Goodhart's law is extremely useful for illustrating the issues which come from bad KPIs and raising awareness of the natural psychology that people will work to game those measures if incentivized to do so.
Limitations of Goodhart's Law
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Re: Limitations of Goodhart's Law
#32In any corporation many, if not most managers, directors and VPs are not measured by revenue impact. Not they don't have a revenue impact but that they aren't measured by it because the contribution is indirect. In those cases, I notice that the 4 most common places for distorting or cheating the system aren't in the article--budget, head count (hiring), performance reviews and space allocation. And the gaming can come from below by inflating budget requests, head count and the like--empire building, or from above by underinvesting in or cutting critical functions where the revenue impact is indirect.
Re: Limitations of Goodhart's Law
#33I've always considered Goodhart's Law to be "of the people," but the article offers only top down solutions. What is the solution when the decision-makers have subjected you to a Goodhartable system of incentives and don't have enough awareness, vision, or humility themselves to change the system as described in the article? Well, you play the game or get beat by those who do. Right up until the point when you all lo…
Everybody should have a lot of experience working within Goodhart's Law, since grades and school tests are such a huge part of everybody's early life. You can then apply Joiner's list to school tests as: 1. you can learn your source material 2. you can game the test 3. you can cheat
You say this like there is an obvious and right way to handle the situation. But the reason such a situation might end up Goodhartable is if you had three tests every day with no time to study. Unless the requirements change, it would be impossible to "succeed" without adopting #2 or #3. This is why the GP is saying this concept is great for a top-down approach, but if you are in a system that doesn't give a shit, then you are forced to play the game or lose to those who do.
Re: Limitations of Goodhart's Law
#34Picking on calories in/out is problematic if you think that is just two variables. Easily listed problematic parts, there are several ways to get "calories out," "calories in" have an impact on energy levels, and "hunger" and "satiation" are impacted by more than just "calories in or out." Though, as stated, the biggest gotcha is going to be that, unless you are doing extreme exercise, that will not be the dominate way that you are expending calories. Such that the criticism of the idea is flawed from the start. That is not what in/out means.
For the rest? I don't buy it. For starters the WBR process can easily get downright toxic from my view. Too much time spent preparing the metrics without nearly enough time understanding. There are literally teams of people whose job is to present numbers up and feel like they are somehow masters of the system. Not at all healthy for the boots on the ground doing work. (Ironically, this is a manifestation of Goodhart's Law. When the metrics were being used by the boots on the ground, they were great. As soon as you get a middle layer...)
Which, is the point of the "law." There are no evergreen policies or metrics that can lead to improvement. Sucks, as you can't even really take this in a meta direction. Constantly changing metrics and process is a bad idea when you are tracking how often you do that.
Re: Limitations of Goodhart's Law
#35This is such a compelling article on Goodharts law and interesting to see how Amazon conducts their Weekly Business Reviews. I'm wondering if there's a rebuttal to this piece.
> if you want to improve some process, you have to ignore the goal (target)
This is the whole message of Goodhart's Law. Once you set a target, people will naturally aim for it. If you have to ignore the target or even not have one then you are saying Goodhart's Law is useful, which counters his narrative. The point of the measure should be to detect anomalies in the system, not drive targets or goals.
If you measure widgets per week, you can look back at the end of each week and ask the questions: * Why did we produce 10% more widgets this week than our 6 week rolling average? * Why did we produce 5% less widgets this week than our 6 week rolling average? * Is there anything we can easily do to increase the amount of widgets we produce next week?
None of these questions have a target. They are process oriented. We aren't saying what the rolling average must be, we are using it to detect variance. Or, we are investigating to see if we can produce positive variance. What we try might fail and the variance is negative but then we revert our process. Or it is positive and we have improved our process. Rinse and repeat
Re: Limitations of Goodhart's Law
#36What presumption! The author doesn't know how useful I find Goodhart's Law! Seriously though, Goodhart's Law means that the world is more complex in a way that you may not have realized. Saying it is wrong, and that the world is more complex than you may have realized is just expanding it. Every model is wrong, some models are useful after all. > "Well, let’s think about the weight control example. Losing weight is a…
I thought it was more ironic than presumptuous.
After all, without the wisdom of goodheart, he would not be addressing the problems exposed.
It may be presumptuous of me to assume that he wouldn't see right through how measures make people dysfunctional, but I'm not sure what makes him so special from the rest of us it wouldn't have had the particular insight to realize where the problem actually lay with measurement dysfunction.
Re: Limitations of Goodhart's Law
#37Earlier quoted context omitted.
Looking at the 'damage' amazon has done, both to its workers, and to the credibility of their wares, you could say that amazon has suffered from goodhart's law to some extend on the grander scale. Specifically, they set a list of 'outcome metrics' that they wanted to optimize. Using these WBRs they ensures that the metrics by which their middle managers are measured remain effective for actually optimizing these outc…
You not liking Amazon's goals doesn't make them bad for Amazon . Unless your concerns lead to >$500B loss, they are merely tradeoffs in the overall optimization.
The entire overbuild and overhire of the pandemic? Hard not to think of the hiring metrics that you know they were tracking in "efficient WBR" meetings the entire time. :D
Re: Limitations of Goodhart's Law
#38I've always considered Goodhart's Law to be "of the people," but the article offers only top down solutions. What is the solution when the decision-makers have subjected you to a Goodhartable system of incentives and don't have enough awareness, vision, or humility themselves to change the system as described in the article? Well, you play the game or get beat by those who do. Right up until the point when you all lo…
Everybody should have a lot of experience working within Goodhart's Law, since grades and school tests are such a huge part of everybody's early life. You can then apply Joiner's list to school tests as: 1. you can learn your source material 2. you can game the test 3. you can cheat
The thing being distorted is not passing tests, it's education.
Learning the source material for tests does not give you a good education.
Re: Limitations of Goodhart's Law
#39Picking on calories in/out is problematic if you think that is just two variables. Easily listed problematic parts, there are several ways to get "calories out," "calories in" have an impact on energy levels, and "hunger" and "satiation" are impacted by more than just "calories in or out." Though, as stated, the biggest gotcha is going to be that, unless you are doing extreme exercise, that will not be the dominate w…
1000 times this. Any management system is only as good as its practitioners. The most talented managers and leaders tend to be good communicators, and so there are hundreds and thousands of great books on management philosophy, systems, tactics, etc. But all of it is subject to cargo culting by people who simply lack the experience or skillset to successfully follow the advice. At the end of the day, unless you have a quorum of leaders who viscerally understand what is meant by the old adage "the map is not the territory", then you are doomed. This is why leaders should be drawn from experienced practitioners, MBA programs should require 5+ years industry experience before admission, and Finance should not be let anywhere near product decisions (other than to set a budget).
Re: Limitations of Goodhart's Law
#40While it sounds simple in the article, I think in reality the difference between "Distorting the system" and "Improving the system" is often not very clear. Even looking at the example of a WBR metric that evolved over time[1], the final version incentivizes product behavior that may run counter to the idea of Amazon as an "everything store", such as down-ranking items that are a better match for what the customer is looking for because they aren't immediately available or removing a long tail of products altogether. Is that a distortion or an improvement?
[1]:
- number of detail pages, which we refined to
- number of detail page views (you don’t get credit for a new detail page if customers don’t view it), which then became
- the percentage of detail page views where the products were in stock (you don’t get credit if you add items but can’t keep them in stock), which was ultimately finalized as
- the percentage of detail page views where the products were in stock and immediately ready for two-day shipping, which ended up being called Fast Track In Stock.