Thankfully, Google has been looking into this. A few months ago Google announced a new feature on Google Analytics called Inpage analytics ( the new avatar of site overlay feature) which allowed marketers and owners of websites  visually analyze each page on their website and do a customer behavior analysis. Here’s a demo of how this tool can actually help you, if you are desperate to find a way to analyze online customer behaviour on your site.
 

If you want to check Google’s introductory video for inpage analytics for an e-commerce solution, here it is.

Leading indicators should be good warnings -like a compass, so that one can steer towards the targeted goal. Lagging indicators are a measure of what has already happened, and they are normally used to simply validate the success or failure of the goal, not to cause it. Coincident indicators are like triggers which show up at the same time when the objective is met. Here are some leading,lagging and coincident indicators examples for a cruise.

Case: A boat starts from Dublin and is expected to reach Liverpool in 5 days
OBJECTIVE: To reach Liverpool in 5 days.

Lagging indicators
Timer: to record time taken to reach Liverpool
Travel log: provides information on the boat speed and the distance covered.

Leading indicators
Anemometer (wind indicator): provides information on wind speed and direction, thus adjustments can be made to sail to maximize speed.
Compass : provides information on the course being steered thus enabling the course to be plotted.
Radar: highlights obstructions en-route.

Coincident indicators
Sea level gauge: to find out depth of water. When this level reaches a certain threshold, the boat has reached ashore safely.

A word of caution needs to be said here: any indicator does not necessitate successful fulfillment of the objective being measured. Going by our previous definition a good indicator is that which can sufficiently warn (leading indicators), measure (lagging indicators) or be triggered (coincident indicators). For leading performance measures to play an effective role in the improvement process, there must be an association between the inputs that the leading performance measures are measuring and the desired lagging outputs. There needs to be a reasonable belief that the actions taken to improve the leading performance measure will be followed by an improvement in the associated lagging measures. For eg: the fuel tank gauge on a car’s dashboard indicates the level of fuel while driving the car and is a necessary leading indicator to reach the destination on time (time taken being a lagging indicator).  Reading this gauge and taking steps to ensure that the fuel tank has enough fuel to go the distance ensures that the time taken to reach is minimum.

Using a good mix of leading, lagging and coincident indicators , we can ensure that all are initiatives and quarterly goals are being met with predictability and are helpful to measure success. I bet my next quarter is going to be different, at the least, more predictable.

Related posts

Learning Leading, Lagging and Coincident indicators from Kungfu Panda –Part I

This is a good bare-bones approach to identifying the leading and lagging indicators at each stage, but often we find it difficult to decipher either the milestones or performance metrics that add up to the final objective.

For eg: Let’s try to measure the objective of “reduce time-to-closure for a sales deal”. The sub-objectives or milestones that lead up to this event could be – reduce time to generate lead, reduce time to touch base with lead contact, reduce time to move lead to opportunity and reduce time to closure. In this case, it’s quite easy to find out the milestones and their respective measures, called lagging indicators, give some predictability on “deal closure”.

Let’s now measure the objective of “productivity improvement”. What would be the milestones leading to this event? We’ll have a hard time guessing this. Most executives are comfortable just measuring “productivity improvement” with a loosely connected metric such as “no. of billable hours” or “earned value”, but these are just lagging indicators for this event, and these do not ensure that the improvement is already happening

We need a better way to nail down leading and lagging indicators.

It’s at this time that Po- the supposed epitome of “awesomeness”, popularly known as the Kungfu Panda came to my aid.

If you’ve seen the movie Kungfu Panda you cannot help but feel amused and awestruck at the same time that a Panda his size could do the splits. I mean, look at him! His very size defiles the word “flexibility”. Ok, let me cut to the chase instead of this rambling over his “awesomeness”. In the movie Po’s taken through a strict regime by master Shifu. At first, there are these “milestones” that he needs to get through - the blades, the rings, the fire, the tumbling cistern, walking up the dragon temple, etc. but Po finds himself unsuccessful at every step. Going by our earlier sequence diagram, the performance metrics for each milestone is somewhat like the leading indicators for his becoming the Dragon Warrior, but each milestone’s success or failure is a lagging indicator for that milestone.

These are sequential steps that are supposed to lead up to making Po the Dragon Warrior. However, we notice that the choice of these leading indicators don’t help Po persevere towards the goal. There’s something about these milestones and indicators that obstructs Po from getting where he ought to get. With time, there is an interesting insight which master Shifu gains which is our key to understanding good leading indicators.

Po’s greatest stumbling block for becoming the Dragon Warrior is his body weight and over-eating habits. Most of them in the field of kungfu had exceptional flexibility of bones and muscles and Po was the odd one out. One day Po finds a bowl of momos that are located in a precarious place up the shelf. What is amazing is that in order to get his hands on the bowl of momos, Po does a center split perfectly balancing his entire weight with just his heels.

Shifu uses this “carrot” to teach him kungfu and he successfully trains Po to incorporate these skills into a makeshift yet effective kungfu style.

