Trying to Do Something You Probably Shouldn't

Key Takeaways

• Goodhart's Law applies to statistical regularities used as control targets
• Direct output measures avoid Goodhart effects, unlike proxy metrics
• Redundant, regularly retired metrics trigger investigations, not high‑stakes actions
• Trust in teams enables black‑box resource bargains, reducing micromanagement
• Variety engineering mitigates narrow‑band information channel failures

Pulse Analysis

Goodhart’s Law, first articulated by economist Charles Goodhart, warns that any statistical regularity collapses when it becomes a control target. The law is often misquoted as "when a measure becomes a target it ceases to be a good measure," but the original phrasing stresses the vulnerability of proxy metrics under pressure. In practice, this means that indirect indicators—such as test scores or productivity ratios—can be gamed, distorting the very phenomena they aim to monitor, while direct outputs like infection counts remain reliable.

For managers, the distinction between outputs and proxies is critical. Direct measures of outcomes are less prone to Goodhart effects, but many organizations rely on intermediate inputs or derived metrics because they are easier to quantify. Stafford Beer’s concept of a "resource bargain" offers a remedy: define the desired output and allocate a fixed pool of inputs, allowing the delegated unit discretion in how to achieve the goal. This black‑box approach reduces the temptation to micromanage and sidesteps the pitfalls of narrow‑band information channels that can be exploited.

Implementing robust measurement systems therefore involves layering redundant, regularly retired metrics that serve as early‑warning signals rather than decisive levers. Building trust in teams enables the use of black‑box resource bargains, while variety engineering—designing diverse feedback loops—mitigates the risk of metric gaming. By recognizing Goodhart’s Law as an alert rather than a prohibition, leaders can craft measurement dashboards that remain resilient and actionable over time.