This insight showcases the repercussions of prioritising delivery and costs over business outcomes, offering insight into why a shift in mindset is necessary for organisations to thrive in a VUCA world.
The Focus on Delivery and Cost over Business Outcomes
In today’s rapidly evolving business landscape, many organisations are grappling with a common challenge: a disconnect between the focus on delivery and cost management versus the achievement of business outcomes.
This disparity is hindering organisation’s ability to capture value realisation and what is actually having an impact on their customers.
The prevailing culture often favours execution management over hypothesis validation and business value realisation, making it difficult to foster incremental value release and experimentation.
Having seen this many times with clients, we wanted to showcase the repercussions of prioritising delivery and costs over business outcomes and offer our insight into why a shift in mindset is necessary for organisations to thrive.
Below is a clip from our OKR Associates Mike & Taner discussing the Focus on Value Delivery
Frontline disconnection to Business Strategy
Below the C-suite and department heads, employees typically become more engrossed in the execution of tasks and projects than with outcomes for customers or business value.
While leadership tends to speak in terms of long-term outcomes and future states, frontline teams are primarily concerned with meeting immediate deliverables.
The disconnect arises from an increasing majority of leadership teams communicating objectives through operating metrics like EBITDA, which are far removed from the daily activities of frontline workers. An organisation I worked with recently has over 250 KPIs managed at a senior leadership level with no connect to the delivery functions. Their biggest challenge was managing costs and cost reduction as they were being squeezed in the market. A lack of innovation and customer focus was eating away at their ability to generate new customer value, but the focus remained on cutting costs and on-time delivery. This was no coincidence.
This kind of imbalance leaves employees feeling disconnected from the high-impact goals set at the top, creating a sense of detachment and diminishing their understanding of how their work contributes to the wider business outcomes. Lowering innovation, challenge and creativity.
The Challenge of Deliverables
Many change programs and initiatives are centred around delivering specific outputs or solutions, reinforcing the perception that the completion of tasks equates to achieving business outcomes.
However, this narrow focus on deliverables fails to capture the true impact of initiatives on the organisation.
Companies often fail to determine whether the delivered outputs actually generated the desired benefits or contributed towards business outcomes.
This is often due to the fact that senior management break down the outcomes into deliverables for the rest of the organisation to execute, and fail to communicate the outcomes that employees are expected to deliver for the organisation.
Traditional programs often operate on long time horizons and there is rarely a mechanism in place to track whether the intended outcomes are being delivered.
Businesses focus on tracking whether outputs are delivered on time and on budget, which further distances employees from the outcomes they’re expected to achieve.
The Need for Value Realisation
We’ve also identified that organisations we work with find it challenging to measure the impact of their initiatives.
Leaders are driven by a desire for speed and more deliverables, and thus frequently overlook whether these deliverables are creating business or customer value.
We go and sit down with the C-suite, we ask them questions, and what is it they say? “We want to go faster! We want more stuff, faster!”.
Part of the reason they want that is because they can’t measure the impact of what they have. So what is their natural response?
“If we’re not getting the outcomes we’re looking for, it must be because we’re not fast enough.”
But actually, it’s not delivery time, or delivery speed or what it is they’re doing that presents the problems, but the fact that they aren’t adapting the deliverables to maximise the value they deliver.
So, instead of emphasising the speed of delivery, organisations should prioritise understanding and measuring the value generated at regular intervals.
All of a sudden, providing quarterly updates on the value released by the organisation allows everyone to understand the purpose of their work and maximise the impact.
If this resonates with you why not set up a Leadership Workshop for your team to explore implementing OKRs and improving your opportunity to focus on Business Outcomes.
Shifting the Mindset
The fundamental problem lies in the bias ingrained from the start, where the solution itself is considered the answer.
When fixated on deliverables, organisations fail to articulate the impact they intend to make or the desired change in state.
For example, to execute on an idea, we wrap governance over it, in order to have confidence that we’re going to deliver it at pace.
What we then end up doing is creating statements of work, functional requirements and test scripts, all of which direct focus on the work, not the outcome.
We believe a crucial shift is needed to move away from a contractual mindset and adopt a hypothesis-driven approach.
One approach that we’ve had success with in organisations, both large and small, is Objectives & Key Results (OKRs).
OKRs encourage an outcome-oriented culture, whereby organisations propose hypotheses rather than creating rigid contracts.
This shift in mindset and culture allows for more flexibility and acknowledges that outcomes cannot always be predetermined.
