Business Analytics for Sales and Marketing Managers: How to Compete in the Information Age

RELATIONSHIP BETWEEN LEAD AND LAG INFORMATION

Before we look into a more detailed presentation of how lag infor­mation is generated and can be used, first we briefly discuss the relationship between lead and lag information. It can be difficult to distinguish between lead and lag information, and for good reason, since lag information is used to monitor and optimize processes. However, if the process changes become fundamental, then we must assume that lead information has been used, since lead information by definition is the type of decision support used for a fundamental process change. Whether we use lead or lag information, therefore, has nothing to do with what algorithm was used or the type of data but with how fundamental the process change potentially could be for the way you do business. This also means that there might be situations where lead information was produced, but no fundamental changes of the process was created, just minor adjustments. We still would call it lead information because it was created with the purpose of potentially creating a new process.

To confuse things even more, lead information often is created based on thorough analysis of lag information. That is, by analyzing the historical process performance (lag information), we have learned that we should focus only on one product and two segments and abandon the old way of selling (lead information). For example, say your sales budget tells you that you are underperforming with the current number ...