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How to use lead and lag indicators

Lead and lag indicators are performance metrics you can use in business.

Do you often fail to follow through when it comes to setting and achieving your goals? You could be focusing on the wrong thing. You are focused on the lag measure rather than the lead measure.

So what are these measures? According to Claire Storm, a Co-Founder and Director at Airshot, they are performance metrics you can use to measure your goals and your success in achieving them. “These are not just the latest buzz in business speak. Lag and lead indicators are really useful tools that will help you to think more clearly and critically in business planning to assess, analyse and set business goals,” Claire explains.

In a nutshell, a lead indicator is an input as it measures future outcomes and events. A lag measure is an output and looks back at whether the intended result was achieved. Claire believes that the principle of lead and lag measures is powerful as it ensures you are asking the right questions.

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“Lag measures relate to your overall business goal such as revenue, profit, quality and customer satisfaction. They are called lags because by the time you see them, the performance that drove them has already passed. You can’t do anything to fix them, they are history,” says Claire.

“Lead measures focus on the process, the actions needed to achieve the goal. These actions can change on a regular basis and can be influenced directly by a person or a team.”

Here is Claire’s step-by-step guide to applying lag and lead indicators to achieve your company’s goals:

  • First decide what you want to achieve.
    Choose a goal such as increasing profit, sales growth or lead generation. Be wildly ambitious with this, as it will determine your organisation’s success. This is your big number and your lag indicator.
  • Now you need to identify your lead measures, the actions that will lead you to your wild goal.
    The lead indicator will be different for each business and could relate to total sales, variable cost, call conversions or fixed costs.
  • Then you need to measure the performance of your lead indicators.
    What actions can you take to ensure the goal will be met and how do you measure this? You can set smaller targets for incremental improvements for each indicator – the key is to start moving your business forward.
  • What gets measured gets managed, so make sure you have the right data and create a scoreboard to track the results.
    Share these with your team so that you are all aligned on the deliverables – preferably on a centralised platform that is easy for remote workers to access. Seeing these measures on a daily and weekly basis will keep everyone motivated. And if things start going sideways, you can create just-in-time plans that enable your team to adapt quickly.
  • Turn data into smart insights.
    Lead measures should be driving consistent improvement, so ask yourself what is the one thing you can do this week that will have the most impact? Knowing that you are doing something is not enough. You need to know what you are doing right and what you are doing wrong. If it’s wrong, stop. If it’s right, continue. Focus on the critical few activities that you can improve (lead indicators) to create the results you want.
  • Communication is key to achieving your lead measures.
    Ladders and reports will give you firm-wide rankings on all your performance measures. You will be able to identify your top performers and what is contributing to their performance. You will understand their strengths, areas for improvement and holistic performance – letting managers take a bottom-up approach.

John Maxwell says, “You will never change your life, unless you change something that you do daily,” and by providing lead goals, you are providing daily steps that your team can take to make real change.

Claire Storm, Airshot
Claire Storm, Airshot

Claire Storm, Co-founder and Director for Airshot.

- Advertisement -

Do you often fail to follow through when it comes to setting and achieving your goals? You could be focusing on the wrong thing. You are focused on the lag measure rather than the lead measure.

So what are these measures? According to Claire Storm, a Co-Founder and Director at Airshot, they are performance metrics you can use to measure your goals and your success in achieving them. “These are not just the latest buzz in business speak. Lag and lead indicators are really useful tools that will help you to think more clearly and critically in business planning to assess, analyse and set business goals,” Claire explains.

In a nutshell, a lead indicator is an input as it measures future outcomes and events. A lag measure is an output and looks back at whether the intended result was achieved. Claire believes that the principle of lead and lag measures is powerful as it ensures you are asking the right questions.

- Advertisement -

“Lag measures relate to your overall business goal such as revenue, profit, quality and customer satisfaction. They are called lags because by the time you see them, the performance that drove them has already passed. You can’t do anything to fix them, they are history,” says Claire.

“Lead measures focus on the process, the actions needed to achieve the goal. These actions can change on a regular basis and can be influenced directly by a person or a team.”

Here is Claire’s step-by-step guide to applying lag and lead indicators to achieve your company’s goals:

  • First decide what you want to achieve.
    Choose a goal such as increasing profit, sales growth or lead generation. Be wildly ambitious with this, as it will determine your organisation’s success. This is your big number and your lag indicator.
  • Now you need to identify your lead measures, the actions that will lead you to your wild goal.
    The lead indicator will be different for each business and could relate to total sales, variable cost, call conversions or fixed costs.
  • Then you need to measure the performance of your lead indicators.
    What actions can you take to ensure the goal will be met and how do you measure this? You can set smaller targets for incremental improvements for each indicator – the key is to start moving your business forward.
  • What gets measured gets managed, so make sure you have the right data and create a scoreboard to track the results.
    Share these with your team so that you are all aligned on the deliverables – preferably on a centralised platform that is easy for remote workers to access. Seeing these measures on a daily and weekly basis will keep everyone motivated. And if things start going sideways, you can create just-in-time plans that enable your team to adapt quickly.
  • Turn data into smart insights.
    Lead measures should be driving consistent improvement, so ask yourself what is the one thing you can do this week that will have the most impact? Knowing that you are doing something is not enough. You need to know what you are doing right and what you are doing wrong. If it’s wrong, stop. If it’s right, continue. Focus on the critical few activities that you can improve (lead indicators) to create the results you want.
  • Communication is key to achieving your lead measures.
    Ladders and reports will give you firm-wide rankings on all your performance measures. You will be able to identify your top performers and what is contributing to their performance. You will understand their strengths, areas for improvement and holistic performance – letting managers take a bottom-up approach.

John Maxwell says, “You will never change your life, unless you change something that you do daily,” and by providing lead goals, you are providing daily steps that your team can take to make real change.

Claire Storm, Airshot
Claire Storm, Airshot

Claire Storm, Co-founder and Director for Airshot.

- Advertisement -
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