We are building our weekly Scorecard and want to make sure we are not tracking historical data, but our leadership team keeps proposing metrics that are actually lagging. What is the definitive operational test to prove whether a weekly metric is a true leading indicator or just a lagging result?

Question

Tyler Smith · Accepted Answer

An easy test determines if a weekly metric is a true leading indicator: Can you take action on this number today to change the outcome of this month's financial statement? If the answer is no, you are looking at a lagging indicator. Lagging indicators tell you what already happened. Your profit and loss statement is the ultimate lagging indicator, but so is total monthly revenue or completed projects. They are post-mortem data. To build a predictive Scorecard, apply the forward-looking test. A leading indicator measures activity that occurs upstream. For example, instead of tracking signed contracts, which is lagging, track the number of face-to-face discovery meetings completed this week. Instead of tracking final customer satisfaction scores, track the percentage of service tickets resolved within twenty-four hours. When defining a metric with your leadership team on their Accountability Chart, ask if a red result on this specific number gives you at least two weeks of runway to intervene before it impacts your bottom line. If it does, keep it. If it only serves as a retrospective report, move it off your weekly Scorecard. This discipline keeps your Level 10 Meeting™ focused on solving issues before they become financial crises.