The Art of Goal Setting: Understanding Lead and Lag Indicators
|
|
By Adi
Solution Architect and Founder of ARC
|
↓
Hello and Welcome to all new and old subscribers of ARC’s Leadership Campfire.
Every 15 days, we’ll be in your inbox sharing stories, ideas and frameworks related to the vast concept of Leadership- and how you can apply them to become better leaders in your workspace and your life!
Start of April, time to set your goals for the new financial year?
Here is an idea that might help you set better goals.
“Reduce employee turnover by 25% in the coming year.”
While this might seem like an attractive goal, the problem with it is that it focuses on the outcome. However, to achieve this you need to understand the difference between lead and lag indicators
The concept of Lead and Lag Indicators.
Lag indicators measure the end result- what has already happened. These indicators are often the ultimate goal of a person, team or even a business. Revenue growth, customer satisfaction scores or employee retention rates, are all examples.
However, by the time we measure a lag indicator, it’s too late to change it.
Lead indicators, on the other hand, are the actions or behaviours that drive those results. They are predictive measures that can be influenced in real-time, increasing the likelihood of achieving the desired outcome.
In the below section, I will be sharing 3 principles of setting lead and lag indicators.
The famous case of the Chicago Bulls
Consider the case of Chicago Bulls, a basketball team in the NBA. Until 1991, they hadn't won any titles, their goal was similar to all teams- increase the win rate. The team couldn’t directly control the outcome of each game and hence they focused on their lead indicators.
Metrics like the number of successful passes shot accuracy in practice, and defensive efficiency.
Under the leadership of head coach Phil Jackson, the Bulls adopted the famous ‘Triangle Offense’, a strategy that wasn’t just about emphasising ball movement, spacing and teamwork (because these are still lag indicators).
Michael Jordan, Scottie Pippen and later, Dennis Rodman were instrumental in executing this system.
Jackson and his assistant tracked specific lead indicators such as:
- Pass-to-short ratio: Ensuring the team moved the ball at least 3 times per possession before taking a shot.
- Defensive rebounds per game: Rodman, for example, averaged 16.1 rebounds per game in the 1996-97 season, directly reducing opponents' second-chance points.
- Assist percentage: Pippen’s playmaking ensured that over 60% of their field goals were assisted, reflecting strong teamwork.
Over time, their discipline in these lead indicators led to an extraordinary six NBA championships between 1991 and 1998, with two separate three-peats (1991-1993 and 1996-1998).
By focusing on what they could control they won titles in an effective and repeatable way.
And, that brings me to...
3 Principles of Lead and Lag Indicators
1] Direct Co-relation
The Lead indicator should have a direct correlation with the outcome without any intermediary. An increase in pass-to-shot ratio directly improved shot quality and scoring efficiency, leading to a higher win rate.
2] Done repeatedly
In a disciplined manner, the activity or task needs to be repeatable, like a cadence. The 3 Lag indicators (passes, rebounds and assists) were repeated throughout the season, embedding it into their system.
3] Effectiveness
Minimum effort maximum impact. Over time the quality of passes and shots get better, leading to better efficiency with the same effort. As the players mastered their system, they didn’t just pass more; they passed smarter, leading to higher-percentage shots and a stronger, more efficient offence.
The Cogwheel Analogy
Think of lead and lag indicators as two interlinked cogwheels. The larger wheel represents the lag indicator, while the smaller wheel represents the lead indicators. To move the bigger wheel, the smaller one must rotate consistently, with discipline, and in a way that directly influences the larger outcome.
By focusing on what is within our control—our lead indicators—we set ourselves up for achieving our larger goals.
Take some time out and create one for yourself. I am open to answering any of your questions.
Just hit ‘reply’. I will be personally replying to your mails :)
Until next time,
Adi,
Leading the way.
www.yourarcteam.com
RESEARCH: PILOT STUDY
Give us 15 minutes of your time and get a free report.
The Research Function at ARC is actively working on creating four assessments that help individuals, teams and organisations uncover the truth. These assessments are in the developing stage where they go through a trial run by a representative group to identify flaws, ambiguities, or areas for improvement.
The goal is to refine the test before its official launch.
Your responses will help us evaluate the strength of the assessments and create a standardized (reliable and valid) tool for organisations to use. In return get a free report with insights.
The 4 assessments
- Learner’s Preference Assessment
- Core Value Adherence
- Organisation Political Scale
- Self Review Form
|
|
A bit about ARC and what we do...
ARC (Adi Raheja and Co) is a decade-old consulting firm in the field of Organisation Development and Leadership Development. Clients partner with us for some of the most innovative and impactful interventions to develop leaders, teams and culture and strategy.
ARC’s main purpose is to Bring Humanness back into Consulting.
|