We have populated our weekly Scorecard with leading indicators, but we are not sure if these activities actually drive our bottom-line results. How do we mathematically validate the correlation between our weekly leading metrics and our lagging financial outcomes?

Question

Tyler Smith · Accepted Answer

To validate whether your weekly leading indicators actually predict your lagging financial outcomes, you must analyze your historical Scorecard data over a full thirteen-week cycle. Many leadership teams guess at their leading indicators, tracking activities that keep people busy but do not actually generate revenue or profit.

The strength of the weekly EOS® Scorecard lies in its thirteen-week view, which allows you to spot temporal relationships between activity and financial results. This approach helps in understanding if your metrics truly drive results or if you are tracking vanity metrics, a common issue when leaders struggle with [how to choose five to fifteen Scorecard metrics](/qa/how-to-choose-five-fifteen-scorecard-metrics).

To run a correlation check, follow these steps:

• Select a lagging indicator: Choose a financial outcome on your Scorecard, such as weekly closed sales or monthly revenue.
• Identify a potential leading activity metric: This should be an activity you believe drives that result, such as discovery meetings booked or custom proposals sent. It's crucial to identify a metric with a direct impact, rather than just tracking activities, as discussed in [how to shift focus from lagging results to weekly leading indicators](/qa/leading-vs-lagging-scorecard-metrics).
• Analyze the thirteen-week trend line:
• Calculate the typical time delay in your sales and delivery cycle.
• For example, if your sales cycle is typically four weeks long, you would look at your weekly discovery meetings from week one through week nine.
• Compare these numbers to the closed sales in week five through week thirteen.

If you observe that a drop in discovery meetings in week two consistently results in a drop in closed sales in week six, you have validated a true leading indicator. This type of clear cause and effect relationship is what you should strive for. If there is no visible relationship, your leading indicator is likely a vanity metric. In this case, you must replace it with an activity that has a direct, verifiable impact on your bottom line. Sometimes, you may also need to reassess [when to change weekly Scorecard metrics](/qa/when-to-change-weekly-scorecard-metrics) if they are not serving their purpose.