American economist Theodore Levitt famously quipped that “people don’t want to buy a quarter-inch drill, they want a quarter-inch hole.” His quote is often associated with the Outcome Economy, a theory first coined in the 1980s but that has since become trendy fodder for boardroom conversations about digital transformation.
The Outcome Economy dictates that all businesses should see the world through a solutions-based lens, where value creation becomes the guiding principle throughout the company. This approach makes a lot of sense for businesses today, as the technological and data-rich tools available enable them to truly find, capture and make sense of their customers’ outcomes.
Here, we take a look at the key steps businesses should take to unlock the Outcome Economy.
Don’t lose sight of the customer outcome
It’s no surprise that digital transformation is often intertwined with the Outcome Economy. But be wary: transformation doesn’t always equate to intelligence, and losing sight of the customer outcome in the chase for data will only do more harm than good.
Digital transformation shouldn’t be enforced for the sake of it; it’s there to enable improved connectivity, new features and superior client servicing, which ultimately leads to better outcomes.
By making the customer endpoint the foundation of discussions, it becomes tangible, relevant and attainable.
Building collaborative relationships
In many cases, what you’re selling is often a small cog in a very large wheel—and the outcome your customer desires may be one or two steps removed from your current offering. It’s important to work with partners to build unified products and services that solve that need.
It pays to build an understanding of the wider outcome and other dependencies; it allows you to think bigger, achieve more, and (most likely) sell a bit more, too.
Set clear goals and KPIs
Delivering measurable results that are important to the customer is a much more challenging prospect than traditional evaluation methods.
When setting evaluation parameters, it’s crucial you have an open dialogue with your customers about their needs in order to provide the outcomes they desire.
Beyond quarter-inch holes
The Outcome Economy is about empathising with customers and honing in on what their ultimate goal is. So, Mr Levitt, it turns out it’s not even the quarter-inch hole that people want—they want the painting hanging on the wall at the end of it all.
And it’s the same for customers: by focusing on the end result, businesses can reap the rewards of deeper, more meaningful customer relationships.