Chapter 03 · Reporting & strategyStrategy, Targets & Performance Management
Leading indicator
Definition
A leading indicator is a measure that signals likely future performance, risk or progress before the final outcome is observed.
References
This reference provides supporting context for how “Leading indicator” is defined and used.
Overview
What it means in practice
Leading indicator should be read as a strategy and performance-management term. Its meaning depends on the objective, boundary, baseline, owner, timeframe and evidence used to assess progress.
In practice, users should connect leading indicator to a specific decision, metric, plan or governance process. That keeps the term concrete enough to guide action and review.
Why it matters
Leading indicator matters because strategy language can shape priorities, budgets, accountability and external claims. Clear wording helps readers see whether the term describes intent, action, measurement or demonstrated performance.
Common misconception
A common error is to use Leading indicator as a label for ambition without showing the scope, metric, owner or review process. That can make progress appear more settled than it is.
Review questions
What objective or decision does the term support? Who owns it? What boundary, metric, evidence and timeframe would let a reviewer judge whether it is working?
How it is used
The term appears in strategy, target-setting, sustainability reporting, performance reviews and external communications, where boards, executives, reporting teams, auditors and stakeholders use it to classify, assess or communicate a measure that signals likely future performance, risk or progress before the final outcome is observed.
Its correct use depends on the reporting framework, organisational boundary, baseline, timeframe, metric and governance process.