Gartner Research

Leading Indicators of Business Performance: The CIO's Role

Published: 01 October 2009

ID: G00171674

Analyst(s): Michael Smith , Patrick Meehan

Summary

CIOs are uniquely positioned to lead the development and use of leading indicators. By focusing on what needs to be done going forward, leading indicators make performance management more strategic and boost enterprise responsiveness to economic change.

Table Of Contents
  • Overview
  • Companies that use leading indicators outperform their competitors
  • Use guiding principles to develop leading indicators
  • CIOs can play an important role in the development and use of leading indicators
  • Leading indicators extend the value of lagging indicators in performance management
  • Companies that use leading indicators earn almost 3% higher return on assets and more than 5% higher return on equity
  • Leading indicators create opportunities for improved performance
  • Use different types of leading indicators to create a balanced set
  • Apply guiding principles to choose leading indicators for your enterprise
  • Guiding Principle #1: Use external leading indicators
  • Guiding Principle #2: Use internal leading indicators
  • Guiding Principle #3: Understand the difference between correlation and causality
  • Guiding Principle #4: Use your industry and your enterprise’s strategy to select a focused set of leading indicators
  • Guiding Principle #5: Apply leading indicators to cross-functional management processes
  • Guiding Principle #6: Prepare to overcome common obstacles
  • Assess your current performance management capabilities
  • Assess: Use the Capability Assessment Tool for assessing the development and use of leading indicators
  • Organize: Generate support and commitment from the CEO and CFO with a winning proposal
  • Plan: Develop your 21st-century performance management program
  • Act: Report progress and resolve issues as you implement the plan
  • Conclusion
  • Top 5 CEO questions on the implementation of leading indicators
  • Toolkit: External data sources of macroeconomic leading indicators
  • Toolkit: External data sources of microeconomic leading indicators
  • Alpha Natural Resources—Delivering on the strategic need for nonfinancial performance management
  • DuPont—Leading indicators: A source of better business planning and decision making
  • Interview with Robert Eccles, Harvard Business School—Using leading indicators of financial performance for internal reporting
  • Exterran—Moving from traditional to emerging performance management
  • ING Intermediary Division—Using leading indicators to manage the normality of change
  • Interview with Professor David Larcker, Stanford Graduate School of Business—Moving to leading indicators
  • Interview with Professor Andy Neely, Cambridge University—Performance management needs an owner
  • Gartner Executive Programs reports
  • Core research
  • Book
  • Article

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