In “Why Manufacturers Need an Outcome Culture (Pt. I),” we made the case for manufacturers adopting an outcome culture. In Part II, we will cover how to build and maintain an outcome culture.
Implementing an Outcome Culture
An outcome culture emphasizes clarity on what to achieve at each stage of business activity. The focus is on the outcome rather than the process. Of course, manufacturers still need processes. But management and staff focus on whether they achieve a series of outcomes. They don’t make adherence to a set of processes the primary management tool.
Building an Outcome Framework
An outcome culture needs a simple framework. Each person should be clear on the outcome to which they contribute. And we want to turn the complexity of scores of processes into a handful of outcomes.
Let’s consider the elements of an Outcome Framework.
Start with Execution Outcomes
We begin by grouping a series of processes. We then identify the outcome that group of processes should enable. We call the outcome produced by the group of processes an Execution Outcome.
Let’s illustrate. Here’s one group of processes a make-to-stock manufacturer might go through:
- Consider the latest forecast
- Consider current stock levels
- Consider safety stock levels
- Confirm current safety stock policy
- Confirm lead time for required raw materials/components
- Consider capacity constraints affecting consumption of raw materials/components
- Create time-phased purchase orders
The Execution Outcome for this group of processes is ‘Purchasing Plan Created’. The people involved are clear about the outcome they’re responsible for, and they know that without an effective purchasing plan, a manufacturer can’t make and deliver what the customers want, when they want it. There’s a clear sense of purpose in what they do.
Link the Execution Outcomes to Form an Outcome Cycle
A manufacturer will define an Execution Outcome for each group of processes. You can then link each of the Execution Outcomes. We call these linked Execution Outcomes an Outcome Cycle. An Outcome Cycle will have 8-12 linked Execution Outcomes.
Here’s what that would look like:
Here’s an example of an Outcome Cycle for a make-to-stock manufacturer:
Identify Contributing Outcomes to Support the Outcome Cycle
To keep the Outcome Cycle simple, manufacturers may include an Execution Outcome that covers many processes. In that case, staff may not feel a close connection to the Execution Outcome they serve. Adding a layer of outcomes below the Execution Outcome can help. We call this next-down layer Contributing Outcomes. Each contributes to the Execution Outcome.
To continue our make-to-stock example, a manufacturer might consider that ‘Production Plan Executed’ covers too many processes. Rather than adding more Execution Outcomes, we can break the ‘Production Plan Executed’ into Contributing Outcomes. It could look like this:
Analyze and Develop Execution Capability
For a manufacturer to execute their strategy, they need execution capability. An Outcome Cycle provides a simple framework for analyzing then developing execution capability.
Execution capability requires four elements:
- Processes – the steps you typically want staff to follow.
- Systems – IT and other systems to enable the processes.
- People Skills – people with the knowledge, skills and motivation to achieve their Execution Outcome.
- Partners – external partners play a role for most manufacturers in execution and must be integrated.
For each Execution Outcome, a manufacturer must have all four elements effectively in place.
Creating an Outcome Culture
It’s one thing to define an Outcome Cycle and develop the necessary execution capability. It’s another to turn this into a culture – into ‘the way we do things around here’. Let’s consider the elements that will help create an outcome culture.
Measure and Manage Outcomes
Each Execution Outcome must have at least one KPI. And that must become the key thing management focuses on. The adage of ‘what gets measured gets managed’ remains true. If people at lower levels understand the top management focus on Execution Outcome KPIs, then that’s what they’ll focus on.
Reinforce Outcomes with Rewards
Reinforcing the measurement element, we want elements of reward linked to the Execution Outcomes. That will reiterate the message about the importance of outcomes.
Recognition of Outcomes
When recognition of staff achievements occurs, it should be formulated and presented in outcome terms.
For example, ‘Jill recognized a problem with safety stock that no one had seen before. She knew it would mean we couldn’t deliver a practical purchasing plan for production. So, she took the initiative and fixed the safety stock issue. As a result, we were able to deliver a viable purchasing plan.’
To achieve an outcome culture, a manufacturer needs an Outcome Framework. A framework helps staff understand and focus on the outcome to which they contribute. And it simplifies the task of building execution capability. An Outcome Framework includes:
- An Execution Outcome for each group of processes
- An Outcome Cycle that links each of the Execution Outcomes
- The breakdown of Execution Outcomes into Contributing Outcomes as needed
- The four elements of execution capability – processes, systems, people skills and partners
- A plan for reinforcing the importance of the outcome approach
Creating a New Culture Takes Evolution, Not Revolution
We discussed the benefits of an outcome culture in the last article. These include:
- Improved problem-solving
- Customer responsiveness
- Ability to change
- Less administration and overhead
- Positive employee experience
These benefits of a positive, high-performance culture don’t happen overnight. Creating a new positive company culture takes time, patience and perseverance. But the rewards make it worthwhile for everyone in the company.