Lead vs Lag Measures

2016-09-26

You have a goal. How will you know if you succeed? It depends on the goal, of course. Goal: Be the #1 sales region in Q3 sales. Compare your sales to the other regions. Goal: Reduce manufacturing defects by 10% each month through the end of the year. Compare your defect rate each month to the previous month. Goal: Increase conference pre-registrations by 12% over last year. Compare this year’s registrations to last year’s after the pre-registration window closes. If your goal is well-defined, it’s easy to know whether you’ve succeeded. This is not a leadership problem.

The real problem is understanding the behavior that leads to success. What plan will you execute that ensures success?

I’ve been reading a fantastic book: The 4 Disciplines of Execution by Chris McChesney, Sean Covey, and Jim Huling (Free Press, 2012). The book address the pervasive problem that leaders know a lot about developing strategy, but we tend to struggle with execution of strategy. The authors point out that our business and leadership schools teach us a lot about strategy, but very little about execution. This book presents a four-step model for execution of strategy. In a nutshell, here is the model:

Discipline 1 “Focus your finest effort on the one or two goals that will make all the difference, instead of giving mediocre effort to dozens of goals.”1

Discipline 2 “Apply disproportionate energy to the activities that drive your lead measures. This applies the leverage for achieving the lag measures.”2

Discipline 3 “Make sure everyone knows the score at all times, so that they can tell whether or not they are winning. This is the discipline of engagement.”3

Discipline 4 “Create a cadence of accountability, a frequently recurring cycle of accounting for past performance and planning to move the score forward.”4

It’s that second discipline that I want to focus on here. The second discipline requires the skill of understanding the difference between lead and lag measures.

Leaders are very good at lag measures. Lag measures are how we measure success after the activity has ceased. Sales. Defects. Registrations. Deadlines. Words. Pages. Pieces. Miles. Metric tons. Hours. There is an endless list of ways to measure success with lag measures. One reason we focus on lag measures is that it’s often how our work is assessed and it is a common factor in determining your value to the organization.

What, then, are lead measures?

They are measurements of activity that lead to success in the goal.

McChesney, Covey, and Huling point out a very important distinction between lag and lead measures: “A lag measure is hard to do anything about, [while] a lead measure is virtually within your control.”5 Once you’ve gotten to the point of collecting data on lag measures there is nothing you can do to influence the outcome. Lead measures, though, are the very things that are indeed in your control and that which impact the lag measures in a positive way.

The trick is identifying the correct lead measures.

Some lead measures are more apparent than others. If the lag measure is a decrease in manufacturing defects of 5% by the end of the year, potential lead measures could be related to:

  • Compliance with equipment maintenance standards.
  • Use of materials that meet quality standards.
  • Compliance with prescribed manufacturing procedures.

The appropriate lead measures would be determined by the specifics of the situation after careful consideration of available data.

On the other hand if the lag measure is an increase in customer satisfaction by ten points by the end of the year, the team first needs to carefully define “customer” and “satisfaction,” accurate ways to assess the lag measure of satisfaction, and, very importantly, the factors within your control that influence that satisfaction.

McChesney, Covey, and Huling refer to correct lead measures as the leverage you need to move the “big rock” that is your goal. Without the correct lead measures, the rock is indeed too big to move. The right lead measures, though, enable you to move some pretty large boulders.

I want to leave you with two challenges and one recommendation.

Challenge 1: Make a list of all the things you measure in your organization or department and classify each as a lead or a lag measure. If it is in your control and you can influence it directly, it’s a lead measure. If it is data you have in hand after all is said and done, and there’s nothing left to do about the problem, it’s a lag measure.

Challenge 2: Identify more lead measures. Identify things you can influence that lead to positive team and organizational outcomes. Experiment with them to see if you can move some rocks. Maybe they’re small rocks at first, but eventually …

Recommendation: Consider purchasing The 4 Disciplines of Execution by Chris McChesney, Sean Covey, and Jim Huling (Free Press, 2012). There’s much more to the model than what I’m presenting here. I’ve given you a couple tidbits out of one chapter. It’s one of the rare books that have challenged me to slow down and really consider how I do things in my work. I believe it will for you, too.

Dr. Scott Yorkovich is a leadership coach and consultant. He works with individuals, small and medium organizations, and ministries. Contact him at ScottYorkovich[at]LeadStrategic.com with your questions.

Notes
1: Chris McChesney, Sean Covey, and Jim Huling, The 4 Disciplines of Execution, Free Press, 2012, p. 23.
2: p. 44.
3: p. 65.
4: p. 77.
5: p. 45.

Credits
Photo by Joeri Römer. Photo available at Unsplash under CC0 license. Image modified for size and space.

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