Now, the big difference between the basket ball game and the business world is latency. Imagine, the score on the basketball scoreboard would show the result of last year’s match, not the current one the team is in? Imagine, all lights get turned off at the moment the ball is thrown and you don’t know at that time if the throw hit a score or not? This kind of action-result latency would introduce a whole new dimension of uncertainty, wouldn’t it? Would the game be boring? What would be the basketball’s team real time indicators of success, of their route to winning the match?
He’s making a good point. Of course basketball wouldn’t work if you see one year later if a shot goes in. Who would sit in an arena for one year and wait for this? So action-result latency in basketball is very short. That’s why I love this game so much!
I don’t think basketball and business ever will have the same timescale. But I don’t want to give up the analogy too quickly. We can learn something from this for business. There are different action-result latencies!
In basketball you also have a one year latency. You only can become champion once a year. And then there’s a net time latency of 40 minutes (in all the European leagues). You don’t know after your first shot if you will win or loose the game. The number of points are a leading indicator if you might win this game. Still in many games you don’t know until the last minute if you’ll win this or not.
What can we learn for business? We need to reduce the action-result latency. Often we can’t do this for the end result. So can’t we for winning a championship in basketball. But we can think about leading indicators, that have a shorter action-result latency. If the intended end-result of my change is revenue in a new market segment, a leading indicator could be number of customers in that segment downloading a document. For the end-result the action-result latency might be 1+ years. For the # of downloads this can be an action-result latency of days.
This will also help us to identify some quick wins and get into a flow. But more on this in a future post! Hope this helps. Leave me your leading indicators in the comments or reach out to me for a followup discussion.