This week’s WNW entry is an idea, not a word. But it’s important.
Goodhart’s law formally says: “When a measure becomes a target, it ceases to become a good measure.”
The man credited with saying this, Charles Goodhart, was an economist.
He was talking about issues of monetary policy in the UK when he made this point.
I have 𝟎 expertise in that area, but I find the essence of Mr. Goodhart’s idea to be true across all of business:
✍ Once you set targets for a given metric, it stops being an accurate measure.
People start gaming the system to maximize their performance (perceived or actual).
⌧ “We need more Promoters” turns into “Let’s guilt customers into giving more 9s and 10s.”
⌧ “We need to reduce call volume” turns into “Let’s make the phone number harder to find.”
⌧ “We want to have a higher percent of revenue coming from new products” turns into “we’ll make one or two changes and then reclassify the whole product as new.”
I know many of you have seen this happen first hand! What metrics have you seen warped and/or manipulated in the name of “making the numbers”?
