What is the difference between a lag measure and a lead measure

Leading indicators look forwards, through the windshield, at the road ahead. A financial indicator like revenue, for example, is a lagging indicator, in that it tells you about what has already happened. But an indicator like customer satisfaction does point to future revenue — because satisfied customers are more likely to repurchase and tell their friends about your company.

Customer satisfaction, therefore, is a leading indicator. Delving into leading indicators. Leading indicators are about trying to predict the future. The number of mortgage defaults, for example, can predict negative changes in the economy. In business, brand recognition, new product pipeline, growth in new markets or sales channels, are all examples of forward-looking indicators, pointing to trends that can predict future performance.

Customer satisfaction can be an indicator for customer loyalty and, in turn, future revenue , while employee satisfaction can be an indicator for staff retention and, in turn, performance and productivity.

Leading indicators are important for building a broad understanding of performance because they provide information on likely future outcomes. Many of us were perfectly satisfied with our old Nokia mobile phones, for example, but we still switched to Apple or Samsung when smart phones were released! Therefore, think of leading indicators as what might happen, not what definitely will happen.

In addition, leading indicators are harder to identify than lagging indicators which tend to be pretty standard across industries. It tells you what you need to do to get there.

Spend some time to brainstorm your lead measures. You need to come up with at least one or two lead measures to focus on. Remember, your lead measure will directly influence the results you get. The key is to identify the actions that will give you the results you want, and then get busy working on them day-in and day-out.

Use lag measures to inspire you for the results you want, and then focus and work on lead measures that help you progress forward. If you want to learn more about the science of goals achievement, get The 4 Disciplines of Execution and study the book like your life depends on it. I'm a blogger, writer, and also an internet entrepreneur.

If you want to learn more about me, kindly go to the About page. Don't forget to do so. Hi man I want to thank u so much for this article coz often we forget to concentrate more on the gaol instead of the process, big up bro thanks. Hello Mohammed, yes, many people know goal setting, but most of them have no idea about the lead and lag measure. Great article. Can we look at lag goals as a target result or outcome and look at lead goals as a targeting tactics we can take related to a specific outcome or result?

Hi Derej, you need to have both lead and lag measure goals. Lag measure goals are the big and ultimate results you want, like to lose X pounds. Then your lead measures are the action commitments that will get you to your lag measure goal, such as to exercise for 30 minutes on Mon, Wed, and Fri. Save my name, email, and website in this browser for the next time I comment. This site uses Akismet to reduce spam.

Learn how your comment data is processed. Lead vs. Lag Gross margin of actual sales last period vs. About Latest Posts. Follow Dave. Dave Schoenbeck. Dave Schoenbeck is a professional business and executive coach who translates complex business methods, processes, and strategies into actionable plans to dramatically improve financial results. Read more about Dave here.

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