Most process improvement initiatives and their success are decided by the performance measurements that precede them. Going down the rabbit hole trying to get an operation running more optimally by solely focusing on the one performance metric that signifies its success can be lethal to the entire effort.
To give an example for such a situation, imagine an incident management department trying to improve by only measuring and forcing improvement to “service availability”. The entire operation ends up working as a fire department, panicking at every major outage, staying reactive in its approach to service management.
This is because Service Availability is a “lagging” performance indicator. It represents the past and does not signify the future. In its very nature, it is reactive – you only see that your performance has dropped below a threshold after the fact. Which is why it is not actionable, and is inherently unsuitable for driving improvement.
But there is a better way.
On the opposite spectrum of “lagging” KPIs are “leading” KPIs. What sets them apart is their capacity to point to trends in the future, and their ability to trigger predictive corrective actions.
Leading indicators are indicators that change before overall performance shifts. They are therefore useful as short-term predictors of performance.
Again within the example of incident management, a “leading” KPI whose improvement can actually influence service availability is Mean Time to Know (MTTK), or the time it takes on average to diagnose incidents – focus on driving this down and, just like a snowball effect, incident resolution times will plummet and service availability will go up.
How to identify the Leading KPI?
When suffering from uncertainty in what measurements are the right ones to drive improvement, the first step would be to break an indicator into components and create a so-called KPI tree. In the case of handling technical incidents in a service provider landscape, the tree will look something like the diagram to the right.
At the top are the hugely important lagging indicators that show the results of the incident management efforts.
At the bottom are the extremely granular leading KPIs whose performance directly impacts the levels above them, and contributes to the top-level KPIs.
How to use them to your advantage?
Once identified, the leading KPIs can be influenced easily, because they are very operational. A change to the process, an increase of staffing, or adding smart tools – these things will quickly drive improvement that will then trickle up the KPI tree to beneficially impact the rest of the performance indicators.
And if there is any doubt about how realistic this is, just remember the last time you unsubscribed from a service, because your simple requests for support were mishandled.