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The origin of managing by outcomes versus managing by outputs can be traced back to the differences between sales-led organisations and product-led organisations (short-term revenue generation vs. long-term customer value creation), as well as the differences between B2B and B2C decision-making processes (more complex and involving more stakeholders vs. more emotional and impulsive decisions). However, since the experience of a B2B software product is just as important as that of a customer facing product, an outcome-based approach proves to be more effective.
Josh Seiden defines an outcome as "a change in human behaviour that drives business results." Managing by outcomes means that teams are working towards a shared goal, where the product team has the autonomy to identify product opportunities that will drive business results in return. The key is to focus on the end goal, which is to create a positive impact on the customer or user.
On the other hand, managing by outputs means that teams are working on a fixed list of features that supposedly drive business outcomes, without much knowledge about the underlying customer behaviour. In this approach, the product team is often just an executing party and doesn't have much influence over the product outcomes. The focus is simply on outputs, not on the impact on customers or the growth of the business.
It is essential to understand the difference between managing by outcomes and managing by outputs. A focus on outcomes leads to a shared goal, collaboration, and autonomy for the product team. On the other hand, a focus on outputs leads to a lack of trust, micromanagement, and a focus on features rather than customer behaviour change. The key to success is when the product team is working in collaboration with the business to achieve the best results.
