Moving from Results-Driven to Value-Driven

Updated: Apr 11, 2019


I see many discussions these days centering on how to measure/justify the significant costs of products and services (the latter of which is coming under increasing scrutiny in today's economy).  This is one of the key issues impacting many aspects of business.  Service industries are getting more pressure to justify their costs through value-based measurement as results-based measurement has proven an inefficient and sometimes an ineffective approach to tracing value back to the services received.  Many industries still don't know how to measure value, but are trying to move toward results-based measurement in an attempt to move forward (healthcare is trying to move in this direction, education has already done this through the No Child Left Behind & Standardized Testing programs).  These programs are good first steps, but they are often flawed due to the inability to clearly trace value from the point of service to the results.  For example:

  • Scenario: A patient receives treatment for an injury in a hospital.  The patient is provided with a diagnosis (which he/she may or may not fully understand), obtains medication and care by one or more nursing staff and is discharged (presumably w/o incident).  Some hospitals will be measured by results associated with turnaround time for care, no harm done to patient, some aspect of patient satisfaction (captured by a survey - assuming it's properly completed), and there may be some additional quality & efficiency metrics as well associated with an increasing amount of scrutiny via Six Sigma efforts.  All of these are useful results to capture, but what is the real value to the patient ?  Did the healthcare "system" understand the patient's desired outcomes from the point of admission to the point of complete recovery (not just discharge) ?  When we can fully understand how to measure these outcomes, we'll be in a position to measure value.  Once we can measure value in healthcare, we can transform it.

  • Scenario: A class of students receives their grades for the term and the usual bell curve is applied to achieve the typical spread of grades.  The teacher is measured on the number of students who passed (no child left behind) and how well those students performed on standardized tests.  Again, this is a results-driven approach.  But, did we really meet the desired outcomes of the student ?  These students are "customers" (whether they pay indirectly through taxes or directly through tuition).   Did the educational institution capture the desired outcomes of the student from the time they signed up for a class to the to the point of completing the class (to say nothing of being able to apply the knowledge down the line) ?  This is where the value of education is measured ...

Once we move beyond results so that we measure the proper outcomes, the discussion can now moved to the point where can talk about measuring value as it pertains to the job that an individual is trying to accomplish.  That individual may be an executive, a student, or a Accounts Payable manager.  When we capture the desired outcomes form the viewpoint of the customer, we are now in a position to assess the importance & satisfaction of existing services being offered to the customer.  That becomes the basis for measuring value.  The gaps between what is delivered and what is expected is the opportunity (that has never changed), but the difference is what we are measuring.

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