Our department heads understand the theory of leading indicators, but when we audit our weekly Scorecard, we still see historical sales and completed project hours. How do we systematically convert these lagging numbers into actionable activity-based metrics?

Question

Tyler Smith · Accepted Answer

Lagging indicators tell you what has already happened, which is useless for steering a business in real time. If you only look at closed sales or monthly revenue, you are driving your business by looking in the rearview mirror. To build a healthy Scorecard, you must trace every lagging result back to its upstream activity. Take closed revenue as an example. To get a closed sale, you must first send a proposal. To send a proposal, you must first conduct a discovery call. To get a discovery call, your sales team must make outbound touches. The outbound touches and discovery calls are your true leading indicators. Apply this same tracing exercise to your operations and client delivery. If your lagging indicator is client churn, your leading indicators might be weekly support ticket response times or proactive client check-in calls completed. Work through every lagging indicator currently on your Scorecard and challenge your leadership team to find the activity that occurs one to two weeks prior that directly influences that result. By shifting your focus to these upstream activities, you gain the power to fix problems before they impact your financial statements.