KPIs
KPIs have proven themselves as a way to ensure we stay on track and actually achieve our goals, be it at a business level (i.e. How many new clients are we getting each day?) or a personal level ( i.e. how many hours of exercise am I doing each week? ). As I read through Cal Newport’s Deep Work he distinguishes between lead and lag measures, a big enough distinction that warrants keeping in mind while designing any KPI.
Lag measures
Lag measures are more in line with what we want to achieve, such as business profitability or exam scores. They are only observed after the correct decisions are made, which makes them less useful for driving decisions, as they only inform us on the quality of past decisions.
Lead measures
Lead measures are usually less aligned with what we care about, but provide us with earlier information, even if it isn’t always perfectly correlated with our goals.
Examples
In these examples, the Lagged Measures are what I care about, and the Lead Measures allow me to consistently build towards that goal, even if they don’t perfectly reflect it.
| Goal | Lagged Measure | Lead Measure |
|---|---|---|
| Becoming healthier | Overall tiredness during the day | Quality of the food I am eating |
| Knowledge | How confident I am in my knowledge | Exam scores |
| Better grades | Exam scores | Time it takes to correctly complete homework |
| Startup success | An actual problem is solved | Daily Active Users |
| Social welfare | Population satisfaction | Wealth Gini Coefficient |
Which other examples should I add?