Are your firm’s business performance measures leading or lagging?

Are you leading or lagging?

 

As a business that specialises in embedding change…..(through understanding where an organisation wants to go, helping build the skills, knowledge, behaviours and confidence to enable people to drive the organisation towards that destination, and creating systems and process to ‘lock-in’ and embed the learning)…..a frequent battle that we face is helping senior management to understand that change is required.

Now we all know that ‘change is constant’, that there is a ‘tech revolution’ and that ‘the future will be here tomorrow’, but the vast majority of organisations we talk to are successful –  profitable, financially healthy and operationally stable.

But the BIG question is – is the business success built on past activity or on what you are doing right now?

Jorgen Vig Knudstorp, CEO of Lego believes a critical leadership activity is ‘tearing down the illusion that if we are successful today, then we will be successful tomorrow’. He famously stated “In reality, no companies are more than a few years from failure. It’s important to remember that and remind the organisation about it again and again”.

Many successful businesses that we speak to are very focused on LAGGING indicators of performance. These measure the quality of PAST performance, yet are usually the primary KPIs. For example:

  • Revenue
  • Costs
  • Margins
  • Working capital
  • Return on Investment
  • Customer loyalty
  • Staff retention
  • Performance against known competitors

It is essential that there is equal (or more) obsession with LEADING indicators, which are predictive and paint a picture of how the organisation is likely to perform in the future if it continues on its current course. For example:

  • Orders
  • Pipeline
  • Conversion rates
  • Current customer satisfaction
  • Staff engagement and morale
  • Threats from new entrants to the market
  • Effectiveness of learning, skills and behavioural development
  • Speed of innovation and ability to manage change

LAG measures can show an organisation in great shape. LEAD measures can reveal dark clouds ahead. But by ensuring a keen focus on LEAD measures today, you will have a great opportunity to manoeuvre around those clouds and maintain your success into the future.

This may mean making changes and requiring your people to think, feel and act differently. And if that is the case we would love to talk to you!

People are the reason 70% of change initiatives fail, at theGrogroup we help organisations to make change stick, call us today on 01892 610060 to see how we can help.