Finding the right metrics for your business growth initiatives is hard. Your core business is most likely measured with proven lag measures. And you need are facing challenges with how to find suitable lead measures for your new initiatives
This development area will develop your ability to create good lead measures.
Businesses measure their operational performance towards proven lag measures, e.g. Orders Booked, Net Sales, EBIDTA, Customer satisfaction etc. These measures work well when aim to run your current business more efficient. When you are building new business lag measures tell too little too late about your progress. It is easy to buy why you need to shift to lead measures. But how do you get your organization to find the best lead measures for each new business you want to develop.
Lag measures are like sets in Tennis. Lead measures are like games. Every good Tennis player has their focus on games. Winning your serve all the time and breaking your opponents serve once per set. By focusing your tennis game the two games at a time you are set to win. I suggest you and your team think about lead measures as games in tennis. Spend time for figure out what the sets in your new business area. Each set representing a vital area of progress.
Consider measuring the progress for your lead measures in 6 tiers, like games are building up to a set.
1. Not started – You know it is a vital area, but you are on square one.
2. First steps – Just started but no/low material progress.
3. Warning – Progress made but not yet good enough. Need continued push.
4. Good – Good enough to close the deal or deliver on the project
5. Excellent – Beyond expectation and a clear driver for customer satisfaction
6. Best In class – This measure is your execution signum in the industry, you excel and compete primarily with yourself.
The second challenge with regards to lead measure is to pick a few of the right ones. Too many measures will make you loose focus. Too generic ones will drive you into reporting mania across both important and not so important measures. Expect your lead measures for pilot deals in the new areas to fall into a few of the following categories.
• Big Picture – Is the environment around your area clear so you can focus on the challenges in your box.
• Maximize Market Potential – Is the pie big enough so you can focus on getting a share of the pie? or is market development a key part of the challenge.
• Clear customer insights – Have you understood the customers’ explicit needs and not just their implied needs
• Deal construction – Is it clear which solution components you need and how they fit together?
• Technical solution development – Are your own and third party product development meeting the time-plans?
• Competence and capabilities – Do you have the right competence and capabilities to pursue
the new opportunities across all vital areas?
• Business model innovation – Are you pursuing, and existing, stolen or a completely new business model?
• Customer value proposition – Is your value proposition towards end-user and your customer clear and proven?
• Shareholder value proposition – How well do you manage to capture the value created?
• Closing customer deal/s – Is the whole package good enough to meet the customer buying criteria?
If you can pick the 3-4 vital areas for your lead measures you are closer to having a team operating with focus and clarity.
For additional reading on the subject of good lead measures:
- Using leading indicators to drive sustainable performance [ARTICLE] – by Harvard
- Why are lead and lag indicators important? [BLOG] – by Intrafocus
- Act on the lead measures [BLOG] – by The Business Excellence Club
I hope you are inspired to find your game, and to start measure how well you play the game of developing a set of new business.