Thought for 2024-10-17 (#40)

content/thoughts/2024-10-27.md

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+date: 2024-10-27
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+![](https://media.giphy.com/media/N2QQfEMAogAEQhJlkw/giphy.gif)
+
+There's a [fantastic set of essays][1] by Cedric Chin about becoming a
+data driven business.  It starts off on a really inspiring
+[essay dissecting Goodhart's law][2].  Most of the essays are focused
+around Amazon and often reference the book that Cedric had helped with:
+["Working Backwards" by Colin Bryar and Bill Carr][3].
+
+For those that don't know it, Goodhart's law is:
+
+> When a measure becomes a target, it ceases to be a good measure.
+
+Every measure is a proxy for what you actually want -- and is always an
+imperfect proxy for it.  Even when you're using a tape measure you're not
+quite getting what you want - an exact measurement of a distance.  Instead,
+you're getting something that's "close enough" in precision to the real
+deal that it works fine.
+
+In [another essay][4], Cedric summarized a [paper by David Manheim and Scott Garrabrant][5]
+that breaks down Goodhart's law into four "flavors": regressive, extremal,
+causal, and adversarial. This is reflected in Donald Wheeler's take on Goodhart's
+law from [Understanding Variation][6]:
+
+> When people are pressured to meet a target value there are three ways they can proceed:
+>
+> 1) They can work to improve the system
+> 2) They can distort the system
+> 3) Or they can distort the data
+
+To me, this is a fantastic way to frame Goodhart's law.  Instead of it being a
+problem declared out into the ether it's something that can be solutioned against.
+The solutions would be to make it more difficult to distort the data or the system -
+or you can make it easier to improve the system.
+
+Wheeler notes that this can be seen between the Voice of the Customer - the
+expectations - and the Voice of the Process - what can be done in the real world.
+Focusing entirely on the Voice of the Customer without understanding the
+Voice of the Process leads to gaming the measurements, inadvertently or not.
+
+The essay series goes into depth on how Amazon has approached this problem - via their
+Weekly Business Review (WBR).  The goal of the WBR is to provide flexibility to make
+the various systems work for them and also to drop measurements that aren't useful.
+It promotes iteration and learning, synchronizing leadership rather than promoting
+blindly following numbers.
+
+Proxy measures will always allow for some form of gaming the system.  At the same time,
+you can't run a business without these kinds of proxy measures. Goodhart's law isn't wrong -
+but instead of approaching it by choosing to avoid measuring, we instead need
+to find solutions to prevent it.
+
+The problem isn't having targets - it's failing to reconcile those
+targets with the real world.
+
+
+[1]: https://commoncog.com/becoming-data-driven-in-business/
+[2]: https://commoncog.com/goodharts-law-not-useful/
+[3]: https://www.goodreads.com/book/show/53138083
+[4]: https://www.holistics.io/blog/four-types-goodharts-law/?ref=commoncog.com
+[5]: https://arxiv.org/abs/1803.04585?ref=commoncog.com
+[6]: https://www.goodreads.com/book/show/63859