Purposeful Startups Track Outcomes

Purposeful Startups Track Outcomes—Entrepreneurs are encouraged to measure Key Performance Indicators (KPIs) to make sure they meet their numbers, and so they should. Entrepreneurs who startup with purpose must also track Key Outcome Indicators (KOIs) with equal diligence to ensure achievement of purpose and avoid mere wishful thinking. KPIs are concerned with outputs, whereas KOIs are concerned, obviously, with outcomes.

KOIs are not to validate vague aspirations, any more than KPIs try to measure pie in the sky. KOIs have to be rigorous in both defining and collecting hard data. If you accept that KPIs are are quantifiable measures used to evaluate progress toward specific business objectives, your creation of KOIs should be similarly quantifiable and specific.

How Purposeful Startups Track Outcomes

The key is to start with a definition of your purpose should be as focused and measurable as your financial goals, because wishy-washy intentions lead to unreliable conclusions about the outcomes you are trying to achieve. This is why purpose driven startups track outcomes. Naturally purpose and profit  both have to measured, so KOIs are not an alternative to KPIs. Both require equal diligence.

Purposeful startups track outcomes for two main reasons: the need to understand how and why desired outcomes are being achieved or not, AND because there is growing evidence that purpose and profit are closely linked. Theres is need to focus particularly on

1. Employees

2. Customers, and

3. Environmental, Social and Governance (ESG) impacts of the business.

Every startup has its own particular set of stakeholders and the process of creating and evolving KOIs of a venture should involve key stakeholders, rather than guessing the kinds of outcome they want, not just the ones the strategy has determined.

Avoid Purpose Drift and Dilution

A clear purpose is vital but not sufficient. As the new venture develops and grows, commercial pressures and daily tasks will tend dominate the attention of founders, managers and employees. Bold aspirations of purpose at the start of a new venture are tough to maintain, as I can attest from personal experience. As business grows in complexity people tend to focus on outputs rather than outcomes.

The reality however, is that purpose and performance are intertwined, rather than separate. Both need to be accounted for, since outcomes impact output and vice versa. To help in getting to the best definition of KOIs, key managers can ask themselves collectively and individually, some pretty basic questions like:

1. Is the long-term focus on purpose at variance with any business strategies?
2. How do changes in our revenue reinforce or hinder purpose—and how?
3. Do marketing tactics support or conflict with purpose?
4. Are employment policies or practices positively reinforcing purpose, or not?
5. Do our suppliers or distributors espouse ideas or action that are not in line with ours?
6. Does my behavior concord and demonstrate our declared purpose or commitments?
7. Are our sources of investment, our bankers or financial advisers supportive of our purpose?

How to Define Key Outcome Indicators (KOIs)

The purpose driven startup’s founders (and key managers, if any have been hired) must first figure out the process they intend using to establish what the KOIs will be: participants, time frame, meetings, schedules, documentation, communication, audience—and maybe other issues of importance.

The KOIs will track and measure the extent to which the venture’s purpose is being fulfilled. They will also need to be designed so that the interrelationship between outputs (especially sales and financials) and outcomes can be analyzed together.

Purposeful startups track outcomes, not only because they want to know if their dreams are being fulfilled, but also it is likely that founders intuitively know about the interconnection between behavior and results. As a consequence they will want to know how both are working.

In our own B2B startup, the early and maybe most significant indicator came from our experience of organizing the first of our annual client/user conferences. Why? The answer was very simple. We wanted to get to know our clients better and maybe even sell them something else if we were lucky.

What we got was infinitely more than that. Here are some of the outcomes that we learned about:

• Without asking questions or pestering them with surveys, during informal discussions participants told us and one another about the consequences of using our products—good and bad. It was not us the suppliers poking our noses into their business; the user conferences became sharing and learning opportunities not only for us, but all the clients among themselves—a community.
• We progressively learned over time about client priority issues that they raised with one another. In the informal and social gatherings.
• We focused on ‘big’ outcomes like how our products had been used and the benefits derived by clients. Of greater significance was being told how the use of our products had led some clients to make management policy changes.

These outcomes helped our company to get a better handle on (a) what improvements we could make to the products and their delivery, and (b) how to define what we should find out and measure those outcomes in order to be able to attain further advantage by sharing them with other existing and future clients, and (c) positively impact your own policies, procedures products.

Very often and especially in these days of amazing IT, social media and AI developments, a company can easily overlook the strategic implication of consequences of how clients and customers use and apply the products they buy. This is something of which Dr Soren Kaplan is well aware. He has written an insightful description of his key outcome indicators template for business strategy that could be very useful to enable your thinking, planning and execution of KOIs.

Purpose driven startups track outcomes for two main reasons: the need to understand how and why desired outcomes are being achieved or not, AND because there is growing evidence that purpose and profit are closely linked. To that end, you’ll probably want to at least look at and probably, read Purpose + Profit: How Business Can Lift Up the World, by the Harvard Business School Professor, George Serafeim.

More help to consider your own approach to defining and tracking KOIs lie in much of the Venture Founders website, but here are some ideas that may spark you own thinking and decisions about using them: Startup to Flourish; Remaking Capitalism, Startup Purpose, Stakeholder Business Thrives, Startup Purpose Is Why. If you’re looking for confirmation of why purpose driven startups track outcomes, you’ll probably want to at least look at, and probably, read Purpose + Profit: How Business Can Lift Up the World, by the Harvard Business School Professor, George Serafeim.