Our team insists on putting monthly profit margin and trailing twelve month revenue on our weekly Scorecard. How do we explain the difference between leading and lagging indicators to get them focused on actionable weekly numbers?

Question

Tyler Smith · Accepted Answer

Your weekly Scorecard is not a financial statement. It is a dashboard designed to show you where the car is heading, not where it has already driven. Monthly profit margins and trailing twelve month revenue are lagging indicators. By the time you review them, the work is done, the cash is spent, and you cannot change the outcome. You must teach your leadership team to shift their focus from outcomes to activities.

Leading indicators measure the inputs that generate those lagging financial results. For example, you cannot directly control profit margin on a Tuesday afternoon. However, you can control average project estimation variance, daily utilization rates, or the number of billable scope changes approved. If those leading indicators are green, your monthly profit margin will naturally take care of itself.

To transition your team, look at each lagging financial number they want to track. Ask them what specific actions must happen seven days prior to influence that number. If they want to track weekly revenue, track instead the number of projects kicked off or billable milestones signed off. If they want to track profit, track weekly billable hours vs non-billable hours. Keep the focus entirely on activity-based, real-time metrics. This is how you build a predictive system that allows your team to catch and solve issues in your Level 10 Meeting™ before they ruin your monthly performance.