How Project Managers Can Become Data-Driven Team Leaders
To their disappointment my answer isn’t that simple. Performance measurements can either be used to monitor and follow up on past activities, or be used to learn and to predict a certain result. The former is called lagging indicators and the latter is called leading indicators. Lagging indicators measure the result of already performed actions while leading indicators measure the factors that impact the result. Leading indicators can thus be used to drive a certain behavior or change the direction.
A challenge for many organizations today is to find leading indicators when the time between performing actions and seeing the effect of them is too long. Another complexity is that a measurement that is lagging for one stakeholder can be leading for another, e.g. learning that the project is one month late can be a leading indicator for the project owner while lagging for the project manager. In general, leading indicators are important because they not only make us work more proactively but also stimulate learning, and this makes us more successful in our project execution.
Many project organizations have an abundance of performance measurements to report to stakeholders external to the project team (lagging). The steering committee needs economical reporting, following up on the critical dimensions of time and cost. It is common to get stuck in measuring what is easy to quantify, but in a non-repetitive environment such as today’s fast changing world, these measurements become lagging per definition. Quantifying a time delay or deviating costs is rather easy compared to measuring the underlying reason behind it (leading).