Why Lead Measures Matter Most

I think most new business owners (like myself) must have watched Field of Dreams… a lot. (And if you haven’t… seriously… what are you waiting for?!  The movie has Kevin Costner AND James Earl Jones AND baseball!) Anyways, I think we’re hopeless romantics that ultimately believe that all it takes is our dream, and a “if you build it, they will come” mentality. Or maybe its our dream that actually blinds us to the reality of what business actually is… a market of goods and services where the best doesn’t always win, and good people close their doors every day.

imagesAs I was reading The 4 Disciplines of Execution, they introduced a pretty neat concept of Lag Measures and Lead Measures, and I feel like knowing the difference between the two is the key to knowing how to make ANY business successful.

Here’s a basic definition of the two:

  • Lag Measures – These are measurement of a result you are trying to achieve. They are called lag measures because by the time you get the data the result has already happened; they are always lagging.
  • Lead Measures – They are predictive and influenceable. They generally consist of very specific actions that can be measured and that you are in direct control of.

Let’s get really crude, functional example of each.

  • Monthly sales revenue – This is a lag measure because by the time the end of the month rolls around, theres no way to affect this metric.  You can’t force people to purchase from you, you just have to hope that everything that you’ve done will show fruitful results.
  • Monthly cold calls – This is a lead measure because its within your influence to change.  You have the ability to pick up the phone and make a call.

I’m sure I’m not the only one that has looked at a lag measure (generally monthly revenue), and set future goals that anticipate growth in your lag measure.  You may even have things like “increase marketing” as a vague vehicle for reaching that growth.  But how many of you have lead measures that you track on a monthly basis?

Lead Measures Aren’t Enough

Yes, knowing what a lead measure is, and how it affects your business, and tracking it from month to month is a FANTASTIC step in the right direction, but part of working with Lead Measures is knowing exactly what lead measures are most effective at moving your Lag Measures.

For example… in my crude example of sales revenue v. cold calling, what if we found out that increasing cold calls had little to no affect on monthly sales revenue? Once you find that out (which could take months, because let’s face it… we can’t assume you had a perfect pitch on your cold calls), increasing the number of calls you make isn’t going to make you any more money (technically at that point it will make you less money since you are spending extra time doing something that bears no fruit).

Just like anything else, we should be willing to explore different things in a measurable, and repeatable way to see what kinds of results they produce.  It’s a rinse & repeat type of approach.  Find something that works – do more of it. Find something that doesn’t work – stop doing it and try something else. If you follow this cycle enough, you’ll be in a constant cycle of growth (success).

I challenge you (as much as I challenge myself) to take a look to see what kind of lead measures you can put in place.