Leading Indicator In A Nutshell

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.

Read Next: SWOT Analysis, Personal SWOT Analysis, TOWS Matrix, PESTEL Analysis, Porter’s Five Forces.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"