Our leadership team is tracking plenty of metrics, but we are constantly surprised by sudden revenue dips because we are measuring the wrong things. How do we design a Scorecard filled with true leading indicators rather than lagging financial results?

Question

Tyler Smith · Accepted Answer

Many leadership teams make the mistake of filling their Scorecard with lagging indicators like monthly revenue, profit margins, and closed sales. While these numbers are important, they are history lessons. By the time you see a drop in revenue, the damage was done months ago. To build a predictive Scorecard, you must focus on leading indicators, which are the activities that drive those lagging results. For example, instead of tracking closed sales, track the number of outbound calls, initial consultations, and proposals sent. In your operations department, instead of tracking completed projects, track the weekly utilization rate and project milestones achieved on time. Every metric on your Scorecard must be a weekly, leading, and true number. Start by identifying the three to five activities that must happen every week for each department to be successful. Assign one leadership team member to be accountable for each number. When a leading indicator misses its target for two weeks in a row, drop it down to the Issues List in your Level 10 Meeting™. By identifying and solving these issues early through the IDS® process, you can prevent future financial dips before they ever hit your profit and loss statement.