measures to understand the behaviour change, monitor movement towards the outcome, and to deliver value incrementally. We need measures to ensure we are getting feedback early and often.
Measures answer the questions:
❔ Are we on the right track?
❔ How will we know we have been successful?
This is why we need to shift from Output to Outcome.
What does a good OKR look like?
Inspired by Jonathan Smart’s OK NOTOK OKR talk, Jon highlights an example of what an OK and not OK OKR looks like:
How do you get started?
OKRs are hard. It takes at least 3-4 quarters to get comfortable. When I get asked, how do I get started? My answer is: Just start!
Helpful tips and tricks to consider on your journey
1️⃣ OKRs are more than a framework. Consider the 3Ms of OKRs. Mindset, Mission, Measurement.
2️⃣ Get some help to write OKRs. Start by using our Outcome Canvas. There is a FREE to download tutorial that will step you through how to use it via the SSH website.