Some members of our leadership team argue that lagging indicators like weekly revenue and cash in the bank are the only numbers that actually matter, while others want only activity-based leading indicators. What is the ideal balance of leading and lagging metrics on a weekly EOS Scorecard?

Question

Tyler Smith · Accepted Answer

To build an effective weekly Scorecard, you must understand that leading indicators are about activities you can control today, while lagging indicators are about results that have already happened. A healthy weekly Scorecard needs both, but the ratio must be heavily weighted toward leading indicators.

The ideal balance is roughly eighty percent leading indicators and twenty percent lagging indicators. Out of ten metrics on your Scorecard, eight should measure activities that happen in real time, and two should measure the ultimate financial or operational outcomes.

For example, lagging indicators like weekly revenue or cash balance tell you where you stand right now, but they do not tell you where you are going. If your cash is low, it is too late to fix the mistake that caused it weeks ago. That is why you need leading indicators like outbound sales calls, project milestones met, or client onboarding calls completed. If those leading indicators are consistently green, your lagging financial indicators will inevitably turn green in the future.

If your Scorecard is dominated by lagging indicators, you are running your business by looking in the rearview mirror. You will only realize you have hit a wall after the crash. Shift your focus to tracking the weekly activities that drive those lagging results, and you will gain the ability to predict your financial future rather than just reporting on your past.