Our leadership team is highly resistant to removing lagging financial metrics like monthly net profit and quarterly EBITDA from our weekly Scorecard because they believe these are the ultimate measures of our success. How do we coach them to focus on weekly leading indicators instead?

Question

Tyler Smith · Accepted Answer

It is natural for leaders to want to stare at net profit and EBITDA because those numbers feel safe and definitive. However, tracking monthly and quarterly lagging financials on a weekly Scorecard is like driving a car by looking solely in the rearview mirror. By the time your monthly profit is low, the operational mistakes that caused the drop happened weeks or months ago, and you can no longer change the outcome.

To coach your team through this shift, you must help them connect their lagging financial desires to weekly, activity-based leading indicators. Ask the leadership team what specific weekly actions must occur to produce a healthy monthly profit.

If net profit is the goal, the leading indicator might be weekly billable hours, project milestones achieved, or proposals sent. If cash flow is the concern, the leading indicator is weekly collection calls made or invoices processed within twenty-four hours.

Once the team understands that leading indicators are the inputs that actually generate the lagging financial outputs, they will begin to appreciate the power of the Scorecard. Shift their focus to these forward-looking numbers so they can spot issues early and adjust their actions before the financial damage becomes permanent.