Focus on output leads to ineffectiveness in pursuit of ambitious goals and causes frustration within organisation.
Real life anecdote: Lose-lose-lose-lose 📉
A renowned brand I used to work for figured out that a Sales rep should be able to have on average of ## daily 1-1 customer interactions (i.e. calls, meetings, visits, demos ...). At this level of output growth targets would be achieved, said the data & math.
The activity metric was imposed as a top-down KPI. Eventually, the KPI was achieved and most reps hit or exceeded the call rate target = Output was well on target.
However, revenue growth didn't improve ... if anything, it got worse!
Mood on all levels turned sombre:
Real life anecdote: Lose-lose-lose-lose 📉
A renowned brand I used to work for figured out that a Sales rep should be able to have on average of ## daily 1-1 customer interactions (i.e. calls, meetings, visits, demos ...). At this level of output growth targets would be achieved, said the data & math.
The activity metric was imposed as a top-down KPI. Eventually, the KPI was achieved and most reps hit or exceeded the call rate target = Output was well on target.
However, revenue growth didn't improve ... if anything, it got worse!
Mood on all levels turned sombre:
- Reps felt mistrusted, micro-managed and treated like tin soldiers.
- Management felt betrayed and trusted its sales team even less.
- Customers didn't get any better service, and many prospects got a fast-food treatment not a seriously consultative approach.
- Shareholders' saw their valuation shrink
What happened was a focus on output / activities - i.e. one(!) specific way of doing things. Data and analytics suggest this link and top-/middle-management (at a distance from the field) doubled down. Sales teams were expected to execute it. Period.
Focus on Outcome instead 🎯
A much better way would have been to let local team figure out the best opportunities to achieve financial targets quickly with given boundaries and resources.
This means focusing on outcomes (results, e.g. revenue target), and not on output (see above).
Given a realistic and crystal clear goal (a challenge), humans will come up with creative and surprising ideas: provided they are also given autonomy and support in enablement. (aka genuine trust, not lip service)
Sound easy. And it is! It only gets complex once old habits, status & ego, and different pay-grades get in the way. In the above organisation management would have to agree a realistic target bottom up and leave it to the teams to deliver these results while making all stakeholders happy. (win-win-win-win)
How about you 🫵
What is your organisation's goal?
Is it one clear objective everybody in the firm knows, and understands how they contribute to it?
Or, do you have several targets? Different targets per team or function?
If so, you might be slowing yourselves down and hindering bottom-up creativity on how to get from A to B with fewer resources. 🧐
Maxim
PS: And if you're an academic like me: Forget what you learned in university or Business School - it will hardly get you there.