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Five Crucial but Misunderstood OKR Terms Every Manager Must Know.
Lay the most solid foundation for OKRs that resonate with your team, your peers and your boss.
Mukom
June 26, 2024
“Outcomes over outputs” is a brilliant mantra (one I wish I’d come up with), but:
What is an outcome?
What is an output?
What are inputs?
One benefit of actually implementing OKRs (and Lean Six Sigma and 4DX before that) rather than just teaching them is that I know firsthand the importance of clear definitions. The simplifications that make for a good social media post break down spectacularly during implementation.
In the next, three minutes, not only you will never confuse those terms but you will set the most rock solid foundation for a high performance team.
1 | Tasks: the ultimate battlefield.
Do you know the one thing your team is never confused about?
The piece of work they’ve done or plan to do, i.e. tasks.
They’re in their email inboxes.
They’re implied in their job descriptions.
They’re on their Trello, Jira, ClickUp, Asana, or Notion boards.
Task:
A piece of work to be done, typically by a single person within 4 - 5 hours.
At its most basic functional level, your team is just a group of people completing tasks. Tasks like:
Write copy for a landing page.
Set up email automation software.
Finalise the design of the “Ultimate Guide to AI”
But, there is no inherent value in any task, and the point of work is for a set of tasks to create value. That doesn’t happen unless we have …
Goals.
2 | Goals give direction & meaning to tasks.
If I told you that a team’s goal is to: “Increase lead generation”, suddenly the list of tasks above has meaning and direction.
Goal:
The object of effort. The aim or desired result.
Your team is productive when it completes tasks that are aligned to goals.
You can easily justify whether a task is worth doing or not and whether you should do the task now or later.
When tasks are organised and executed in a way that contributes to a specific objective, they form projects or processes, e.g.
Onboard the new instructional designer (a process).
Create a landing page for product Delta (a project).
Produce a budget for 2025 (a process).
Just like there’s no inherent value in a single task, there is generally no intrinsic value in a project or process. But they produce something crucial to value:
Outputs.
3 | Outputs are the results of a set of tasks.
An output is the result of a set of tasks that drive the same goal.
When people complete (a set of) tasks, they produce outputs e.g.
Activity: Create a landing page for product X.
Output: A landing page.
Activity: Produce a budget for 2025.
Output: A budget in Excel.
Activity: Onboard new employee.
Output: A ready-to-work new hire
Output:
Anything (physical or digital) produced by a set of tasks that drive the same goal. The result of tasks.
Again, the direct result of our efforts—outputs—don’t have any inherent value because value results from a transaction with ….
A customer.
4 | A customer determines value.
Customer:
The receiver of your team’s outputs. An external customer is simply a receiver that’s outside your company. An internal customer is a receiver of outputs within your company.
The user who uses your website.
The client that buys your services.
The colleague whose task uses your outputs.
There’s no value without a customer (a consumer of outputs).
5 | Value: the difference your outputs make.
When the customer derives a benefit from consuming one of your team’s output, then value has been created. But only if the benefits are greater than the cost of acquiring and consuming that output.
Value is only created when a customer consumes outputs.
Value:
The benefits a customer gets from using a product or service compared to the cost to them of acquiring and using it.
Here’s an example:
A manager (customer) downloads a template (an output) from our website, which helps them create a project plan for her team in 2 hours instead of two weeks (benefit.
Here’s another example:
An approved budget (output) makes funds (another output) available for initiatives so that the team (the customer) can get the tooling that makes the website project faster and simpler (benefit).
Here’s one last example:
The new employee (an output) jumps straight into the work with little training and helps reduce the team’s workload while speeding delivery (benefits).
Outcome:
A benefit created in the short to medium term (e.g., a good mood after a workout).
Impact:
A long-term benefit (e.g., improved cardiovascular fitness ).
So Josh Sedon is right about “Outcomes over outputs”:
The point of work isn’t to create outputs.
The point of work isn’t to complete tasks.
The point is to create value, for a clearly identified customer.
However, just as a good sandwich requires good inputs, your output wouldn’t be possible without ….
Inputs.
6 | Inputs: the raw materials for outputs.
Every task needs an input:
a resource to be transformed.
data or information.
equipment & tools.
In a nutshell, your team’s work activities transform inputs (from colleagues and external suppliers) into outputs, which create value when the customer benefits from them over what it costs them to get the output.
Therefore …
Outcomes and impact are not outputs.
Activities (tasks, projects & processes) are not outputs.
Activities (tasks, projects & processes) are not inputs either.
Now you can understand why calling outputs and tasks as inputs is an impractical oversimplification (never mind totally confusing) that an effective manager cannot afford to have.
One tool to bind them all: The SIPPR canvas.
Mastering these simple concepts helps eliminate confusion about a team’s work. But you can do something even better.
Use these concepts to co-create (with your team) a one-page visual story of your team creates delivers, measures and captures value. The hundreds of managers who have used this like it because the SIPPR canvas.
clarifies context for the team.
clarifies the context for peer-to-peer collaboration.
demonstrates a strategic thinking to their boss and leadership.
It also creates the perfect context for and accomplishing OKRs that measure what really matters.
Download it for free here.
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