To define success for your initiative you need to focus on measurable outcomes. People need to see the end result with such clarity that they can act on their own. There’s a strong desire in business to measure everything with one simple question: how much money are we making right now? But when we are making a breakthrough change, the end goal of enhanced profitability could be a long time in coming. There are always other more immediate factors we can track that will lead to profit improvement down the road. And when that road is long and uncharted, as it often is with breakthrough change, it’s particularly important to measure the interim steps and goals along the way.
Leaders and high-level executives who are responsible for funding a given project want concrete, measurable indicators that tell them how a change is going. Historically, the usual word attached to these kinds of indicators has been “metrics.”
The possibilities big data offers seem phenomenal; the opportunities to analyze enormous amounts of data in real time, very enticing. But even as capabilities evolve, it’s clear that given the changes brought by big data, the traditional terms of metrics simply don’t go far enough. Instead, we need to think in terms of analytics as we strive to use the newly available data most effectively. How do we best make use of the data and monitor the indicators? There are two major types of indicators — leading and lagging — each with different implications for your breakthrough change initiative.
Leading indicators: As the name implies, leading indicators are harbingers or evidence of success or failure that appear before any of the others. It’s a common misconception that market share and profitability are leading indicators. In fact, it’s more likely that we are hoping these will dramatically accelerate toward the end of the project; they rarely do so at the beginning. Here are some leading indicators you might consider measuring:
- Measures of customer engagement such as customer calls or log-ins, click-throughs to deeper parts of your website, visits to physical locations, and purchases of various merchandise lines or products.
- Measures of employee engagement, attitude and turnover.
- Trend lines revealing how key indicators move over time periods.
- Customer loyalty as measured by online recommendations, endorsements, referral programs, or by the Net Promoter Score.
- Sales numbers, units, dollars, average price, product mix.
- Public relations as measured by number of positive mentions and numbers of headline stories, product reviews, or articles about your product or initiative, as well as social media mentions in tweets, retweets, and the like.
- Customer complaints, by type and number.
- Any customer attrition you may experience.
Lagging indicators: Lagging indicators are the big and important measures of success — such as reduced costs or improved market share, competitive position, pricing power, profit dollars, and profit margins — that we are working toward. Everyone wants to see positive lagging indicators and, typically, the sooner the better. But the results reflected in lagging indicators take time, sometimes years, to emerge. They are almost always foreshadowed by positive trends with leading indicators.
How do we help our people through that long period before the lagging indicators move ? We have to power through. And that is helped enormously with analytics and measurements: the more precise and granular, the better. We want monthly, weekly, and even daily measurements. We want to see every emerging trend, and every reporting period counts.
From leading and lagging indicators to big data to various types of analyses, the available information is nonstop. You need to determine what’s most important among competing issues and direct your attention there.