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Goodhart’s Law: Why targets don’t work, according to an economist

USEFUL CONCEPT TO EXPLAIN MY RANT ABOUT TARGETS, BELOW: Goodhart’s Law. Named after a chief economist at the Bank of England. Goodhart’s Law states that if a measure becomes a target it loses its value and ceases to be a measure. Controlling an indicator of a problem will not cure the problem. Goodhart himself phrased it like this: `Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes’.

SOURCE: Central Banking, Monetary Theory and Practice: Essays in honour of Charles Goodhart, page 96. Systems thinking, as practised by Toyota and other high-performing organizations, stresses that target-based systems distort behaviour and make your organization inflexible. John Seddon’s book Freedom From Command & Control is helpful in understanding systems thinking and how you can lead more effectively by using it. Peter Senge’s work is also instructive on systems thinking and how it can help you avoid falling into the trap of target-based attempts to lead change.

More on the misuse of targets in attempts at leading change – which is obviously a bug-bear of mine – in The 60 Second Leader, my book, due out April in the UK and June in North America. Damn, I plugged. But, I’m angry about this target nonsense, so researched it and put it in the book. So that plug was based on passion, not self-promotion. Honest.

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