Creating Leading Indicators

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Presentation from the 2013 Iowa Recognition of Performance Excellence (IRPE) on creating leading indicators within your organization. Includes worksheet template to create them on your own.

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  • Show of hands who has heard of leading or lagging indicators?Both?Display definitionsAsk for examplesLagging Measures: Sales, Profit, Safety Rate, W. Edwards Deming, the management and quality guru, said itbest when he told executives that managing a company by lookingat financial data (lag measures) is the equivalent of “driving a car bylooking in the rearview mirror.”Leading indicators must guide future actions…simply measuring them and not doing anything about it is wasteful…Key point of leading indicators is to:Measure themTake action on themMany times we are drowning in data but searching for knowledge…
  • Generally organizations want to use leading measures when they are
  • Do you want to create leading measures for everything?
  • At your tables is the worksheet, as a group or in partners work on some examples, go through the 5 steps, Q&A.
  • Creating Leading Indicators

    1. 1. Creating Leading Indicators Scott J Burgmeyer Bridgestone America’s Tire Operations Des Moines, IA burgmeyersco@firestoneag.com
    2. 2. Creating Leading Indicators Goals of our time together….. Understand what leading and lagging metrics are and why they are important Create leading indicators Have fun…or at least pretend
    3. 3. Creating Leading Indicators Leading vs Lagging Indicators Lagging Indicators: Leading Indicators: Measures goal accomplishment, e asy to measure but hard to influence. Predict goal achievement, you can influence them but can be more difficult to measure.
    4. 4. Creating Leading Indicators Example My goal is to be 50 lbs lighter by EOY 2013. Lagging Indicator: My weight on the scale Leading Indicator: Calories consumed Calories burned
    5. 5. Creating Leading Indicators Why use leading measures? • Stop working on things you don’t need to • Focus your actions on the right things • Improve your outcomes • Others??
    6. 6. Creating Leading Indicators Why don’t more organizations measure leading measures? • Focused on outcomes • Sometimes hard for leaders to understand • Can be hard to measure and track • Requires you to do something differently
    7. 7. Creating Leading Indicators How do I create great leading measures? 1. Determine what lagging indicator(s) you want to create leading indicators on. 2. Create a list of options for lead indicators and how you will measure those ideas. 3. Verify they are really lead measures. 4. Rank them on importance. 5. Implement and take action Adapted from The 4 Disciplines of Execution
    8. 8. Creating Leading Indicators Creating Leading Measures Creating Lead Measures Template Idea for measure How to measure? Days of exercise Calorie Intake Calories burned Lag Measure: Lose 50 lbs by EOY 2013 Test Predictive? Influenceable? Count the number of days that I exercise On going? Can it be measured? Worth Measuring? Predictive? Influenceable? Record what I eat and the total number of On going? calories Can it be measured? Worth Measuring? Predictive? Influenceable? Record what I do each day and the number of On going? calories burned. Can it be measured? Worth Measuring? Rank N Y Y Y N Y Y Y Y Y Y Y Y Y Y Ues It? 3 NO 1 YES 2 YES Adapted from The 4 Disciplines of Execution
    9. 9. Creating Leading Indicators Time to work!! Creating Lead Measures Template Idea for measure How to measure? Lag Measure: Test Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Predictive? Influenceable? On going? Can it be measured? Worth Measuring? Rank Ues It? Adapted from The 4 Disciplines of Execution
    10. 10. Creating Leading Indicators References Using Leading Indicators to Drive Sustainability Performance. Environmental Quality Management, Summer 2009. www.interscience.wiley.com The 4 Disciplines of Execution. Covey, M. &. (2012). New York: Free Press. Determining Leading and Lagging Indicators. Society for Maintenance and Reliability Professionals Metric Guideline. 2009. www.srmp.org.

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