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Negotiate effectiveness through outcome targets

outcome-targets Driving effectiveness through outcome targets

The aim of a target is to minimise uncertainty. Uncertainty is a gamble and thus also a risk. Outputs are the results that processes produce. An outcome is feedback on how relevant an output is. In the post "targets, outputs, and outcomes" I explain their difference. A target is a prediction of either an output or an outcome. Exact repetition of the past will drive certain outputs. Insightful plans will influence effective outcomes. The future is less certain than the past, thus outputs are more certain than outcomes. Policy and procedures ensure that past efficiency prevails. Strategy and projects secure our ideas of the future. Processes govern present reality. Therefore, a strategy will imply much greater risk than e.g., a procedure.

The difference between a target, an output, and an outcome

In life, we measure much of any person's worth by what they achieve, after they have achieved it. In some sense, targets, outputs, and outcomes all do this. Well, then why should we know their difference? What makes matters worse, is that there are many definitions on each. To manage operations and strategy, Org must measure its results. There are ...
Uncertainty increases through outcomes and decreases through outputs.

To create an output target is a precise exercise. There is no ambiguity in its quantification. Outcome targets do not have this luxury. They must predict how an environment will respond to the outputs that Org delivers. Humans are unpredictable. In that lies the gamble of an outcome target. If one has absolute information, one can accurately predict the future. This will never be possible because our scope of both present and future is finite. Nevertheless, we can increase the accuracy of our predictions through quantifying them. In the case of an outcome target we quantify a future state. The better Org is at doing that, the more it will control its present. Therefore, a basic assumption is that Org's idea about its future will craft its present reality.

To make exact predictions of the future, one must combine human perception with systems intelligence. Jointly they create orgtelligence, which aims to guide Org in making decisions about the present and the future. To drive the right direction, Org must know where to find targets and how high one can pitch them. Lastly, it is important to formulate and articulate outcome targets in such a way that those who must achieve them know how to do so.

1. Orgtelligence – knowing how to integrate future ideas with present physical reality

In Theory 2I of Orgtelligence, we distinct implied from tacit intelligence. Implied intelligence resides in the rules, dependencies, and outcomes of a process. Tacit intellect relates to the abstract and innovative thinking of humans. Orgtelligence is the ability of Org to create interdependence between process intelligence and human intellect. Orgtelligence is thus the neural network that links human minds with systems flow.

Theory 2I - Understanding Orgtelligence

Intelligence is complex to grasp. Orgamatics holds that there are two types of intelligence. The first is implied intelligence (I i ). This is an algorithm - a set of rules that drives activity, which delivers a predictable output. For humans, breathing is a good example. For Org, the flow of work is one. The second type of intelligence is tacit in...

The purpose of a target is to put pressure on the operations and strategy of Org. To achieve targets, Org must overcome risks, exploit opportunities, negotiate relationships, and keep its processes efficient. In other words, Org must become more orgtelligent. Output targets will increase the operational intelligence whilst outcome targets will increase strategic intellect.

Efficiency drives output targets. The more one understands organisational processes, the more efficient it becomes. Output targets assesses the efficiency of process flow. Contrariwise, effectiveness drive outcome targets. We can only measure the effect that an output has on its environment if the environment is predictable. This is never the case, which makes the drafting of an outcome target extremely difficult.

To create outcome targets, we quantify a controllable assumption of the outcome. E.g., we can create outcome targets for profitability; quality; benefit; relationship strength; etc. The problem is that we cannot totally control any of these aspects. They are all subject to human perception, which is unpredictable. Yet, each of these items have a part which we can control. E.g., we can direct all our resources to achieve a certain level of profitability. In so, we can negotiate a beneficial value proposition with customers. Orgtelligence will help Org to focus on doing relevant things right.

2. Where to find an outcome target

In orgamatics we use project management method to work with the future. I.e. to do things that we have not done before and which we will not repeat. At strategic level, an objective will define a strategy. To execute a strategy, one must turn it into a programme. A programme is a high-level project, which holds all its activity within sub-projects. For convenience, we call a strategy a programme, and the execution thereof, projects. We define programmes through strategic objectives. In so, each project will also have a definition. Targets define a future state. It thus makes sense to turn each objective and project definition into a target. Therefore, we will find outcome targets in their definitions.

3. Exceeding an outcome target

Org achieves and maintains output targets whilst it executes outcome targets. Achievement is a sign that one has reached a pinnacle in performance. It does not end the performance. Rather, it sets the bar. Execution is final. It marks a clear end. Targets of outputs and outcomes are not the same. They do not measure the same thing and they do not have the same purpose. Outputs shows the performance of a process. Outcomes are a test for relevance. Therefore, we cannot measure and construct them in the same way.

