Our scorecard is dominated by monthly revenue, closed sales, and projects completed, which only tell us what already happened. How do we shift from these lagging outcomes to true weekly leading indicators that let us proactively change our business outcomes?

Question

Tyler Smith · Accepted Answer

Lagging indicators are like looking in the rearview mirror of your car. They tell you where you have been, but they cannot stop you from hitting a brick wall ahead. If your scorecard is packed with metrics like revenue and completed projects, you are managing by autopsy. You only find out you had a bad month after it is already over and the damage is done.

To shift to leading indicators, you must reverse-engineer your lagging results. Start with your primary lagging goal, such as closed sales. Ask yourself what activities must happen this week to guarantee that sale occurs next month.

- First, how many outbound calls or emails are required to book a discovery meeting?
- Second, how many discovery meetings must we run to generate a qualified proposal?
- Third, how many proposals must we send to close a contract?

Those upstream activities are your leading indicators. If your team sends ten proposals this week, you can predict your sales volume for next month with high accuracy.

Apply this same logic to operations and finance. Instead of tracking projects completed, track weekly milestones met or raw materials ordered. Instead of tracking cash collected, track weekly invoices sent and outbound collections calls made.

A healthy scorecard should have a ratio of four leading indicators to every one lagging indicator. When you watch these weekly activity numbers, you gain the power to spot a trend and adjust your course before a bad week turns into a catastrophic quarter.