I’m a fair weather college basketball fan. Growing up in India and the United States made me a renaissance sports fan – albeit an inch deep and a kilometer wide. As such, I know just enough about college basketball to understand the games when I watch them but not nearly enough to speak cogently in a group of ESPN addicts. This is why I love Nate Silver.
Nate Silver attended my alma mater – The University of Chicago. His sport was data analytics. He is widely regarded as one of the most prescient of predictors. Ardent fans and neophytes alike, as outlined on fivethirtyeight.com follow his March Madness predictions, religiously. So, when trying to articulate Key Performance Indicators (KPI’s) for a Contract Lifecycle Management (CLM) project, it made sense to turn to Mr. Silver for inspiration. By association, I’m now an informed basketball fan.
Leading Metrics beat lagging Metrics
One of the key things that I learned from Mr. Silver is that lagging indicators are nice, by leading indicators are better.
Win records. Of course they matter. Points per game? Number of players in double digits? Blocked shots? Free throw percentages? All important. However in the course of a game, as the game progresses, there are other measures that are statistically sound predictors of successful outcomes:
- – Time remaining in the game
- – Score difference
- – Pre-game win probabilities
- – The team that has possession at the time of prediction
When translating this to CLM measurement, it reminds me that lagging indicators like contracting cycle time or achievement of rollout/implementation deadlines are important but leading indicators are as well. Things such as:
- – Level of Readiness of a business group or contract type to adopt CLM
- – % Of contract documents that can be readily located for purposes of building a high integrity contract repository
- – % Of contracts that go through a legal review workflow (either via standards pushed out to non-lawyers or through actual routing through legal)
Here is one key difference between the basketball leading indicator measures and Contract Management measures. In the case of an active game the leading indicators are hard to control – they exist and they are predictors of outcome. In the case of CLM the leading indicators above, if measured, can be used for adjusting strategic decision-making, sequencing of effort or to proactively cultivate stakeholders.