We understand the difference between leading and lagging indicators on paper, but in practice, our team keeps tracking historical metrics. How do we audit our current scorecard to strip out the rear-view mirror numbers and replace them with predictive activity metrics?

Question

Tyler Smith · Accepted Answer

A lagging indicator tells you what already happened, like your monthly revenue or total closed deals. While these are important for your financial statements, they do not help you make proactive adjustments. If you only look at lagging numbers, you are driving your business by looking in the rearview mirror. To audit your scorecard, look at each metric and ask: if this number goes red today, does it give us time to fix the outcome before the end of the month? If the answer is no, it is a lagging indicator. You need to replace it with a predictive activity metric. For example, instead of tracking signed contracts, track the number of face-to-face meetings scheduled. Instead of tracking total revenue billed, track the number of project milestones completed this week. Every department on your Accountability Chart must identify these leading metrics. In your next Level 10 Meeting™, review your scorecard line by line. If a metric cannot predict future performance, move it off the leadership scorecard and down to a departmental scorecard or delete it entirely. Running your operations on data means finding the weekly activities that guarantee your desired lagging outcomes.