Our leadership team is constantly debating the exact ratio of leading to lagging indicators we should have on our weekly Scorecard. How do we determine the right balance to ensure we are steering the business forward rather than just reporting history?

Question

Tyler Smith · Accepted Answer

An ideal weekly Scorecard for a leadership team contains five to fifteen high-level metrics, and the vast majority of these must be leading indicators. Lagging indicators, like monthly revenue or net profit, tell you what already happened. By the time you see a dip in profit, the damage occurred weeks or months ago. To run a business proactively, your Scorecard needs to skew heavily toward leading indicators, typically at an eighty-twenty ratio. Every lagging indicator you care about must have a corresponding leading indicator earlier in the sequence. For example, if your target is closing ten new deals a month, your weekly leading indicators should be the number of outbound discovery calls made, the number of qualified proposals submitted, and the number of second-stage pitch meetings scheduled. When you look at your weekly Scorecard during the Level 10 Meeting, you are looking for activity metrics that predict future success. If your leading activity metrics are green for four weeks straight, your lagging financial results will almost always follow suit. If those leading indicators are red, you have an early warning system that allows you to IDS the issue and make course corrections before the monthly financial statements arrive. Keep your eyes on the inputs, and the outputs will take care of themselves.