Chelsea's six-game winning run came to an end as they were beaten 2-1 by the Premier League champions at the Etihad Stadium on Saturday.
It is a measure of the London club's progress under new boss Lampard, who has had to rely on youth due to a transfer embargo, that losing to a side that won the treble last season is considered a disappointment.
However Lampard says the defeat can do them the world of good, and is one they have to "take on the chin" and move on from quickly.
The Blues boss has lofty ambitions for Chelsea.
Manchester City are the benchmark for his young side and defeats like the one at the Etihad is all part of the learning process for his side.
"Where we want to get to means we might come here and win (in future) and it might mean we can win titles, and win going forward, so I like seeing them disappointed." Lampard said.
"I think that that just shows the next question is the reaction we have."
Chelsea had gone into the game above City in the table and they took an early lead through N'Golo Kante before goals from Kevin De Bruyne and Riyad Mahrez won it for the hosts.
Lampard admits his side are probably exceeding expectations this term but has warned against complacency and has stressed the need to respond to the loss in the right way.
"In football the curve will go downhill very fast if you don't keep on yourself and take a lot of the lessons from Saturday and take them on moving forward," he added.
"Now our test is can we bounce back from a defeat when we are used to winning, because that is another challenge for us all."
Chelsea are next in action when they entertain Valencia in the Champions League on Wednesday night, before West Ham visit on Saturday.