I would like to share Insight #62 from my book “The Dangerous Book for CEOs”.
Lag KPIs focus on performance after the event, while lead KPIs focus on the activities and processes that make the results happen. The single most important KPI you can track is the one that drives your business engine.
KPIs and dashboards give us the metrics that tell us whether the plan is working or not. They’re your business’s vital signs.
There are lead and lag indicators. The lag indicators tell you what has happened after the event, such as revenue or profit for a month. The lead indicators tell you if you are doing what you need to do – such as sales call made, size of the pipeline, new contracts signed, etc. – so the lag indicator needles move in the right direction.
It’s essential that these be displayed in a visually compelling way and that they be updated regularly. This is because not just you, but the entire team must be able to see these measurements, interact with each other about them, and notice which direction they’re moving in.
What are YOUR KPIs?