Leading Indicators

By Andrew Paparozzi
In March 2, 2009

We asked participants in the February 2009 NAPL Critical Issues Survey what lessons they have learned from the current recession. Among the responses: We have to have better indicators of what’s ahead.

Follow these steps to develop your own set of leading business indicators:

1. Define the indicators. Get your key people together and try a fill-in-the-blank exercise. Take a critical outcome, positive or negative, and ask the group to complete this statement: If only we had known (had been measuring) ____________, we would have seen this coming.

2. Measure each indicator carefully. Decide on the appropriate measurement period (daily, weekly, monthly, etc.). Designate a champion to ensure the indicator is collected each period and readings are accurate and comparable from period to period. Anecdotal and sporadic aren’t enough. Don’t be discouraged if an indicator can’t be defined perfectly. No indicator can be. Think creatively to develop reliable proxies.

3. Test and refine. How effective are your leading indicators? Are they consistently telling you what’s ahead. If not, why not? How can they be improved?

You’ll never develop the perfect leading indicator—because it doesn’t exist. But stay with it—keep testing and refining—and you can develop indicators that will consistently give you a better sense of what’s ahead. And that’s important in an industry as dynamic as ours.

Sources/Additional Information: The NAPL State of the Industry Report, Seventh Edition, October 2008, www.napl.org.

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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