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KPIs: You Need Leaders and Laggers

In response to my thoughts yesterday on KPIs and organizational fear, list member Tom Miller (founder of Email for Experts) responds (reprinted with permission):

I really think the leading/lagging KPI distinction matters a ton. If leading indicators are under you/your team’s control, it’s something you can all be held accountable to without the baggage of potential failure attached… you either do the work or you don’t. Lagging indicators give you the feedback mechanism to objectively study what worked and what didn’t, without the baggage of blame. If you did the work, and it didn’t work, you simply had the wrong strategy. Learn and adjust.

Great framework. Let’s first define these terms:

Leading indicators are measures of your inputs — what you’re doing to achieve your goal.

Lagging indicators are measures of outputs or outcomes —​what we conventionally think of as “success” or “failure,” but should think of instead as feedback. 

If your goal is to “get in shape physically,” your leading indicators might include calories reduced day over day, increases in total exercise minutes week over week, or increases in repetitions for certain exercises session over session.

​​Your lagging indicators might include reductions in body weight, body mass index or waist size —​ or perhaps increases in capacity to perform certain functions. These are your indicators that your inputs are working, and that there aren’t other factors messing with their effectiveness.

Leading indicators put your immediate focus where it needs to be — on habits, on what you’re doing regularly to build toward the objective. On whether you’re putting the work in.

But, as Tom implies, you still want both sets of KPIs. You want leading indicators in order to know: Are we doing the work? And you want lagging indicators in order to know: Was that the right work to be doing to achieve our goal? Do we understand the problem and the challenges well enough?

Unfortunately, many research-driven orgs with fear cultures often just settle for leading indicators as a hand wave toward KPIs.

Agreeing to outcome targets freaks them out — so they agree under duress to do more stuff, which feels less dangerous by comparison.

Then circumstances intervene (as circumstances inevitably do), and the leading indicator targets fade into the ether of good intentions.

But at least they tried…

I wish I could tell you that trying to install a framework of leading and lagging indicators might spark a change in your organizational culture. But if you don’t already have a climate of feedback, learning and growth, adding those indicators usually just punishes your team instead of driving innovation and achievement.

I can tell you this: If you’re not sure what kind of culture your organization has, trying to institute a framework of leading and lagging indicators will tell you.