The typical linear and often siloed mindset that we have for much of our innovation thinking within our business organizations, has to rapidly fall away. We are in the ‘cusp’ of a fundamental change that technology, platforms and connected ecosystems will bring into the mix for connecting and collaborating in dramatically different ways than the past.
One of the implications will be our need in measuring and the metrics within companies. The measurement of inputs, throughout and outputs need to become far more focused on delivering speed and scale potential as the critical points. We are far more needing to focus on the outcomes as our primary point of measurement.
This is a further post on discussing outcomes as the focal point of our innovation measurements, following my recent one of “Shifting to Ultimate Outcomes”
Recognizing the emergence of the outcome economy
The outcome economy which is emerging has many implications within it and how we measure and value these will become increasingly important. Companies will need better data to calculate costs, evaluate its potential value and will be modelling far more the risks and tracking the factors required to deliver within any outcome-based value promised.
To quote from a recent World Economic Forum report:
“In the outcome economy phase, companies will shift from competing through selling products and services, to competing on delivering measurable results important to the customer. This is a much more challenging prospect. Among other things, providers will require a deeper understanding of customer needs and contexts in which products and services will be used. Value based on output also entails quantifying results in real-time. Both of these requirements have been nearly insurmountable obstacles to scale – until now. It is the digital age that makes the outcome economy possible”.
There are a number of implications as we move from a ‘push’ into a ‘pull’ environment where results are measured by the customer as valuable to them. For example, pricing practices of a solutions end result will clearly change, based on sold performance, as will the emergence of more predictability modelling of delivering certain outcomes and their potential value. We are becoming part of the connected world, comprising new market ecosystems and technology platforms that ‘look in’ and foresee, expect, and even predict new outcome results. This will require a far more dynamic environment, one that is responsive, agile, fluid and highly adaptive to meeting customer needs, in real-time.
internally this is going to challenge organizations in significant ways. As we break down the present silo view of ‘our’ assets, bring into more into play a system of assets that we will evolve into a system of systems, this could fundamentally redefine businesses, the way they work, collaborate and utilize what is available to them and what needs to be ‘drawn in’ to get the job done.
We are facing an evolution from “solutions” to “outcomes”.
Our measurement system has been established on “value-added” principles, or should have been at the very minimum. These have been based on “pushing out” the end result to customers, products and services offered in particular bundles of broad appeal.
Today we need to target and develop offerings that meet specific customers’ true needs. The customer has been evolving into a far more knowledgeable and increasingly sophisticated one, as they are closer to the end market, hold the relevant data and can determine and decipher changing patterns far quicker than those further back in the supply chain. They have better visibility today. Often they feel they really don’t need the help of the salesperson, they have most of the means increasingly available to them, in a globally connected word, if they chose to exploit this.
The shift within suppliers of products and services is taking place, of engaging even deeper with customers’ needs.
This focus to accelerate and determine their value to the customer, needs to have clearer understanding of their unique needs, and then set about designing and delivering true solutions that meet these needs and are seen as highly valuable. Strategic relationships are increasingly important for maintaining ‘line of sight and value’ to the customer.
As we move far more to the art of selling outcomes, it will bring together sophisticated capabilities, based around technology. There will be an increased recognition of ecosystems that are seen as needing to combine for addressing customer strategic issues where higher value can be extracted. These outcome-based approaches will be strategic, long-lasting partnerships where shared risk and reward become central to all parties. It changes the dynamics of relationships and offers radically different competitive advantages to ‘shoot for’.
The traits of outcome-based solutions
These will be very much custom based-solutions, they will be increasingly based on configurable solution- architecture. They will have clarity in “understanding the challenges and commitments to deliver specific outcomes on critical business needs”. They will be based on platforms that can design, deliver and operate the solutions.
This becomes more a customer partnering model, formed on a partner ecosystem strategy and clear solution architecture to allow it to flow. It will be designed for cross-organizational enablement, seeking – in real-time – customer intelligence to provide a better outcome. The value for all involved is the opportunity to share in a greater value-creating solution that is based for on delivering the outcomes desired and needed.
How GE are switching their approach.
One outstanding example of how this outcome-based proposition is evolving, is by evaluating and reading about the GE Predix solution offering the software platform for the Industrial Internet through predictivity technologies covering health, extreme machines, lighting, aviation, oil & gas, transportation and energy. They are building a platform for igniting the next industrial revolution and their white paper outlines this. This is not an easy sell, it has a significant time lag as many of the existing products already in the market are products that have less technology built-in them and have significant life spans to constrain this concept, but “predictive technology” has the potential in providing a real value adding story into the GE selling story, where it may provide some changing competitor advantage if structured well.
This new industrial platform is here, we need to focus on outcomes.
With it has come the opportunity to make a broad-based change across the industrial world. The time to start is now and that requires a radical shift away from the past 20th century measuring and metrics model into recognizing the significant shit to redirecting your business to outcome solutions.
Each person within your organization should be measured on outcome-based solutions, I’d junk all those income, throughput and output ones, these are holding you back if you want to release innovation. We are all in need of just focusing on outcome-based solutions, these are what customers want providing they deliver what they need to improve their business returns.
You certainly do “get what you measure” and that has a real challenge in today’s connected world where we need to collaborate, connect and share far more to achieve greater value-adding outcome-based solutions as the way forward to earn the trust of the customer by providing solutions they need but are also building better, lasting value into your product offerings.