The darkside of Godhart’s Law
While reading the other day and I was introduced to Goodhart’s Law[1]. It states that “when a measure becomes a target, it ceases to be a good measure”. In other words when we focus on a specific goal or measure, we tend to optimise for that goal regardless of the consequences.
This is the dark side of metrics. I couldn’t help but think of the stories from banking staff over recent months, driven to meet their weekly sales targets, selling customers products that they didn’t need. Some were obviously conflicted and understandably worried about their jobs.
‘You can’t manage what you don’t measure’ is the mantra we have all heard however when is this just too much and what if what we are tracking is the wrong thing?
Let’s say we are wanting to improve sales, we can break down sales by month and provide targets for sales teams to achieve. We can provide sales training, incentives, hold a ‘team kick off’ and away we go. For those that are wired to win, they are off. They focus on the task and hit the number. They are celebrated. Did they deliver customer care? Did they sell what the customer needed or what they could sell? Did they listen to the customer? Did they follow the brands customer experience design or did they let a few things slip all in the name of the sale?
Put another way, it’s like measuring success of a restaurant only on the number of covers and sales, not considering or observing how well the food was received or how long people stayed (maybe they are having a great time!).
And then there is my favourite, declaring success of a marketing campaign on ROI alone. Any smart marketer will know that if they focus on smaller campaigns with existing high purchasing customers they will hit the right ROI’s. This is great if you wish to show how efficient you are however not so great for your business if the strategy is to grow share or penetration.
So, what’s the answer? A different mantra to follow.
‘If you do the right things, the numbers will follow’.
Measuring the right behaviours will deliver the right experience and the numbers will follow. Considering the input metrics that feel aligned to the business values and the experience you have designed for your customers will help you achieve.
It’s also worth remembering YoungMe Moons great advice from her book Different. “If we only pay attention to things that we can measure, we will only pay attention to the things that are easily measurable. And in the process, we will miss a lot.”
Having confidence to look around the metrics or measuring the odd may enable us to explore anomalies or the things that make your brand different. It could open up the opportunity for imagination and drive competitive advantage.
[1] Godharts Law is discussed in a fantastic book called ‘Atomic Habits’ (p203) by James Clear.
