Leading and lagging indicators are two types of measurements used when assessing performance in a business or organisation. A leading indicator is a predictive measurement, for example; the percentage of people wearing hard hats on a building site is a leading safety indicator. A lagging indicator is an output measurement, for example; the number of accidents on a building site is a lagging safety indicator. The difference between the two is a leading indicator can influence change and a lagging indicator can only record what has happened.
I was thinking about what Chamath Palihapitiya said regarding capital as a lagging indicator for progress. As I spend time with more companies, I have realized it’s so important to differentiate between the two.