The Leader’s Credibility Index: Predictability Matters

As a leader, ensuring that what we say aligns with what we do is crucial. This predictability is the basis of confidence among all stakeholders. Years ago, I learned this lesson from a new CEO. Summoned to her office, she asked me a seemingly simple question: “Paul, do you know the most important word in business?” Anticipating a setup, I asked her what she had in mind. She replied, “Predictability. Our business is suffering from our inability to hit the targets we set and communicated.” She went on to explain why predictability was her key word and more importantly what she expected me to do about it.? Theatrics aside, this lesson has remained with me throughout my career – and lots of people hear that same guidance from me. Which is another lesson I learned young – know what stuff is good enough to steal.

Later in my career, while interviewing a candidate for a CEO role, I encountered the concept referred to as a "credibility index." The idea made a lot of sense to me – it aligned well with the spirit of predictability. In this candidate’s company, every leader had a single number that reported on the extent to which they achieved their set targets. If a target was 100 and they achieved 97, they missed by 3%. Likewise, achieving 103 also meant missing by 3%. Their credibility index was 97%. The actual number was sum total of variances across all KPIs rolled into the leaders “credibility index.”? In their world it revealed how well the leader knew their area of responsibility, inputs, processes and outputs. Like any good control, it is important to note that this metric was not a tool for punishment but a starting point for genuine problem-solving and continuous improvement.? From what I gathered in the interview, it might have played a role in promotions…

Predictability Builds Trust

Predictability isn’t about perfection or punitive measures; it’s about creating a reliable and transparent environment where everyone understands the expectations, strives to meet them and commits to getting better. Consistent predictability builds trust and confidence among stakeholders, be they employees, customers, suppliers, owner/ investors or the communities in which we work.

Predictability Builds Productivity

The credibility index serves its best purpose as a feedback mechanism, not a hammer with which to beat people. It’s a metric that guides leaders to seek real understanding of process variation. For instance, if actual sales exceed forecast by 10% that sounds like a really great thing. And it almost always a great thing. But it certainly highlights a variation that may need attention. A 10% understatement in predicted sales could lead to potential issues such as a lack of staffing, supply chain disruptions, or inadequate capital assets, prompting reactionary problem-solving. A proactive leader will look at all in inputs and processes to determine why they missed, what they learn could point to sources of information, skills of assessment, processes that could be enhanced. ?This is leader work that makes things better.

Keys to the Successful use of a Credibility Index

1. Every team should have family of measures – not one: Meaningful control of work usually requires there to be measures of effectiveness and efficiency.? Some measures can be leading, and some are lagging. Collectively the measures (KPIs) should reveal their “productivity” which is simply the ratio of outputs to inputs. Setting proper goals in all KPIs is both an exercise in the creative tension of stretch goals and realism that build commitment.
2. Analyze Variances Regularly: Take time to investigate the root causes of every variance on a regular schedule with intervals short enough to make certain you don’t get far off track. ?Understand what factors led to deviations from the target - fix them.
3. Refine Processes: Your credibility index is a high-level report and it alone does not provide the insights necessary to fix things.? Dig deeper into individual processes variance analysis to refine forecasting (not just sales) processes and improve accuracy.
4. Engage the Team: Involve your team in the analysis and refinement process. Get everyone on the predictability band wagon. Understanding how important it is to limit variation can stimulate perspectives can spot causes early, uncover hidden issues and generate innovative solutions.
5. Prioritize and Learn from Failure: Treat every variance as a learning opportunity. Continuous improvement should be the goal. When targets are missed, focus on learning and improvement rather than blame.

I am 100% sure that a leader’s credibility index can be a fun and powerful tool for building confidence and ensuring predictability in business. By aiming for accuracy and addressing variances constructively, leaders can foster a culture of transparency, continuous improvement, and trust. Predictability is not about perfection; it’s about understanding and refining processes to achieve better outcomes. Through this approach, leaders can create a more reliable and successful organization where predictability becomes a hallmark of their leadership.