/ 4 Steps to developing your leading indicators

Knowledge Base Article
Article Type: Blog
Author: Bibi M

4 Steps to developing your leading indicators

“A business decision made a fraction of a second early can be the difference between a successful journey and an accident”


In our KPIs to Drive Your Business Forward post we focused on the key KPIs you need to develop to drive success by staying focused on the priorities. We suggested that you focus on leading indicators, whenever possible. Leading indicators help you peer around the corner.

They are predictive and they give you some insight as to what is about to happen. Accountability to the right leading indicators with clear success criteria will drive performance.

How do you develop and use leading indicators?

Here is a 4-step process to help you.

Step 1: 

Identify the problem. Begin with the end. What is the business goal or the business problem you are trying to solve?

Step 2: 

Articulate the desired result. What is the outcome you are trying to achieve? Think of your result in measurable terms, like percentage of growth. This is your results indicator.

Step 3: 

Start digging deeper with questions and curiosity. Ask questions about what drives and creates the results you are looking for. Do not stop at the first or second question. Sometimes it takes five or six questions to get to the best leading indicator to drive the results you are looking for.

Step 4: 

Drive Results. What leading indicators do we push on to drive success and how do we measure progress? What are the red-yellow-green success criteria for your leading indicator?

How do you know that you have found a leading indicator?

It is measurable and you can push on it for results. Many executives stop after asking two or three questions. They stop just before true insight is uncovered. Don’t stop asking questions until you discover a strong leading indicator to help you solve your particular business problem. Ask why until you think you will cry. This will help you eliminate weak indicators.

The best leadership teams stay focused on indicators that support good decisions. Imagine how many train wrecks you can avoid by being proactive! You can be proactive because what you measure is a leading indicator that prompts you to take action before the potential crisis arrives.

Here are few tips for using leading indicators to achieve results:

  • Share your KPIs. Go public with them. Ask other team members how they can positively impact your KPIs.
  • Measure what you want to move, rather than everything that is moving. Measure most important  KPIs. You only need a few if you actually take action. Everything else is a waste!
  • Identify a critical number to measure your progress for each quarter and each year. Track your critical number and discuss it with your team weekly.

After you have discovered your KPIs, use them to create accountability and drive the right actions. It is action that helps you get results. To guide the hard work of your teams, establish red-yellow-green success criteria.

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Post originally published via ICAEW Business Advice Service – click here

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