Business & strategy laws · law 003
Goodhart's Law
Also known as: When a measure becomes a target, it ceases to be a good measure
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
what it means
When a measure becomes a target, it stops being a good measure — people optimise the number instead of the result it was meant to track.
How Goodhart's Law works
Metrics are proxies. Calls made is a proxy for sales effort; tickets closed is a proxy for customer help. The moment pay or praise depends on the proxy, people find ways to move the number without moving the real goal.
Goodhart's law does not say measuring is bad. It says single numbers tied to rewards get gamed, so you need balancing metrics and regular conversations about what the number is supposed to mean.
where it comes from
British economist Charles Goodhart described the effect in 1975 while writing about monetary policy. The popular wording comes from anthropologist Marilyn Strathern in 1997.
Goodhart's Law examples in business
Support desk
Agents rewarded on tickets closed per hour start closing tickets before problems are solved. Reopen rates climb and customers get angrier.
Sales
A team targeted purely on revenue offers deep discounts in the last week of each month. Revenue hits target while margin quietly collapses.
Hiring
Recruiters measured on time-to-hire fill roles quickly with weak candidates, and attrition six months later wipes out the gain.
How to apply it
- 1For every target, write down the real outcome it is meant to represent.
- 2Pair each target with a counter-metric that catches gaming (revenue with margin, speed with quality, volume with repeat rate).
- 3Review the numbers alongside real examples — read the tickets, listen to the calls.
- 4Rotate or retire metrics that have clearly been gamed.
common misreading
It is not an argument against targets. Teams without measures drift; the fix is better, balanced measures — not none.
ask yourself
Which number in your business could your team hit next month while the business actually gets worse?
put it into practice
Frequently asked questions
What is Goodhart's Law?
When a measure becomes a target, it stops being a good measure — people optimise the number instead of the result it was meant to track. Metrics are proxies. Calls made is a proxy for sales effort; tickets closed is a proxy for customer help. The moment pay or praise depends on the proxy, people find ways to move the number without moving the real goal.
Who came up with Goodhart's Law?
British economist Charles Goodhart described the effect in 1975 while writing about monetary policy. The popular wording comes from anthropologist Marilyn Strathern in 1997.
How do you apply Goodhart's Law in business?
1. For every target, write down the real outcome it is meant to represent. 2. Pair each target with a counter-metric that catches gaming (revenue with margin, speed with quality, volume with repeat rate). 3. Review the numbers alongside real examples — read the tickets, listen to the calls. 4. Rotate or retire metrics that have clearly been gamed.
What is a common misunderstanding of Goodhart's Law?
It is not an argument against targets. Teams without measures drift; the fix is better, balanced measures — not none.