Outputs vs. Outcomes

Published by Tim Wilson on February 6, 2008 All posts from Tim Wilson

I’ve been involved with United Way for the past seven or eight years in Austin and, now, in Columbus. One of the attractions to spending my volunteer energy with United Way is that they are very accountability-focussed. That means that, in their agency funding cycle, they require agencies that are requesting funding to specify measures and targets for the specific programs they describe in their funding requests.

For the last few months, I’ve been getting involved with the United Way of Central Ohio (side note: if you’ve thought about doing volunteer work and just can’t figure out how to get started, it’s insanely easy; one phone call to any nonprofit organization that piques your interest, and you WILL have the opportunity to get involved). I’m on a couple of standing committees that are focussed on emergency food, shelter, and financial assistance. And, I’m on an ad hoc committee focused on developing performance measures for that overall “impact area.”

One common distinction I learned when working on agency funding committees with two different United Ways is the distinction between an “outcome” and an “output.” An output is something like “provided 1,000 families in a housing crisis with one-time emergency financial assistance.” An outcome is more like ”reduced the number of families who became homeless due to a financial crisis by 15% over the previous reporting period.” Does the distinction make sense? The output is what the nonprofit agency did, whereas the outcome is why they did it — what result they were really trying to achieve at the end of the day.

In the business world — specifically, in marketing — examples of outputs would be “deployed 20 new pages,” “conducted 3 webinars,” “published 2 white papers.” And, really, some highly tactical measures such as “achieved an open rate of 54%,” “achieved a clickthrough rate of 12%,” and even “drove 450 registrations” are all much more outputs than outcomes.

The marketing outcome that is wildly in vogue right now is ROI — how much revenue did all of this marketing activity drive? In this sense, Marketing in the for profit world is paralleling the nonprofit world (it’s becoming a cliche in the nonproft arena that nonprofits need to be “run more like for profit businesses”) — both are starting to accept as gospel that measuring outputs is bad, and the only measures that matter are outcome-based.

This, I fear, is another case of a perfectly valid concept being oversimplified to the point that it is presented as an absolute rule. And it really shouldn’t be. Here’s the problem with throwing out all output measures: the larger the organization and the more complex the business, the more factors there are that influence the ultimate outcome!

Take the case of a brilliantly executed Marketing campaign — just accept that it was perfect in all possible ways. BUT, during that same measurement period, the Sales organization was in total upheaval: senior leadership turnover, processes in flux, and a grossly understaffed inside sales organization. Marketing — in an effort to be outcome-based — assesses their efforts solely based on the conversion to revenue of the leads they generated and nurtured. The results were abysmal. The CMO loses his job. The CEO steps in temporarily and demands that, whatever Marketing did for the last six months…they need to do the opposite…

This example is only slightly dramatized. The same potential folly exists for nonprofits. If an agency is focussed on addressing short-term food and shelter crises, their outputs may actually be the best thing for them to measure — are they managing their resources to meet the demands for assistance that they get every day of the year? If they start focussing on longer-term, root causes of the crises, in order to get to the true outcome of food/housing crisis prevention and food/housing stability, then there will be a gap in short-term services. Better, in my book, to allow (and encourage) a focus on outputs when it makes sense. Still with a bias to outcomes, but not to the black-and-white exclusion of outputs.

I like the “outputs vs. outcomes” distinction. It’s a distinction that Marketers could benefit from making. I don’t like blanket beliefs that one is good and one is bad, or one is right and one is wrong. The world, folks, is just too complicated for that.

Categorized under Metrics