6 minute read
The coronavirus and COVID-19 are not synonymous, despite that many people use these terms interchangeably.
The coronavirus, or novel coronavirus, is the nasty little particle that has been traveling the globe. When the virus sneaks into the human body the result is the disease known as COVID-19. Coronoavirus is the cause. COVID-19 is the result. Virus vs. Disease.
Vaccines prevent us from being infected by the coronavirus. Treatments help us heal and recover from the COVID-19 disease.
At first glance, these facts may not seem blog-worthy. Semantics at best? But I have not been able to shake them from my thoughts. They represent classic leading vs. lagging indicators!
When the virus (leading indicator) goes away, then so does the disease (lagging indicator). If the virus (leading indicator) comes back, then so does the disease (lagging indicator).
Lagging indicators are, of course, valuable. But leading indicators are where the magic happens. Their namesake alone should compel us to focus some of our time on them.
Virus vs. Disease. Leading vs. lagging.
Leading indicators can influence or change an outcome: lagging indicators record or document outcomes.
Leading indicators look forward at what is coming, at what could be. Lagging indicators look backward at where we have been, at what happened.
While I’m a big fan of reflecting (especially when it comes to self-awareness in emotional intelligence), what has my attention right now is the horizon ahead of us.
Lagging indicators get the most focus because they are easy to measure and, for the most part, pretty darn accurate. Typical lagging indicators are numbers like revenue, cost, or the number of deals won.
Again, lagging indicators can still be helpful, but we have to remember that by the time we get them, it is too late to influence what has happened to get them. They are outcomes or results that cannot be changed. Whatever got you to the finish line is over.
Leading indicators, albeit trickier to choose and manage, are what help show your progress and how likely you are to achieve the results or outcomes that you want. Leading indicators can influence your ability to be successful before the success, or failure happens.
For example, let’s look at sales. It is common practice to reward on revenue or profit (lagging). But what are the activities, behaviors, or trends (leading) that result in the revenue or profit? Can we look to those to help us get ahead of revenue or profit – to help ensure that we achieve the outcomes we want?
What is the close rate? How many deals are in the funnel? How easy is the sales process? How timely (or well) do we answer customers’ questions? How long does it take to get from the first conversation to the deal won? How likely is a customer to come back or refer you to others?
These leading indicators are dynamic. You can influence them by adjusting their behavior and/ or process.
If you know that customers are more likely to buy (e.g., revenue) due to an easy proposal process, then turn your attention to your proposal process. If you know that a returning customer brings more revenue, then how do you ensure they return?
So, how do we find or create leading indicators?
- First, identify a lagging indicator that is critical to your organization’s growth or sustainability, such as customer service levels, revenue, profit, or market share.
- Then unpack what factors impact that lagging indicator or outcome, such as wait times, how long it takes for a customer to return your call, number of inquiries, etc
- Look to existing research and best practices already at play in your industry or function – there is a lot of work already done for you.
- Look inside your own organization to customized processes or systems that could be the source for unique indicators that contribute to your outcomes.
- Select a few leading indicators that you believe (through market research or by just years of experience) have the greatest impact or influence on your outcomes. (I will come back to this one!)
- Ideally, you put into place specific tools or processes to measure those leading indicators (the hard part).
- Lastly, you manage them. You keep adjusting those leading indicators. You keep improving them over time to then improve your lagging indicators.
Leading and lagging indicators can not only be applied to your professional life, but to your personal life as well. Here are a few considerations to get you thinking:
- Put a name to your desired lagging indicator
- From a macro perspective, what does success look like in your life? What is your win? What is your purpose?
- From a micro perspective, what goals do you have? Get a faster 5K time? Become better in the kitchen? Have more quality time with your family?
- Then dig into discovering those leading indicators.
- Faster 5K time? Maybe a leading indicator is sleep, nutrition, or how many days a week you do hill training.
- Better in the kitchen? Maybe a leading indicator is the quality of ingredients you buy, the type or author of the recipes you follow, or the way you prepare the ingredients.
- More quality time with your family? Maybe a leading indicator is how good you are at saying “no” to other things, how early you get family time on your calendar, or how well you practice time management such as batching tasks.
Before I close, I want to revisit number 3 from above. Due to the coronavirus and its resulting disease, it is important to note that in many cases, what may have been proven or valuable leading indicators BEFORE March 2019 may NOT be the same leading indicators needed going forward. Just because the number of sales calls per day was a good indicator prior to the pandemic does not mean it is the right indicator post-pandemic.
It might be. But it might not be.
Now is the time for thinking differently about what creates success in our forthcoming new normal. How have our customers’ needs changed …will be changing? What do we need to be doing (leading) differently to secure the desired outcomes (lagging)?
The indicators we used pre-COVID are worth a revisit to make sure we measure what will truly make us successful. We don’t need to keep doing what we did before just because we did it before. We also don’t need to throw out what made us successful just because our environment has changed. We simply must spend time thinking about, discussing, trying, revising indicators that can help us be successful during and post-COVID.
In closing, while there will always be a place for lagging indicators to help measure progress and guide purposeful refection and process improvement, we cannot only focus our attention on results that come AFTER an event or action occurs. We can’t influence a result if we don’t get our metrics until after what produced the result is finished.
The answer is to lead. Get ahead of the result or the outcome. Discover, manage, and own the leading indicators that create your future.