Several years ago, I was interviewing today’s top (and pop) thought leader on KPIs. I hated his book, but I interviewed him because a friend recommended that I have him on my show.

I took issue with his 12-step process of creating KPIs. While we weren’t recording, I told him this was far too many steps. To his credit (and I can tell he’s a very humble person), he confided that he was working on a five-step process for creating KPIs.

Ouch, that’s still far too many steps.

And this is the perfect setup for the concept of leading and lagging indicators, a topic that typically surfaces when KPIs are discussed in small businesses. So-called gurus claim we should have as many leading indicators as lagging indicators. The focus is on the prescription, not the logic behind it.

And that’s why I never use the terms “lagging” and “leading.” I suppose if I were an economist, I’d be compelled to use that language. But in a small business where I want to get from x to y, I don’t need those words. That terminology only clouds the tools and visuals we need to achieve the performance we want.

In this brief article,

I will revisit the language of leading and lagging indicators based on one popular author’s belief system.
I will then share two terms that should replace leading and lagging, which are deeply rooted in psychology.
We’ll then create a simple reporting example using these two new terms. Afterward, you’ll be able to recreate new reporting in one area of your business where you are frequently encountering performance deficiencies.