Why do you invest in projects and programs? A simple question, but one that many employees likely can’t answer. All investments are made to generate an outcome. Whether that’s financial, reputational, regulatory, or any other category label you want to apply, every investment – in projects, programs, products, capabilities, technologies, et al has to produce a meaningful outcome or it fails.
An outcome, by any other name, still must deliver results
With the realization that one must manage projects to achieve a desired outcome, the concept of outcome management has become a hot topic in the last couple of years. Of course, before that it was called benefits management, a term some might argue morphed into outcome management because too many organizations were fed up with failing to effectively manage benefits. That failure happened because benefits were only used in the business case to secure funding, which was then archived / ignored. Or it was too difficult to measure non-financial benefits and implement a framework to manage benefit attainment. And of course, failing to update benefit projections when other variables changed.
When Google championed a concept invented decades earlier called OKRs – objectives and key results – the opportunity to reinvent the concept as outcome management was born. But if outcome management is going to be more than benefits management 2.0 – and in order to avoid the same less-than-satisfactory results – we need to change what it is and how it’s managed.
Aligning the work you do with your organization’s strategy
Let’s back up a bit. We’ve talked a lot so far about effective strategies and planning. If you’re going to spend time evolving your business towards generating and managing a holistic view of all investments, you’re going to ensure your approach to planning can evolve and adapt and you can effectively deliver work using any modality, you also need to ensure that the results of that work are the focus of everyone’s attention. Because as we said, the only reason any of those investments are happening is to generate an outcome – the right outcome.
Outcome management is therefore a direct result of defining the right strategy and making the right investments. As you move from a project to a product or program-based investment approach and then on to one that’s capability driven, you can derive all of your work directly from your strategy. In parallel, as you move from annual planning to continuous and adaptive planning, you need to ensure that you are always adjusting the alignment of the work you are doing with the strategy and outcomes to ensure you are optimizing the value being achieved.
Combined, these factors make outcome management more straightforward and more attainable – as long as you decompose your strategies effectively. That has to start with clear and complete communication. Your various business functions have to take your corporate strategies and develop clear focus areas and departmental strategies of their own that map directly to the corporate objectives.
Identifying the right metrics, and then tracking them is key
More than that, they need to define OKRs for each of those strategies that not only demonstrate the alignment to corporate goals but also state the metrics – financial and non-financial that will be used to measure success. Apply targets to those metrics and you now have effective OKRs for each departmental strategy and a direct line back to your corporate strategies.
Continue the decomposition of strategy and you define actionable initiatives, projects and programs that directly relate back to business strategies and contribute to the attainment of the key metrics. You now have enough granularity to determine how each of those metrics will be measured – directly or through proxies, from the bottom-up or from the top-down. And you have a framework for outcomes that the portfolio manager can actually manage against. Sufficiency can be tested at every step to ensure the work being done, collectively and individually is projecting to make the contribution that is required.
It’s important to visualize performance across the lifecycle
This isn’t a ‘one and done’ sufficiency check, it happens continuously to reflect the fact that environments, priorities and capabilities are continuously evolving. And to reflect the fact that you are actively tracking actual outcomes in addition to updating forecasts. Combined, those factors not only allow for early identification of issues, it supports more effective adaptive planning and more effective execution because outcomes are not only front and center, but always directly tied back to the strategies they support.
Implement this model and you won’t be delivering benefits management 2.0. You’ll be delivering improved investment performance, an outcome management framework that is always aligned with strategy and that allows executives to see how they are performing, driving better decision making when changes are needed. Next, we look at the challenges of scaling Agile execution across the enterprise.