Lagging Indicator In A Nutshell

Lagging indicators are outputs that measure the performance of leading indicators (inputs). Thus, they are easier to measure but harder to get impacted compared to a leading indicator. In short, a leading indicator has the power to influence change, but a lagging indicator can only record what has happened already.

Key elements of a leading indicator

This makes them much easier to measure but impossible to change because they are measures of events that have already taken place.

Decision-makers may ask:

  • How much product was produced?
  • How many people attended the event?
  • What response did the product receive?

With these answers, lagging indicators give decision-makers insight into what has occurred and what could be done differently in the future. A lagging indicator may measure profit, revenue, customer participation, or expenses. 

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"