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Leading vs Lagging Indicators: Using Data to Predict [& Shape] The Future

MICHAEL N. NATALIZIO
Business Analytics at HNI

Being results-driven is an inarguable objective for 21st century business leaders.  By distilling an organization’s efforts into a few key measures of success, leaders can bring clarity to the otherwise ambiguous.  Data_1

But is a focus on results [a lagging indicator] limiting your ability to shape the future?

Key Performance Indicators [KPIs] are the foundation of the results-driven organization.  Once defined, these KPIs become the indisputable judge of performance.

Data_2Does the CEO get a bonus? If profitability met expecations.

Does the CFO get a bonus? If margins improved.

Does the CMO get a bonus? If sales grew.

Yet as much clarity as these metrics bring to an organization’s historical performance, they equally lack in predicting future success.  

While organization-wide KPIs certainly add value, they often deprive employees of specific and actionable behaviors that they can strive for on a daily basis. 

How are you and your leadership team providing direction for the many ‘insignificant’ choices that your teams are making on a daily basis -- choices that will significantly impact the future success of the organization?  How are you reinforcing positive behaviors (and providing career fulfillment) to top performers?  

As a results-oriented leadership team, it is essential to measure [and shape] performance at all levels of the organization. 

What are the key activities for each role that will move the needle in the right direction?  Which high-risk behaviors are you trying to drive out?   

By defining and tracking key metrics at an individual role level, you will be building leading indicators that will allow you to truly shape [and predict] the future.  



Topics: Transportation