by Russell T. Westcott
There exists a common tendency to combine certain terms as if they were equal in meaning, e.g., goals and objectives, training and development, and outputs and outcomes. In these examples of paired terms, each of the terms very have different meanings.
For example, when project objectives are determined, the term “deliverables” is often used to specify the tangible things produced by the project (e.g., a new or changed process, a new computer program, or the acquisition of additional resources to accommodate change and/or growth). Deliverables consist of outputs and outcomes. By treating the terms as meaning the same thing, three key points are overlooked. Each term involves different techniques and tools to develop, each requires a different approach to measuring effectiveness, and each have a different effect on the organization. Let’s look at projects to illustrate a clear case.
Projects usually create two types of outputs. First are the tangible things the project is charged with producing, such as a design for an improved product, a training program to develop or refresh job skills, or specifications for a new product or service. The second type of output is the tangible plans, measurements, tracking methods, and status reports that govern the planning, managing, and completion of the project itself. These two types of outputs differ widely in their purpose, development, and application, and in larger projects are often the responsibility of different people than the members of a project team.
Project team members can confuse the two types of outputs. It’s important to clearly differentiate the tools and documents of project planning and management from the products or services derived from the work of the project team. It’s critical that both types of outputs have clearly defined metrics and tracking mechanisms to ensure that progress toward achieving the deliverables is proceeding according to plan. Activities such as engineering design, production, delivery, etc., should be addressed in a like manner.
All organizational activities and projects should be focused on two types of desired outcomes: the planned payoffs—measured in real dollars—that the activity or project directly produces from the outputs and those important but often difficult-to-precisely measure, longer-term, broader results.
The time period between completion of an action and type of measurability are the two principle factors that distinguish outputs and outcomes. Project outputs are considered complete upon delivery in accordance with agreed-upon specifications. The same applies to production activities, engineering design, etc. Regarding measurability, outputs are typically tangible and are, therefore, more easily measured objectively. Outcomes are documented through evaluative actions taken after some time interval following activity/project completion. Outcomes are often harder—but not impossible—to measure and may be measured by estimation.
Examples of outcomes derived directly from outputs from activities and projects include:
- Improved cycle time of a changed process from rearrangement of machines.
- Faster, more accurate order entries resulting from introduction of electronic order capture.
- Reduction in damage costs from installation of climate controls in warehouse.
- Employee clock-in time improved with introduction of magnetically-coded badges.
- All product components reach internal customers within time and quality specifications following implementation of service-level agreements.
Examples of medium-term outcomes achieved include:
- Market share increase from improved segmentation actions.
- Benefits from implementing enhanced supply change management techniques and tools.
- Standardized work practices derived from ISO 9001 certification initiative.
Examples of the important but sometimes difficult-to-measure, longer-term broader outcomes:
- Improved public image of the organization
- Increased customer satisfaction
- Improved community acceptance of the organization by the communities in which the organization operates
- Positive change in the organization’s contribution to the health, safety, and welfare of its employees
Auditing deliverables: View from an organizational perspective
At the macro level, strategic goals and the objectives supporting and measuring the achievement of strategic goals are achieved through actions—inputs and transformation—and outputs. These actions are affected by internal and external situational demands such as customer demands, capacity demands, and regulations. Aligned with the actions are the human behaviors, performance, and outputs of employees that are influenced by the work climate, the predominant style of managing and, above all, the organizational culture.
Effective measurement and communication represent the channels that allow an organization to ultimately achieve measurable outcomes. These concepts are deployed throughout the organization to enable achievement of the strategic goals and objectives.
Auditing deliverables: Questions for auditors to consider
- Is there vertical traceability from vision, mission, strategic goals, strategic objectives, and actions?
- Have metrics been established for measuring and reporting the effectiveness of all established activities and projects?
- Do the metrics track, measure, and report on both outputs from the activities and projects and the resulting outcomes?
- Is one metric pertaining to every outcome a cost-to-benefit ratio?
- Has the linkage between the activities and projects, their outputs, and ultimately the outcomes and the organization’s strategic goals and strategic objectives been established and communicated internally? See the linkage example below.
Auditing deliverables: Linkage example
Manufacturer A makes a consumer product X and markets to distributors Y throughout the United States. Manufacturer A has established the following:
- One of its strategic goals is to increase market share from 7 percent to 25 percent within four years.
- One of the strategic objectives supporting this goal is to re-segment the marketplace the company serves by end of fiscal year 2013.
- Three of the actions supporting this objective are:
- Collect and analyze data from all territories to determine the basis for market segmentation. Complete by June 30, 2013, at or below an established cost.
- Submit the segment allocations to sales management for review, suggestions, and approval by July 31, 2013, at or below an established cost.
- Collaborate with sales management and the marketing manager to establish the segmented market share quotas to be deployed by August 31, 2013, below an established cost for the 2013–2014 sales year.
Note that a time and cost measure is established for each action. The outcome for the actions is the achievement of the strategic objective they support.
Auditors must remember that a perfect output does not guarantee an effective outcome when assessing the effectiveness of activities and projects. Consider:
- Top-grade buggy whips but with few or no buyers
- Volumes of high-quality and high-priced television sets filling warehouses but not selling in a struggling economy
- A large quantity of product produced precisely to buyer’s specifications in a buyer’s scrap pile because of a misplaced decimal point in the incoming order. Buyer missed delivery to their customer resulting in lost business and the producer is sued for not effectively checking the specs. Yes, there is a difference between outputs and outcomes.
About the author
Russell T. Westcott is an ASQ Fellow, Certified Quality Auditor and Certified Manager of Quality/Organizational Excellence. He is editor of ASQ Certified Manager of Quality/Organizational Excellence Handbook, Fourth Edition and a co-editor of the ASQ Quality Improvement Handbook, Third Edition. He authored Simplified Project Management for the Quality Professional (ASQ Quality Press, 2005), and Stepping Up To ISO 9004:2000 (Paton Press, 2003). He is active in ASQ’s Quality Management Division and the Thames Valley (CT) section management.
Westcott instructs the ASQ Certified Manager of Quality/Organizational Excellence refresher course nationwide. He writes for Quality Progress, The Quality Management Forum, The Auditor, and other publications. He is president of R.T. Westcott & Associates, founded in 1979, based in Old Saybrook, Connecticut.