When implementing a change, it’s valuable to not only have measures you can use to evaluate your ultimate success, but also a few leading indicators to help you know if you’re on the right track. Getting the right leading indicators can make the difference between feeling hope and feeling despair, giving up and soldiering on, knowing when to course correct or blissfully careening off a cliff. Getting the right set of leading indicators is a little harder than you think. Here are a few tips for selecting the right leading indicators for your initiative.
What is a Leading Indicator?
A leading indicator is simply an event (or circumstance, or symptom) of something that will happen later. For example, you might be on a new fitness regime, trying to lose the weight you’ve accumulated during lockdown. At some point, you want evidence of success from the scale, but in the short-term, the scale might not be registering because your loss of fat might be offset by your gain in muscle. A good leading indicator might be that you can do up the button in your pants more easily. (For me, a sign that I’m recovering from lockdown would be if I wore a pair of pants with a button!)
I often hear people suggest using measures such as “revenue increase,” or “reduced turnover” as leading indicators. Sure, those are indicators, but a measurable increase in revenue is often so far out that it’s more of a lagging rather than a leading indicator. Instead, ask yourself what would come before increased revenue. Surely, you would see more leads, sales activity, or foot traffic first. And likely, there is a step before the sales activity where you see an increase in web traffic. Arousing interest by getting more clicks is a sign.
Each time you think of a success measure, ask yourself, “What would I see before that?”
Qualitative and Quantitative
In addition to measuring the first steps of a multi-step process, good leading indicators also include a balance of quantitative and qualitative measures. Qualitative measures are useful because they often capture the very earliest green shoots of progress. Even before someone starts to behave in new ways, they might express interest, or convey their excitement. Those positive signs might not be strong enough to register on your quantitative metrics, but they are important for fostering hope and gaining buy-in to your plan.
On the other hand, when you’re heavily invested in the success of a change, too much emphasis on qualitative measures can allow you to be bamboozled by your own wishful thinking. Plus, cognitive biases such as the availability heuristic and the confirmation bias and other forms of motivated reasoning can skew your perceptions. That’s why it’s important to have a few objective, quantitative measures agreed upon at the outset to keep you grounded.
Prepare for the Downside
Here’s a characteristic of good leading indicators that might surprise you—they include negative news. Unfortunately, the vast majority of leading indicators I see are positive. Teams who are enthusiastic about their initiatives imagine all the optimistic signs that will show they are making progress. But focusing exclusively on the upside is missing important information.
To protect yourself and your initiative, spend as much time thinking about some of the negative or adverse reactions that might come in response to a change you’re implementing. What would be a sign that your initiative was a bust? For example, if your new marketing campaign was aimed at increasing sales among affluent, middle-aged consumers and the data show that your clicks are mostly coming from seniors who like to look, but aren’t likely to buy, that might suggest you need to go back to the drawing board.
Not all bad news is bad news (wow, deep.) Change often brings with it a few bumps in the road. It’s helpful to intentionally include some of the anticipated adverse reactions to your change so you don’t overreact when they happen. For example, if you implement a new lead management system, you might see that the time to complete a transaction goes up initially—and that might be perfectly normal. Similarly, important and effective changes to the way you interact with customers might cause some friction initially before being embraced as improvements.
Getting an early indication that something is awry, whether it’s a sign of trouble, or simply a sign that you’re making progress, is a big benefit of including a few downside measures among your leading indicators.
A Checklist for Leading Indicators
Review your set of leading indicators to ensure you have at least one or two of each of the following:
- measures that will tell you whether the chain of events you’re counting on has been triggered
- quantitative measures that will provide objective evidence of change to reduce the weight of your wishful thinking
- qualitative measures that capture meaningful but intangible change in sentiment, energy, or momentum
- negative indicators that will alert you to a possible defect in your plan
- measures of the short-term downsides of your plan
Getting the right set of leading indicators is important. They give you a sense of whether your approach is triggering the desired chain of events, they provide evidence you can use to communicate and create a sense of momentum, they signal if something might be wrong, and they help prepare you psychologically for the inevitable bumps in the road. What can you do to improve your leading indicators?