It goes “When a measure becomes a target, it ceases to be a good measure.” How does that work in practice?
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In a lot of business situations there was this rush to come up with KPIs (Key Performance Indicators). Managers would realize they need to determine if their teams are being efficient or not and where things need to improve.
They would create scorecards and leaderboards based on these great KPIs they came up with.
The thing they missed, which is the core of Godhart’s law is that if you create a very specific metric that you are going to define as “success” then people will naturally find ways to make that metric look better, not caring about the original intent behind the metric.
If they can manipulate the process to make that metric look better they will. This immediately makes the metric turn into a negative because the manager was probably trying to solve an overall issue, but by creating this metric the people doing work are no longer working on the overall process, they want to make the metric move and be considered more successful.
Companies that try to use KPIs exclusively will generally find they end up underperforming overall because it is difficult to come up with a set of KPIs that work together to be measurable and produce the desired overall result.
This was a big problem in the 80s through 2000s (and still exists in different companies). Some refer to it as attempting to manage “by spreadsheet” or other negative views of it.
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