Lies, Damn Lies and Metrics
When working towards an objective or goal there are often some measurements taken to try to indicate progress. These indicator measurements (shortened to just metrics) will be either leading or lagging indicators and it’s important to understand the difference.
Key Performance Indicators
Indicators are statistical values to measure the current situation as well as attempting to predict trends and outcomes. A Key Performance Indicator is a measurable value that shows how effectively a company is achieving business objectives. Business objectives can vary from ROI (return on investment) and research, to reduction of incident rates, reduction of cost, and improvement of product fit.
Use indicators that quantify the current situation and that provide insight into the future.
- Lagging indicators quantify the current situation.
- Leading indicators provide insight into the future.
Lagging indicators are typically output oriented. They are easy to measure but hard to influence or improve. A lagging indicator measures something that follows an event. A lagging indicator is often used to confirm that a pattern is occurring.
For example, many organizations have an objective to deliver some items of work on a specific release date. Number of items Delivered, is a clear lagging indicator that is easy to measure. A simple report from a work tracking tool (e.g. JIRA) will produce this. Achieving this objective in the future requires product release predictably. For product release predictably, there are several leading indicators.
Lagging Indicators are things that might change in the future. A simple example is ones weight.
Leading indicators are easier to influence but harder to measure. They are harder because processes and tools need to be in place in order to measure them.
Building a product (or larger features of a product) is not a known endeavour. It’s the main reason why iterative development processes have proven superior to the waterfall process. It takes time for the level of effort and the technologies required to build the product to be understood. When changing priorities are also taken into account, the lagging indicator becomes an improbably difficult target to hit. Using a leading indicator lets you see if you’re moving in the right direction. It gives you a chance to make changes while there is still time.
If product release predictably is required to deliver some items of work on a specific release date, what leading indicators can help. A backlog with only a few items ready to be worked on indicates a poor understanding of upcoming deliverables. Unstable velocity indicates a lack of measurable progress that can forecast a completion date. Number of ready work items and velocity stability are good leading indicators of product release predictably. They provide insight into future releases.
Leading Indicators are things you can change today. Simple examples are portion size or calories consumed.