Output vs. Outcome-focused teams!
To better understand the different nature of growth teams compared to other departments in the organization, we first need to clear up what's the difference between an outcome and an output.
- Outcome: are what the business wants or needs to achieve.
- Output: are the actions or items that contribute to achieving an outcome.
Some departments (marketing, sales) are more output-oriented, while a few others (growth) are outcome-based. This happens due to the predictable and unpredictable nature of what will come out of their actions.
The Sales and Marketing team example:
The majority of sales and marketing planning activities I have ever participated in all have one characteristic in common: they are somehow predictable — and due to their predictability, teams can reverse engineer their conversion rates and approximately find out what they need to work on.
For example, Marketing might know that for every published article, they get ~1000 new visitors and, on average, 10% of them become leads and, historically, 10% of those are qualified for the sales team, that finally end up closing another 10% of those.
Consequently, if the sales team’s quota for the quarter goes around 20 new accounts, we can work backward and decide what the marketing team should be working on: To get 20 customers, we need 200 opps, 2000 leads, and 20.000 visitors — which converts in about 20 blog posts.
Of course, it's not an exact science, but it does provide the marketing and sales team with some guidance to work upon — they use an output-based approach.
The growth team example:
Growth teams, on another hand, are responsible for running experiments to unlock covered opportunities that can provide meaningful growth levers to the business.
Ideally, a growth team will be validating something. By its definition, validations are done for things that haven't been done before and there are no historical data to rely upon. To validate a hypothesis, growth teams will run experiments, which by its own definition, you can't know the result upfront, otherwise, it's not really an experiment.
As opposed to the example of marketing and sales, there is no predictability on what needs to be done to achieve the expected outcome. The only clear correlation that we can map across the growth team is: that the experimentation volume and velocity are directly correlated with the achievement of the objective.
The product team example:
There are multiple ways to measure how your product team is performing — and none of them is 100% right or wrong, they are simply different from one another:
- The output-based product team's KPI: features launched, development time, stability, team velocity, and resources availability.
- The outcome-based product team's KPI: active users, feature usage, time to X, and users per feature.
Both ways, if well performed, will be leading the company to higher times but through different paths. While there is no one-size-fits-it-all, every company must find owners for both outcomes and outputs, and growth teams can become the perfect balance for the equation — allowing you to make your bets, in a safe environment, while not hurting your ongoing operations.
An outcome-based approach allows managers to ensure teams are heading in the right direction with company expectations, while also giving their teams the flexibility to find how to get there — managers define the questions, and teams find the answers.
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