Leading indicators are also called inputs because they define what actions are necessary to achieve a measurable outcome. Therefore, that is the variable determining another variable to change/get impacted. Therefore, a leading indicator is harder to measure yet dynamic and changeable. Compared to a lagging indicator, which is easy to track and measure yet hard to really impact.
The key components of a leading indicator
To some extent, they force key decision-makers to ask:
- How can processes support or achieve high-level goals?
- How can the skills of a team or individual be improved to reach the desired outcome?
- How can process steps be improved to make product development more efficient?
Leading indicators usually measure intermediate processes and activities. If met, they are indicative of the business meeting its KPIs and objectives. Put differently, leading indicators are the drivers of results.
Some examples include:
- Number of leads generated.
- Number of contracts in negotiation per quarter.
- Team closing ratio.
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