An open letter to the 21st Century businesses
I need you to do three things for me. First, I want you to think about why you’re in business - what your purpose is. Second, look at your corporate scorecard and KPIs. And finally, look at the actual work that you do. I’m going to guess that these three do not align. Most companies do not understand business outcomes and, even when they do, they do not measure them.
Getting to the real business outcomes for an organisation (or even just a team) may seem simple but is actually very difficult. Worse still, there is an easy answer. But it’s wrong. A lot of organisations will define their outcomes around money - either revenue, signings or profit. “We need to increase our quarterly profit by 17%”, or “our target is to sign 20 new clients”, or “we need to make $10 million dollars in revenue this quarter”. While these statements may be true - they are not business outcomes.
You are not in business to make money. I’ll say that again. You are not in business to make money. That is not your purpose. If you’re focusing on making money, you’re not focusing on creating value for your customer. Think of your local doctor - most people don’t become a doctor to make money. They become doctors to save lives. They make money in order to continue saving lives.
“Profit is like the air we breathe. We need air to live, but we don't live to breathe.” - Frederic Laloux
This obsession with financial measures, especially when the global market is performing weakly, is leading to poor behaviour and poor decision making. You get the behaviour that you measure and, when it’s all about money, we tend to forget who’s paying. We become more efficient at the expense of creating customer value. Every week there is a new company making the news.
“If management sets quantitative targets and makes people's job depend on meeting them, they will likely meet the targets – even if they have to destroy the enterprise to do it.” - W. Edwards Deming
So, while remembering that you still need to make money and be profitable, what are your business outcomes? No blog can answer that question for you, however there are some simple practices to help you discover it.
First, start with your customer. We put the customer in the center because they provide us with our purpose. That doesn’t mean that the customer is always right or that employees or shareholders aren’t important. It means that almost everything that we do revolves around them. It means that they are the top of our organisation charts. It means that the work that we do, and the way that we work, is primarily for them.
Now we’re going to use a practice called “5 whys”. A very simple cause-and-effect interrogation technique borrowed from the Toyota Production System and Lean Manufacturing. Start by looking at the work that you do for your customer. Now ask “why”. “Why do we do this?” or “Why do we need this?”. Then, using the answer as the basis for the next question, ask why again. Asking “why” 5 times is, anecdotally, sufficient to get to the root outcome. And there are many cases where you’ll be able to get there in fewer steps.
If you come to “to make money” you’ve gone too deep and abstracted it to the point of meaninglessness. Everyone needs to make money - there’s no differentiation from your competitors in that. Making money is how we show that we are actually solving that need. It’s a measure or an indicator, not the reason. Go back up a level. That’s your outcome.
Repeating the process from different perspectives, and exploring new reasons “why”, can help you discover multiple root outcomes. Likewise, if you come to a looping question/answer series or highly generalised statements (such as money or satisfaction) you should look at rephrasing the “why” question to uncover new lines of inquiry. We also find that external impartial facilitation can help to uncover real root outcomes and avoid confirmation biases and “we’ve always done it this way” syndrome.
Once you know “why” - then you can do the right work.