Goodhart’s law matters to go-to-market teams — even those that don’t know what the law is about.
In this article, we will dive into Goodhart’s law and discuss how we can leverage these insights to improve our go-to-market strategies and results.
What is Goodhart’s Law?
“When a measure becomes a target, it ceases to be a good measure”.
The law is named after British economist, Charles Goodhart.
Goodhart’s Law was introduced in a 1975 paper called “Rules of Thumb for Monetary Policy.” In the paper, Goodhart examines how measures that central banks use to track the economy can become less effective over time as people change their behavior in response to the measures.
How does Goodhart’s Law apply to go-to-market teams?
Goodhart’s Law can be applied to go-to-market teams in a number of ways.
One way is through what is known as the “Observer Effect.” The Observer Effect is when the act of measuring something changes the thing that is being measured.
Consider the behavior of “Goodharting.”
Goodharting is when behaviors change in order to meet a target or goal that has been set.
For example, consider a go-to-market team that has a goal of acquiring 100 new customers within the first month of their product launch.
The team may begin to focus on acquisition numbers to the exclusion of all other measures of success.
They may also start to offer deep discounts or other incentives in order to boost acquisition numbers.
While this may help the team meet their goal, it can also lead to a number of problems down the road, such as lower customer lifetime value or higher churn rate.
Take the time to use multiple metrics to triangulate the impact of your work, and never fall back to just relying on one.
Now that you understand this principle, review our ultimate guide to business metrics.