It’s now the second quarter of the year. How are you doing on achieving your goals for the year? If you’re like many business owners, you probably got too busy on the day-to-day operations to even get started. But since there’s more than one-half the year left maybe it’s time to take a different approach.
Many owners have Key Performance Indicators that monitor the health of their business. The goals they’ve set are something like, increase sales by 10% by the end of the year. If all that’s being monitored is weekly or monthly sales, that’s like looking in the rear view mirror to see where you’re headed. What’s needed are measurements that are leading, not lagging.
In the book, The 4 Disciplines of Execution, the authors define lead measures as “the measures of the activities most connected to achieving the goal.” As the authors discuss, the easiest way to think of it is in terms of a weight loss goal such as I’d like to go from 190 lbs. to 180 lbs. in three months. Measuring one’s weight is a lagging indicator, but measuring daily exercise and calorie counts are leading indicators. In others words, if you can meet the daily goals for exercise and calorie intake, you’ll likely lose weight.
For many goals, it’s difficult to determine which activities or behavior will have the biggest impact on the goal. To determine the leading measures for a goal, they suggest letting the team develop their own activities and find a way to measure them. The authors suggest that the lead measures must be both predictive, something that leads to the goal, and influenceable, something the team can influence.
Three examples of good lead measures may include
- To increase sales, the number of sales calls per day or week
- To reduce worksite accidents, compliance to safety measures
- To increase retail sales, the number of out-of-stocks
Sometime the activities are difficult to measure. In that case, just making a checklist or worksheet for the team to mark when they complied with the activity is sufficient to influence activities.
Business owners have so many issues to deal with each day. In order to move the business forward, focusing on only one or two wildly important goals and having the team act on the lead measures that leverage their activities will result in much greater likelihood of reaching goals and improving the business.
I am a contributing author to the Evansville Business Journal. This was recently published.