Don’t Worry That You Don’t Understand “Leading” and “Lagging” Indicators
Nobody does. I will not attempt to teach “proper” definitions of these terms. I have written this essay to encourage you to stop bothering with them. They’re useless. They’re worse than useless. These terms produce confusion, not clarity. They were invented by some well-meaning consultants and nobody is better for it.
This brief essay is a protest against these words. I hope to persuade you.
The myth:
In some circles (mostly consultants), the terms “leading indicator” and “lagging indicator” are treated like sacred knowledge. The terms are used convincingly to beguile the audience and assert expertise.
The truth:
Nobody truly understands these terms because nobody agrees on their definition. What’s more…nobody needs to understand these terms. They’re useless. They are examples of what linguistic scholars call terminological inconsistency.
terminological inconsistency: a mismatch in how terms are used or defined.
Example: Imagine the word “red” is defined as a frequency (e.g., of light) and simultaneously the word “blue” is defined as a pigment (e.g., of paint). Everyone knows those terms can be used in both contexts. But a terminological inconsistency occurs when someone argues that one of the words should not be altered for one of those contexts.
Imagine someone stubbornly argues that black is not a colour because it cannot be found on the light spectrum. “Black is just the absence of light…not a colour”, they might argue. And while they aren’t entirely wrong, their pedantry enforces a rigid definition that sparks eristic debates over nothing.
pedantry: rigid adherence to a single word definition, rejecting alternative or opposite usages as invalid
eristic: a philosophical term that describes argumentation focused on winning rather than truth, often using nonsensical or fallacious positions, unwinnable for genuine resolution
The Terminological Inconsistency of “Leading” and “Lagging”
It is most often argued that a “lagging” indicator is one that can only be measured by observing historical data (i.e., the past). (Common business examples include profit, revenue, earnings.) And it is most often argued that a “leading” indicator is one that is used to forecast future conditions. (Common business examples include stock price, customer engagement, and website traffic.)
The Problem
Every measure, every indicator, is both. Every metric is derived from observation of the past and simultaneously can be used to forecast future conditions.
The problem occurs when somebody argues that some metrics defy reality and, mysteriously, are one or the other: leading or lagging. To make such an argument, they use a little sleight of hand. They apply a different logical basis for each term.
I’ve suffered countless presentations, debates, and blog articles where an author assertively applies this jargon only to be followed by another presenter, debater, or author who assertively contradicts the first.
My Recommendation
Nobody needs this vocabulary. Don’t chase empty jargon.