Po’s penchant for food is what is called a driver to the targeted goal. Po’s way of achieving the results is not via sequential, progressive milestones but by effective drivers. So in this case, the leading indicator would be the no. of times Po gets to eat the food from master Shifu’s bowl. The better this indicator the more close he is to becoming the Dragon Warrior.

So then a good leading indicator is not just the metric for the previous milestone event, but is the metric for the driver for the next milestone or objective.

In my next post, I’ll take up a real case and help you see the leading, lagging and coincident indicators through that example.

The post outlines 4 steps that every organization must take prior to (and while doing ) a search for the right Software developer or team. From our perspective, these steps are both logical and necessary to ensure the success not just of your association with the software developer, but also the business itself.

Too many engagements have started with just a vague, high level idea of an opportunity and the discovery of a low cost software developer or a senior developer in some third world country. The approach here seems to be more one of ”define the idea through multiple software development iterations”. Many months (and tens, if not hundreds of thousands of dollars ) later, comes the realization that not only is the solution not financially viable, but that the opportunity itself may not really exist. Naturally the end of the association is usually not very smooth either.

• Number of times their business is viewed via a Yelp mobile app
• How many calls were made to their business via a Yelp mobile app
• Directions to their business requested via a Yelp mobile app
• Check-ins

Yelp will soon be releasing these metrics as an add-on tool with their mobile app. What’s interesting to note is the growing demand for intelligence from business owners, not just information. Most social sites and social directories need to gear towards turning their massive warehouse of information into business intelligence in people’s pockets - accessible, simple to decipher, intuitive and intelligent.

What companies like Yelp or Foursquare, however “social” they get, may not do is this: to make these metrics more “social” or let consumers dabble with their own metrics. They will get there someday, but not just yet. Till such time, we’re always around when someone “yelps!”.

As part of the desgin of a software for a client we had to architect roles and permissions for different users of the system . The organization seemed to have a number of roles, some of which were permanent and some were temporary. In addition, some of these roles were distinct (they had permissions that no other role had), whereas some others had common permissions (plus some unique ones). Since the number of roles were less than 20, we decided not to have a “Role management” functionality, where the administrator would allocate permissions to roles in a dynamic fashion.

Our finest minds went to work on this problem, and we came up with a two category solution, where one set of roles were primary roles (the permanent roles) and some roles were secondary(the temporary roles ). Moreover, in the primary role category, most of the roles were hierarchical (moving up a chain of command), so every higher role encompassed the permissions of the lower role (along with a few new ones). We also gave the facility for users to have a primary and one or more secondary roles. Naturally, we were quite pleased with what we came up with.  

However after we developed the solution and deployed it, the customer quickly became quite dissatisfied with the solution. What we missed out in our design was that there were two primary roles that were quite distinct and separate from the other heriarchically arranged roles. The customer was shocked to find that while he could choose one primary and any number of secondary roles, he was unable to choose two primary roles (one heirarchical and the other distinct). It had never occured to us that in the organization, there may be people who held two primary (??) roles simultaneously.

It taught us an important lesson. Business intelligence (the old fashion way) is not just about creating fancy reports, it is also about questioning every assumption and making sure that the software architecture maps are as close to the real business as possible.

Is it any surprise then, when the CEO looks at his IT manager, and grumbles that IT just doesn’t get the business? Nothwithstanding the advantages of running numerous “Align IT with Business” initiatives” (advantage for the consultants, that is), I’ve always wondered why CIOs / IT Managers don’t start their software architecture/design by first defining reports that clealy show whether the problem is being solved, and to what extent.

In many cases, these metrics were never defined, and it is here that IT can bring in the first “business level” contribution. Once these metrics (and reports) have been defined, then the next step would logically be to measure the current “as is” situation. Again, here too there may be instances where business function has no idea of how the problem is currently being managed, and again, IT can contribute to the business by mapping the exisiting business processes. 

As a CEO, this information now allows me to confirm whether an IT intervention is actually needed, what it’s “core business benefits” should be, and what are the absolutely essential features of the software that needs to be developed to solve the problem/ improve the situation. I distinguish “core business benefits” from a more generic ‘cost/ benefit” exercise in that while a Cost / benefit analysis normally looks at an “inside out” picture (what all the software can do versus how much it will cost to build them in) a “core business benefit” gives an “outside in” perspective (what the essentially few things that the software must do well to solve a business problem).

As an Intelligent Business software provider, at Stylus, this is a challenge we have taken on, and our RadicalRootingTM process looks at software requirements backwards, starting from the reports that tell us what problem the software seeks to solve and then allow that insight to define what the software should and should not do. It’s amazing what we’ve learnt through this, but I guess that’s the subject of another blog in the near future. It isn’t an easy ride, but as we see our clients’ businesses succeed, it confirms that it’s a worthwhile one.

