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The Pitfalls of Over-Optimizing for One KPI
How Goodhart’s Law warns against narrow goal-setting
We all act differently when we're alone vs when there's someone else in the room. In the same vein, the mere act of measurement influences our actions1.
Ever noticed an engineering team, when judged by ticket counts, suddenly breaking tasks into smaller tickets? Or a call center team, gauged by call numbers, wrapping up calls quicker, often leaving customers furious? What about that social media intern boosting engagement metrics with divisive content that jeopardizes brand reputation?
In our age of information deluge, there's an undeniable appeal in finding a singular guiding metric or "north star". But there lies the trap.
Goodhart's Law warns, "When a measure becomes a target, it ceases to be a good measure." This translates to: if you single-mindedly chase one goal, you're likely to pursue it, even if it spells disaster elsewhere. Achieving one goal by neglecting other pivotal aspects is hardly a win.
Consider a marketing team zeroed in on ramping up blog traffic. They could easily drum up content and campaigns luring pageviews, neglecting to ensure these visitors align with the brand's target audience. The result? A surge in irrelevant leads unlikely to ever convert.
Goodhart's Law offers us a clear lesson: balance is crucial. Rather than fixating on a lone KPI, a set of varied metrics offers a more holistic, and less short-sighted, approach to reaching our goals.