In his book Traction: Get a Grip on Your Business1, Gino Wickman retells a story of a plane flying over the Atlantic Ocean. He writes that halfway across the pilot announces that he has good news and bad news.
“The bad news is that the gauges aren’t working. We are hopelessly lost. I have no idea how fast we’re flying or in what direction, and I don’t know how much fuel we have left.”
“The good news is that we’re making great time!”
For many financial advisors, much attention is paid to numbers such as assets under management, advisory fees and total clients. There’s a good reason for this – it’s a clear way to measure success. However, these metrics are lagging measures, not leading measures.
What’s the difference? The authors of The Four Disciplines of Execution2 note that “while a lag measure tells you if you’ve achieved the goal, a lead measure tells you if you are likely to achieve the goal.”
For example, the final score of a baseball game is a lag measure (i.e. it describes who won or lost) while the score during the game is a lead measure (i.e. it predicts who is likely to win or lose). A homerun is also a leading indicator in that it affects the probability of the final outcome.
Similarly, a person on a diet would consider weight to be a lagging indicator while calories consumed is a lead measure.
The proactive advisor knows to focus on the lead measures with a particular emphasis on controllable activities. These measures may include the number of:
The lead measures will vary based on your overall goal. The key is that they must:
Once you’ve established these for your business, the next step is to establish a compelling scorecard. Ever noticed that people play differently when they are keeping score?
A good scorecard should show how are you doing. Are you on track? Are the lead measures moving in the right direction? Are they creating the results you want?
If you are struggling to make progress toward your vision, perhaps you need to take a good look at how you are keeping score.
Brought to you by Pathfinder Coaching & Consulting, https://pathfinderadvisor.com/.
The representations and opinions herein are the opinions and view of Pathfinder Coaching & Consulting and are not the opinions or views of EQIS. The information is believed to be reliable but is neither guaranteed by EQIS nor any of its affiliates. EQIS and Pathfinder Coaching & Consulting are not affiliated. EQIS is not responsible for the content or availability of Pathfinder Coaching & Consulting’s website. EQIS is not an agent for the third-party website nor do we endorse, approve or guarantee its products, services or representations. The website is provided for convenience only and is not under the control of EQIS. The security and privacy policies of the third-party website may be different from EQIS’s Terms of Use and Privacy Policy. Contact the external website for answers to questions regarding its content.
1. Gino Wickman, Traction: Get a Grip on Your Business
2. Chris McChesney, Sean Covey, Jim Huling, The Four Disciplines of Execution: Achieving Your Wildly Important Goals
LF1756
860-291-1998
Schedule Demo
