Efficiency · 07 / 07

Goodhart’s law

When a measure becomes a target, it ceases to be a good measure. The harder an indicator is pushed, the further it drifts from what it was meant to measure.

if M = r·V + noise, selecting on M yields E[V | M] = r·M

Try it

Tighten the selection on the metric and compare what the indicator promises with the real value you get.

Pressure on the metric 25% Metric fidelity 0.60

According to the metric: –
In real value: –
Gap: –
Best real ones chosen: –

Where it applies

Rewarding closed tickets leads people to split them up and close them without solving the customer’s problem.
An OKR on team velocity inflates story-point estimates without speeding up delivery.
Targeting average call time in a contact center multiplies repeat calls.

Where it comes from

Charles Goodhart stated it about monetary policy in “Problems of Monetary Management: The U.K. Experience” (1975). The version quoted today is by the anthropologist Marilyn Strathern (European Review, 1997).

Bring it to your organization

In my workshops and diagnoses we work on this and other principles over your team’s real flow of work, with your data rather than the simulation’s. See services or write to me.