Inputs Vs Outputs

I am sharing below a great piece of wisdom from Jeff Bezos on how to get better at delivering superior outcomes.

Outcomes are just the endpoint. What really matters-and what we can control-are the inputs. The deliberate actions we can take that directly influence those outcomes.

He advocates a reductive approach. Break down any outcome to its core drivers, and identify the few critical actions that truly move the needle. Then, focus relentlessly on those.

Bottomline-Master the inputs, and the outputs will take care of themselves.

I am reproducing an excerpt of what he says courtesy of Farnam Street.

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Jeff Bezos reminds us to focus on the inputs, not the outputs.

He gives the example of a higher stock price and works backward to the controllable inputs:

“What are the inputs to a higher stock price? Okay, well, free cash flow and return on invested capital are inputs to a higher stock price. Let’s keep working backwards. What are the inputs to free cash flow? And you keep working backwards until you get to something that’s controllable.”

He points out we can control costs, which is an input to free cash flow:

“If we can improve our picking efficiency in our fulfillment centers and reduce defects – reducing defects at the root is one of the best ways to lower cost structure – that starts to be a job you would accept. If you’re a reasonable person, you would say, I have no idea how to drive up the stock price – I can’t manage that directly. It’s not a controllable input. But I can make your picking algorithms more efficient, and that will reduce cost structure. And then you follow that chain all along the way. That’s what you do in all of these businesses.”