My friend Lane Arthur used to say, “Rain is a lagging indicator.” We measure the rain as an output of a complex atmospheric system with many inputs.
Yet rain is a leading indicator for a farmer, or a whitewater kayaker seeking a bigger thrill.
Every system is perfectly designed to produce the results it generates. Leaders and managers, being in the system improvement business, need to think clearly about leading and lagging indicators.
We can draw it this way:
Indicators are oriented before or after the critical step/event. All indicators have some value; leading indicators are more valuable than lagging indicators for improving system performance. It takes skill and ingenuity to create valuable leading indicators because they are rarely obvious. Tap into multiple perspectives to identify candidate indicators.
Lagging indicators often become the leading indicator for the next interaction of a system, or a separate system.
Be smart about indicators to ratchet up your leadership effectiveness.
