Outcome Measures: Determine the future by understanding the past.

Outcome measures are key indicators of how well all your process management activities are working.

Ultimately, we'd all like to look at our business results and know exactly how we got them. Control of cause for a particular effect is a business person's dream.

To get to that point, you must choose a destination.

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Profitability, market share, and customer retention are all examples of lagging outcome measures. They are critical destinations for any business. Without them, there is no business.

Targets should appropriately reflect the strategy of the business. They should not, however, be the focus of day-to-day management. But, they should be well understand and monitored as a means of providing feedback.

Instead, effective managers should focus on understanding the cause and effect relationships that exist between the everyday activities of the business and the strategic goals described by these measures.

For example, let's pretend my business just ended the second consecutive month of lower than desired revenue. I know this because I track the key measure of gross revenue.

I have a problem.

I know that revenue is a product of sales volume and/ or per unit price. Fortunately, I also track the number of customer inquiries and sales transactions (also outcome measures). I can look back and understand what is contributing to the undesirable result. I see that inquiries were the same but transactions were low.

But now what? If I am not a savvy business owner or manager, I can hope, yell, worry, or complain about the result. That might be all I can do. These measures of the outcome on their own are about as effective as avoiding an accident by looking in your rear view mirror to see what you just hit.

Instead, the real value of tracking these results is to tell you how well your systematic approach to improving key processes is working. Cause, effect. If, then.

If I have control over the process employees follow when assisting a potential customer, then I can work with them on what they say or do to improve conversion of inquiries to transactions. My hypothesis would be: If employees starting saying or doing 'x', then sales should increase by 'y'. Now, I am managing the leading indicator or driver of performance.

I'm back in control. I can check the related measures to see if my plan is working. If it is, great! If not, I don't panic and go try something else.

Consistent with the recurrent theme of this site, outcome measures become a check on how well you are managing. They let you know if your business process management system is effective.

Manage the processes. Measure the results.

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