2024/10/27
+ +
+
There’s a fantastic set of essays by Cedric Chin about becoming a +data driven business. It starts off on a really inspiring +essay dissecting Goodhart’s law. 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.
+
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, Cedric summarized a paper by David Manheim and Scott Garrabrant +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:
+
++When people are pressured to meet a target value there are three ways they can proceed:
++
+- They can work to improve the system
+- They can distort the system
+- 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.