Definition

outcome economy

Outcome economy is an economy contingent on the marketing, pricing and selling of goods and services based on the results or outcomes they produce for customers, rather than on an item or service's face value. The trend toward an outcome-based economy is in large part enabled by digital technologies, including hardware sensors, cloud-based analytics and ubiquitous bandwidth.

With the emergence of the outcome economy, companies are beginning to shift from selling specific products or services to marketing and selling the end results that they produce. That shift has companies focusing more intently on delivering what their clients and customers actually want or need to achieve.

True to its name, the outcome economy is based on the concept that companies can deliver not only the specific item that their customers want but can accurately predict what that item will produce for their customers. For example, in an outcome economy, agricultural equipment manufacturers will sell computerized vehicles to farmers based on the yield per acre that those vehicles can help deliver. Similarly, agricultural services providers, such as seed companies and firms making farming software, also will sell their products based upon how their products can help farmers maximize yield, minimize resource requirements or both.

Technology has created and is now enabling the outcome economy. Sensors, big data, analytics, the Internet of Things (IoT) and the networks connecting all these pieces allow companies to collect and analyze huge volumes of data on how their services and products perform in the marketplace. Based on these technologies, companies can obtain significant insight into the end results that their wares produce, allowing them to market and guarantee certain results to their customers.

The shift to selling products and services based on measurable outcomes requires more than implementing technologies, however. It will require changes in business processes and business models. Companies will need to clearly understand and articulate what outcomes they can produce and what outcomes their customers want. To do that, they will need to create new ecosystems -- or platforms -- enabled by those technologies, and they will have to establish new partnerships with other companies, their customers or both so that they truly understand customer needs and expectations. Moreover, many companies will need to construct new products and services based on these new customer-centric partnerships if they want to successfully compete in the outcome economy.

Furthermore, companies also will need to deploy technologies that can track and measure in real time how their goods and services are doing against specific metrics, and they'll need to deploy technologies and create processes that detect when their goods aren’t meeting those metrics so they can take real-time action to adjust for positive results.

This was last updated in September 2015

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