I walked past a tube station the other day, it was a little after nine and dark outside. There was a lamppost not far from the tube station entrance and a man was walking around beneath it, looking intently at the ground.
It was pretty quiet that time of night and so this chap stood out somewhat.
I stood and watched for a moment before deciding to check everything was alright.
‘Excuse me,’ I said, ‘is everything ok? I couldn’t help notice you walking around the lamp post staring at the ground!’
‘Oh’, he said, seemingly taken aback that someone had stopped and enquired. ‘I’ve lost my keys’, he said.
‘Can I help you?’ I offered. ‘When did you last see them?’
He stopped and looked at me. Then his eyes shifted as he looked into his mind’s eye.
After a moment, he glanced back at the tube station and then his gaze returned to me.
‘I can’t remember when I last saw them’, he said, ‘but I do remember it was whilst I was on the tube.’
I was a little taken aback!
‘On the tube?’ I remarked! ‘Why ever are you looking up here then?’
‘Well it’s dark down there, but I can see up here’.
Sometimes we look in places because it’s easy to see rather than it being the right place to look.
A perfect example of this are metrics such as number of calls, number of customers seen, number of events, number of emails; sales volume or value. Getting visibility on these metrics is usually straightforward as they’re quantity based and easy to measure.
The problem with these types of metrics is two-fold.
Firstly, they’re lagging metrics. In other words, they represent what’s already happened – easy to measure but the result of activities rather than the determinant of the results.
They come too late then, to do anything to change the outcome.
Secondly, they measure only one variable – productivity – otherwise known as output or quantity. How much stuff did you do? How many bits did you sell?
The use of metrics to determine performance is critical but rather than examine just one variable, activities and their associated metrics should focus on three areas – quantity, quality and direction. In other words, doing enough of the right stuff, in the right way, with the right people. If you want to be able to assess the effectiveness of any activity, then each area should be measured in turn and on a regular basis.
In addition, those metrics should be a mixture of both leading and lagging indicators. So whilst lagging indicators are the result of the activities, leading indicators often refer to the activities themselves. Usually more difficult to measure but far more likely to provide critical information on future performance and information which can be leveraged.
Finally, whilst using metrics is key to determining trends in performance, their primary objective should be to improve performance. So whilst it’s sometimes appealing just to measure the areas which are the easiest to see, if the objective of those measurements is to positively impact future performance then they should cover the three variables of quantity, quality and direction, and include a mixture of leading and lagging indicators.
When considering what to measure keep in mind the following:
1. What link do any metrics have to strategic priorities? Key metrics should align with whatever the strategic imperatives are for the business
2. Bucket your activity into the three groups – quantity, quality and direction and then consider the best way of measuring success. Make sure there’s a mixture of leading and lagging indicators
3. Get thoughts and ideas from outside your core (senior) team. Get suggestions from the wider business, not just to get buy-in but to broaden possibilities
4. Don’t try and cover too many leading indicators – these should be limited to those which have the biggest impact on the business. How many is ‘too many’ isn’t black and white but if you can’t look at them on one page then there’s probably too many
5. Don’t dismiss the importance of lagging (or quantity) indicators, just acknowledge that they are trailing to the activity which drives performance and shouldn’t be viewed in isolation
6. Review them regularly but not so often that they stifle activity or lead to reactive changes. Monthly is a good benchmark and everyone who is impacted or can impact their outcomes should see them
7. Ensure that they are included as part of any performance management process and performance management document
8. Be prepared to change them if they aren’t providing relevant insight
9. Don’t be too ambitious – chances are you’ll get them wrong to start with but accept that as long as they’re not ‘too wrong’, they’ll still be useful!
10. Try and choose leading indicators that are specific to you or your business