Outcomes direct Org towards an unknown future. The longer Org's aim, the more unknown the territory. Therefore, one will always measure an outcome target against time. Projects have critical paths because they begin and end. Processes cycle, thus, they have no critical path.

Project flow and its critical path.

To set an outcome target one must set a future date in which a changed state will exist. E.g., "Rank number 5 in the industry by 2022. Exceeding this target will show strategic success beyond what we predicted." To rank Nr. 5 in the industry will only mean something to Org when it happens.

The problem with outcome targets is that they must ensure relevance. What puts bread on the table are outputs. Mostly, outcomes will increase the relevance of outputs. It is important that Org executes outcome targets as fast as possible. Time and cost will always be in mind when executing project-based work. In my post on output targets I discourage the gross exceeding of targets. In this post I encourage it. This is not a contradiction. It shows that the parts of a dual system do not follow the same rules. Processes have exact cycles. E.g., one will not exceed a target when being pregnant for 4-months. There is a reason that pregnancy is 9-months. With projects its about getting things done. Projects influence outcomes. They do not mean anything until they are done. Therefore, Org should always aim to exceed its outcome targets - especially in terms of time and cost.

4. Constructing and quantifying outcome targets

To create an outcome target, one must quantify a purpose. This is quite difficult. E.g. Purpose: "This project will secure food supply to a village of 1000 people." It is likely that its target will read: "Secure food supply to 1000 people in the XYZ Village". Problem with this target is that it is only partly under the control of Org. Even the best technology must face politics, social constructs, and legal constrains. This target will never be under the full control of Org.

To control an output target, one must define it in such a way that it creates an internal locus of control. "Create and run a project over the next three years, which will enable 1000 people of the XYZ Village to access a consistent food supply process." Of course, mere definition will not execute a target. There must be a project plan and approval from all the stakeholders. This requires negotiation. There will always be factors beyond your control. The future is mostly an estimated guess. Therefore, an outcome target will by no means ensure a favourable outcome. Villagers must be happy with the food and government must continue its sponsorship. To achieve this will always prove easier said than done.

What then is the difference between output and outcome targets? It lies in the difference between purpose and intent. Purpose ensures performance. It produces outputs. Output targets show the strength of a process at a specific point in time. Intent, on the other hand, secures relevance. It negotiates outcomes. In that their difference.

The example below shows how to define an outcome target. It comes down to writing a quantifiable goal.

Outcome: ​Outcome Target: Baseline:​2020/212021/222022/23
Create and run a project over the next three years, which will enable the people of the XYZ Village to access a consistent food supply process. 1000 People from the XYZ village has consistent access to the nutrition that they need to live a healthy life. ​40%65%​​85%​100%

4.1. Outcome: 

An outcome describes the purpose of the project or strategy. It drives all the action and justifies the resource expense of a project. In strategy one will call it a strategic objective.

4.2. Outcome Target: 

It predicts an exact status quo at the end of a project or strategy. It thus quantifies the result of a plan.

4.3. Baseline: 

It defines the starting point of our target. It is rare for an outcome target to have a zero baseline. In the example above, 400 out of 1000 people already have access to consistent food supply.

4.4. Periodic Quantifications:

It shows the predictions of periodic progress for the duration of a project or strategy. Good practice is to break an ultimate target into smaller parts. That will help us to fix problems before they become monsters. There are no rules on how to quantify. It could be a number or a percentage. I prefer a percentage since it puts any project result into perspective. Numbers are always relative to other numbers. E.g., 1 million is a lot if your turnover is 1.8 million, but not if you turn 200 million. A percentage will give consistent measure against a fixed point of 100 units.

An output that holds no relevance is a wasted effort. Org must be effective and efficient, which means that it must do relevant things right. Outputs secure performance whilst outcomes show their relevance. An outcome is an environmental and stakeholder judgement. Org will never have full control over its outcomes. To influence them, Org uses strategy, programmes, and projects. Through outcome targets Org ensures that its outputs are meaningful.

Organisations that can negotiate a favourable future position will have immense competitive advantage. Those that cannot do this will become prey to those who can.

Clear outcome targets show that an organisation has a strategy. Achieving them shows good leadership skills. If outcome targets drive a more favourable position for Org, then they are effective.

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© 02-12-2019: Derek Hendrikz

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