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Leading Indicators of Success — A Lens For Decision-Making

The Verge asked Satya Nadella what his hardest challenge at Microsoft will be. He responded —

“A change at Microsoft where we no longer talk about the lagging indicators of success — … revenue, profit. What are the leading indicators of success? Customer love. … So getting an entire organization to fall in love with these leading indicators of success and staying true to them is perhaps the biggest challenge, but it’s also what I know to be the biggest driver of our success.”

What an interesting and powerful lens to inspect decisions with. Are you focusing on leading indicators of success or lagging indicators of success?

Every decision has a desired end goal. What outcome would qualify that decision as a success? Chances are the first thing you think of will be the lagging indicators of success. Trying to build a successful business? You’re trying to make money. Trying to become a writer? You want a lot of people to read your writing.

Trying to improve the lagging indicators means you’re playing the numbers game. You’re trying to get the stats up. If you’re trying to make money it means you’re investing in making your revenue go up, not improving the machine that generates that revenue.

What do I qualify as success for my writing? Having a piece blow up on Medium would satisfy the lagging indicator of having high readership. But after that initial surge in readers, it would be hard to ever recapture that measure of success — I’d probably stop writing. So instead of investing in the end goal of having a lot of readers, invest in the leading indicators of success — finding pleasure in the work, having friends read and discuss your work with you, and cultivating writing as a regular habit.

The most interesting thing about investing in leading indicators is that you’re not forgoing the lagging indicators of success. You’re simply pushing them into the future, and often for a return much higher than what you could get now.

So next time you have a decision pass it through this lens. What are the leading indicators and what are the lagging indicators of success? And how can you invest in the leading indicators in a way that will make the lagging indicators inevitable?