I run a monthly group for the Harvard Business School Club of Chicago. Our speaker this month was Tom Fitzgerald of Fitzgerald Consulting and he had some interesting observation. Particularly what really stuck with me is he talked about different levels of company’s performance and what would be the indicators of such performance.

Among the stages that he mentioned:

1. Healthy company.

2. Diseased company.

3. Dying company.

What does this have to do with what type of mirror are you using to monitor your business? The tie is that certain indicators will only become apparent at certain stages according to Tom. Let’s look at the indicators:

1. Leadership metrics. These cover a lot of the soft things, like talent management and other areas. These he considers to be a leading indicator. These are up front and center and can tell you how well you’re going to be doing in the future.

2. Key performances indicators (KPI). These are nonfinancial metrics or financial metrics that are outside the traditional financial statements. These give some indication on how a company is doing, but they’re sort of looking at how it is right now at this point in time and don’t necessarily what’s going to be happening in the future.

3. Financial statements. These are lagging indicators. These are looking back at stuff that’s already happened and won’t necessarily tell how you’re going to do. Certainly, it will not tell as well as the other indicators.

He used sort of a car analogy:

1. The leadership indicators are like looking out the windshield.

2. The KPIs are like looking out the side view mirrors.

3. The financial statements are like looking out the rearview mirror.

So, consider your business, which mirror or windshield are you using? Are your indicators things that look ahead, look where you’re at now or look back in the past? Make sure you’re looking forward and you can do a better job adjusting the performance. In the end, you’ll have something much better to look forward too.