At ADDO, we believe one of the most important aspects of teaching leadership is creating a common language for corporations, teams, and students. In this blog, I simply want to make a couple of business terms accessible to everyone so that you can use them on your team. When we put words around concepts, we are able to communicate them more clearly and act on them more appropriately. Today, I want to talk about leading vs. lagging indicators.
Most people focus on lagging indicators. A lagging indicator is not the thing that shows us where we’re going; it’s the thing that shows us where we have arrived. Here’s an example that we can all relate to—when you’re trying to lose weight, this is the number that appears on the scale. If I want to lose 20 pounds, I’m going to eat healthier and exercise, but every single day, I will measure my success by standing on the scale to see how much weight I’ve lost. If this is your strategy, you’re focused on lagging indicators.
However, if I plan to focus on leading indicators, I’m less concerned with the number that appears on scale every day. In this example, leading indicators are the elements that go into losing weight, so I’m going to eat fewer calories each day and complete 30 minutes of cardio six times a week. When you focus on the leading indicators, the lagging indicators almost always have a better result. So if I focus on living a healthy lifestyle rather than changing the numbers on a scale, I’ll be more likely to lose weight and make changes that have a positive lasting impact on my life.
This principle of leading vs. lagging indicators applies to our personal and professional lives.
It’s baseball season. A lagging indicator is a player’s average. A leading indicator is how many first pitch fastballs they do not swing at.
A lagging indicator is a student’s grade on an exam. A leading indicator is how many hours they prepared for the test or how many classes they attended.
A lagging indicator is a customer’s Google review of your restaurant. A leading indicator is the time you spend training your team on effective customer service strategies.
A lagging indicator is your company’s revenue growth. A leading indicator is the three new products your company added to its portfolio this year.
A lagging indicator is the number of friends that call you on your birthday. A leading indicator is the time you spend investing in your friendships.
A lagging indicator is your adult child’s tendency to come to you for wisdom and encouragement. A leading indicator is the years you spend fostering a culture of open communication and acceptance in your home.
A lagging indicator is your perception of your faith walk. A leading indicator is the amount of time you dedicate to spiritual disciplines—praying, reading your Bible, and regularly worshipping with a local body of believers.
I think that understanding these terms is important. There isn’t magic in terminology, but terminology allows us to communicate more clearly and to change our actions more effectively.
There isn’t always a one-to-one ratio between leading and lagging indicators. But I want to challenge you to think of what you’re doing on the front-end (leading) to achieve your desired results on the back-end (lagging).
In other words, what are the leading indicators that you can focus on to gain the lagging indicators you desire?
Stop dwelling solely on the results, and start focusing on the things you can do to improve them.
