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.
Key Components of a Leading Indicator
- Definition: Leading indicators are also known as inputs as they determine the actions required to achieve measurable outcomes.
- Dynamic Nature: Leading indicators are harder to measure but can be influenced and changed as they drive results.
- Compared to Lagging Indicators: Leading indicators are contrasted with lagging indicators, which are easier to measure but less changeable.
- Key Decision-Makers: Leading indicators compel decision-makers to assess how processes, skills, and steps can contribute to high-level goals.
- Intermediate Processes: Leading indicators typically measure intermediate processes and activities that drive the achievement of KPIs and objectives.
- Drivers of Results: Leading indicators serve as the drivers of outcomes, indicating whether the business is on track to meet its goals.
- Examples: Leading indicators examples include the number of leads generated, contracts in negotiation per quarter, and team closing ratio.
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