As business leaders, this puts additional pressure on us. Should I now plan and invest now to take advantage of the growth that I hope to see over the next 12 months, or should I wait just in case the whole recovery stalls and/or slows down? One thing I have found out over the last year is that while IT investment cannot be kept on hold any longer without degrading business capability, it is possible, even in this environment to look at IT as more than just maintenance, as an investment that can improve the business decision making capability.

The development of new platforms and tools in the Business intelligence space ( cloud, mobile and on premise) means that now, more than any other time in the past, it is possible to analyze and make sense of data more quickly and relatively inexpensively. This means that rather than spend on new software that will collect even more data, now may be a good time to build/buy robust analytics software that can better use the existing data locked away in your existing systems, in order to make better decisions. And it needs to do so in an easy to use manner, so that business leaders can do the job themselves and not have to rely on expensive human analysts to download data and slice and dice them on ubiquitious spreadsheets.  

Businesses today can neither afford the time not the cost for this spreadsheet mania. Our own research has discovered amazing ways by which companies today can leverage low cost BI solutions to ensure that their software doesn’t just provide data, but track KPIs that are closely linked to the business health of the firm. After all, if the recession has forced our people to rise to the challenge, shouldn’t we expect the same from our existing business software applications as well?

A powerful purpose almost always doesn’t have “I” at the center.

I would have been glad had the problem stopped at just music. But it didn’t. An entrepreneur once came to us at a time when his business simply wasn’t escalating and his funds were drying up. He didn’t come to us with the problem, rather with a solution he thought might work and hoped that we could create the solution for him after studying his requirements. But our folks were curious about his business. We worked along-side him asking him some candid, thought-provoking questions about the purpose of the solution. Quizzing him not only gave us a handle on the problem to be solved, but gave him new insights about the giants he was facing.

It helped him see with crystal clarity that it wasn’t “he” who was actually facing the problems, but his clients!

Once the entrepreneur saw value in our rooting process, he also saw value in roping us in for the solution conceptualization phase. But the real problem cropped up when we began developing the solution. Three months post the business analysis phase, one day, he let out a cry “I don’t like the idea of the solution being owned up by the users – it’s my solution and I want to have control over it!” To the entrepreneur, the solution, firstly, met an intrinsic need in him, more than solving the problem of his clients. The purpose of that solution finally spiraled down to a big ‘I’!

As an analyst and a BI enthusiast, I figured that for a business to be successful, a solution provider has to brace himself and ask some smart, sound and solid questions about the purpose, goal and plausible business impact of the solution, not with skepticism but with curiosity. If you turn to third-world countries like India or China for your business solutions, then you may want a consulting outsourcing partner with a business outlook. Questioning the premise of the solution not only gives a good context for the solution creator but also gives the client an outside-in perspective of the value the solution brings to his users. More than once, our clients have found value in our RadicalRootingTM approach where we ask, answer and solve business problems and measure solution performance. RadicalRootingTM helps us to not just create solutions, but steward the client’s projects responsibly by maximizing value for the clients through proposed alternatives. Well, I think we just about understand that our purpose at Stylus is not about “Us”!

Tell me more about RadicalRootingTM!
For which clients have we taken to this approach?
I like your approach and I want to contact you.

But all this is about to change in ways that can cause wide impact. Over the last few years, Microsoft has been deliberately building up their Business Intelligence services into their MS SQL server software. I believe that these services will make Microsoft SQL server the database of choice for small and midsize companies. Why? Because of two main reasons:

a) With these services, Microsoft, which has traditionally been a strong contender in the SME segment, has effectively combined a transactional database and data warehouse into one server. This has significant implications with respect to both, cost of licenses, and the IT infrastructure that is required (both in terms of hardware and people). Now customers don’t have to spend on expensive BI tool licenses such as Cognos, Web focus, etc. when they come to Stylus as Stylus uses MS SQL database server for all customer’s applications and SSIS, SSAS, SSRS all come as free add on services with MS SQL enterprise edition.

b) Secondly and more importantly it allows for the creation of what we call the “intelligent business applications”. These are applications that not only have clear linkages to one or more business level KPIs, but they also allow the business users to do their own analysis and create their own reports. If customers already have existing applications built with MS SQL and require further customization, Stylus is well equipped to handle it, as it understands the advantages of MS SQL over the other BI tools available. To illustrate our expertise, please click here, to learn how healthcare BI services developed by Stylus can help improve a hospital’s operations, productivity and profitability.

But has this been a core feature of any BI solutions in the past? Yes, but the important thing to note here is that this will become (IMHO) an integral part of every software application that comes out in the near future (at the very least, that will be the case for every software we make at Stylus). BI will no longer be a separate technology with it’s own army of high priests (read Data warehousing experts) and prophets (read BI analysts) but an essential component of every software application that the business will use, be it ERP, CRM, MIS etc. In addition with minimal extra work, users will be able to quickly connect these individual KPIs (from separate applications) into Performance Management Dashboards that give a quick view of not just their performance but the Performance of the area of the business they are responsible for.

Now if that isn’t change you can believe in, I don’t know what is.