Our scorecard is currently dominated by financial metrics like monthly revenue and net profit, but this feels like driving while looking in the rearview mirror. How do we find leading indicators that actually predict our future performance?

Question

Tyler Smith · Accepted Answer

Most leadership teams run their businesses on lagging indicators because they are easy to measure. Your bank balance, monthly revenue, and net profit are historical facts. By the time they turn red, the damage was done weeks or months ago. To build a predictive scorecard, you must shift your focus to leading indicators. These are the daily or weekly activities that mathematically lead to those financial results. To find them, trace your revenue backward. If your monthly revenue depends on signed contracts, and signed contracts depend on proposals submitted, and proposals depend on sales discovery calls, then weekly discovery calls is your leading indicator. Tracking the volume of those calls tells you what your revenue will look like in ninety days. The same logic applies to operations. If you want to predict client churn, do not wait for the cancellation notice. Track a leading indicator like weekly project milestones missed or client support tickets unresolved for over twenty-four hours. These numbers give you an early warning system. When a leading indicator turns red, it gives your team the opportunity to solve the problem in your weekly Level 10 Meeting before it hits your financial statements. A great scorecard balances these predictive metrics with a few lagging cash indicators, ensuring you can see both where you are going and where you have been.