October 30, 2018
When it comes to execution, many executives fail because they focus on the wrong metrics.
In The 4 Disciplines of Execution, a key principle of the book revolves around "Lead" measures and "Lag" measures. Many teams fail to execute because their metrics of success are hindsight measures. Lag measures are metrics that report was has happened. These types of measures are what most companies set as goals.
Let's look at an example. Your company goal is to increase sales by 20% annually over last year. Increasing sales by 20% is a lag measure. You won't know the score until you measure the percentage change over a given period of time. Your decide your tactics are to get your sales team motivated and "working hard". You push incentives, talk about it in meetings, and measure the results at the end of each month. Maybe you affect the number a little, but more often than not, the numbers stay the same. What do you do? You might set higher goals or churn some team members to get more dedicated salespeople in your ranks. This strategy is focused solely on the Lag measure. You don't know whether you achieve it or not until it is too late to affect the number.
Now let's look at the same example from a Lead measure strategy. We still have the same goal of increasing sales by 20% annually over last year, but we are going to focus on measuring different things. With Lead measures, you will focus on the activities that will likely affect the outcome that you seek. It isn't enough just to understand what those activities are but to also measure those activities.
Within sales, you have several stages of your sales funnel that move prospects along in the sales process. More positive activity will likely result in higher sales - i.e. more phone calls, emails and drop by's will yield more active sales cycles that will lead to more sales.
Furthermore, you can also focus on improving the conversion rate at each stage. If it takes 10 initial appointments to generate one real sales cycle, you help your sales team increase their effectiveness in meetings and get more cycles from less initial meetings.
The key here is that we are measuring activities that lead to the positive result, not just "working harder" and hoping the result comes out the way that we want.
This strategy will work in any discipline from production, logistics, administration, education, anything. Focus on measuring and driving the positive behaviors that lead to great outcomes and the Lag measures will take care of themselves.