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Too Little, Too Late: Why lagging indicators won’t drive success.

In my last blog I discussed the role of Service Strategy. Quick recap before we get onto the next subject. A Service Strategy needs to address 3 core challenges:

  • Provide a clear focus. This requires making choices: choices about your service scope and emphasis as well as your customer scope and emphasis; choices about key capabilities you will and will not develop.
  • Develop a competitive advantage. It can be found in the capabilities or services, or combination thereof, to meaningfully differentiate yourselves from your competitors.
  • Create a basis for motivating the troops. A format/language for painting a picture of the end-state that creates energy/commitment amongst your followers to move in this direction.

At the end of formulating a corporate, functional or service strategy we need to ask ourselves: ”How will we know we are getting there?” with the emphasis on ‘getting there’… not ‘gotten there’.

This point gets me to the main characteristic of most IT/service organizations’ metric systems that I take issue with. We are too focused on lagging indicators. Customer Satisfaction, SLA attainment, cycle-time measures, etc. are all important performance metrics, but they only tell us after the fact if we delivered the goods. However, when we go through major change initiatives, these metrics may not be sufficient because by the time these lagging indicators have reacted (or not), it might be too late or too costly to make any corrections.

So why is it that we are so focused on lagging indicators? Because they are easier to measure as they are typically quantitative measures (e.g. duration, percentages, dollars). Also, the point (timing) of measurement is mostly obvious as it generally corresponds with the completion of a task (e.g. delivering an upgrade, closing an incident). If we truly want to measure change alongside performance, we need to combine our lagging indicators with leading indicators that measure process effectiveness and efficiency all the way down to the task level where actual behavior can be assessed.

At the functional/departmental level the most important metrics are process metrics. Processes are about ‘how work gets done’ and how service gets delivered to customers. So how can we derive the most critical lagging and leading process metrics for our business?

First of all, go back to your strategy and ask yourself: “What are the most critical business processes in executing this strategy successfully in the eye of the customer”? Experience shows that most organizations can track their success back to 3-5 critical processes performed at the highest level. Once you have done this, map out the “future process” that will deliver the outcome. In doing so, make sure you are specific enough, i.e. you articulate the “how to” of the most critical tasks including measurable inputs and outputs.

Let’s take the process of Incident and Problem Management, for example. When mapping out this process you want to clearly define what happens at the front-end (the triage/ data gathering phase), the middle portion (diagnostic/potential cause isolation), and the back-end (incident resolution/implementation). At the interface of theses 3 phases you want to have specific quality standards for the output/input you are looking for (for example, the minimum data required in describing the problem “symptoms”). It’s the ongoing measurement of these standards that will help you track actual changes in behavior and will allow you to predict changes in performance (positive or negative).

Here are a few additional questions that need to be answered in order to put an effective measurement system in place:

  • What data object (measurement) will be recorded?
  • How will it be recorded?
  • How will the measurement be triggered?
  • What mechanisms will go into effect after the trigger?
  • When will the mechanism for measurement stop?
  • What logic or processing is needed to derive the measure?
  • Is there a simpler way of gathering/calculating this data?

Executed systematically for all key processes, the above approach will give you a “value dashboard” for monitoring and controlling your core service processes.

Christoph Goldenstern is a Global Vice President and Principal with Kepner-Tregoe. He has more than 15 years of strategic and operational consulting and management experience with focus on Technology and other B2B industries. Christoph can be reached at


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