What is Loop Leakage?

Loop Leakage is the economic exposure created when management work remains unresolved or has to be repeated — including management capacity, delayed contribution margin, rework, avoidable operating costs and capital unnecessarily tied up. It is not a universal percentage of revenue. It is estimated from the operating and financial variables of each company.

The definition, unpacked

A management loop is a work situation that requires management action, an owner, a due date, a closure criterion, and later verification. Most companies already detect these situations — a KPI slips, a decision stalls, a commitment goes overdue. What stays invisible is what happens next: the loop stays open, gets discussed again, gets "resolved" and reopens.

Every day a loop stays open, its cost quietly accrues somewhere in the business. That accrual — across five distinct places at once — is Loop Leakage.

Where it accumulates: five components

• Management capacity Management time consumed by open loops — repeated meetings, reopened decisions, redone follow-ups. Capacity value first, not automatically EBITDA.
• Delayed contribution margin Economic margin delayed or put at risk when time-sensitive work stalls. Never "delayed revenue = lost revenue" — only the incremental expected loss counts.
• Rework Work that had to be repeated: redone proposals, reopened incidents, re-litigated decisions.
• Operational leakage The directly observable costs — overtime, expedites, penalties, credits, defects. Finance usually already knows these numbers.
• Capital carrying cost The financial cost of capital tied up by unresolved loops. The principal itself is balance-sheet exposure, never an annual loss.

The discipline that makes the model defensible: every economic consequence enters exactly once. One delayed contract can touch all five components — but each dollar is counted in only one of them.

What Loop Leakage is not

• It is not a universal percentage of revenue. No rigorous study supports "companies lose X% of revenue to open management loops" — and adding overlapping benchmarks from different consultancies is methodologically indefensible.
• It is not a claim about your company. Until estimated from your own inputs, any figure is a modeling illustration, and should be labeled that way.
• It is not money already lost. It is exposure. As loops close with verified evidence, that exposure is addressed — which is different from promising recovered EBITDA.

How it's estimated

Bottom-up, from company data: the Loop Leakage calculator builds the estimate from your revenue, management cost, margin and working-capital inputs, across the five components — with explicit anti-double-counting rules. The full formulas, external evidence and the claims the model deliberately refuses to make live in the methodology.

Benchmarks inform assumptions. Company data determines the estimate.

What changes when loops are instrumented

Once loops are tracked — time open, reopen count, closure reason, decision latency, action completion, evidence source — Loop Leakage stops being a modeled estimate and becomes an observed number, and closing loops becomes measurable as addressed exposure. With enough observed loops, the empirical benchmark the literature lacks can finally be built: observed leakage over revenue, per industry, size and loop type.