Lagging Indicator
A lagging indicator is a backward-looking metric that measures results that have already occurred, confirming goal achievement only in retrospect.
Lagging indicators measure results that have already happened. They are classic outcome metrics such as revenue, profit, customer satisfaction, or employee turnover.
In the OKR framework, lagging indicators often serve as Key Results because they capture actual goal achievement. The downside: When a lagging indicator shows the goal was missed, it's often too late to course-correct.
That's why experienced OKR coaches recommend combining lagging indicators with leading indicators. This way, teams can use early signals to adjust course during the quarter, while lagging indicators measure actual success at the end.
Related Terms
Leading Indicator
A leading indicator is a forward-looking metric that provides early signals about future results, enabling proactive action before the final outcome is determined.
Key Result
A Key Result is a quantitative, measurable outcome that indicates progress toward an Objective. Each Key Result has a clear metric, a starting value, and a target value, answering the question: "How do we know we're on the right track?"
KPI (Key Performance Indicator)
A KPI (Key Performance Indicator) is an ongoing metric that monitors the health and performance of a business process. Unlike OKRs, KPIs measure the status quo and keep running operations in view, rather than driving targeted change.
OKR Scoring
OKR Scoring is the structured process of evaluating Key Result achievement at the end of an OKR cycle. Typically a 0.0 to 1.0 scale is used, where a score of 0.7 (70%) is considered successful for stretch goals.
Frequently Asked Questions
Why aren't lagging indicators alone sufficient?
Lagging indicators only show at the end whether a goal was achieved. Since OKR cycles last only one quarter, there's little time for corrections. Leading indicators enable early course corrections and complement lagging indicators effectively.
What are typical lagging indicators in the OKR context?
Typical examples: quarterly revenue, customer churn rate, Net Promoter Score, market share, employee satisfaction score. All these metrics reflect the results of past activities.
How do I use lagging indicators effectively in OKRs?
Use lagging indicators as overarching Key Results and supplement them with leading indicators that show expected progress. Use check-ins to regularly review both indicator types.
Can a lagging indicator simultaneously be a leading indicator?
Yes, depending on context. Monthly churn rate is a lagging indicator for customer retention but can be a leading indicator for annual revenue. The classification depends on which outcome you're examining.