Goodhart’s law is an adage that has been stated as, “When a measure becomes a target, it ceases to be a good measure.”
Measure is based on one indicator or target.
Amazing is the number of students who excelled at school but not in life. This is because they focused on being first in class. They did not learn soft skills or gain social skills to succeed in life. They failed the test of life.
This has become a serious issue in our VUCA world. To focus on one target to work on, whether it is volatility, uncertainty, or either complexity or volatility is a road to failure. One must be aware of the four of them.
One other big issue that results from targeting one variable, Such as efficiency, is to blind the eye to other variables that may send a business to failure. This is what Kodak did, focusing on the efficiency of its classical camera and ignoring the advancement of the electronic camera.
Online trade is another striking example. Conventional shops focused on enhancing their windows to attract customers. Restaurants on advertising their new offers and dishes. People seek their comfort, and the more they trusted buying online, the less they cared to go out. Many shops closed following this.
One other aspect is that the new trends are created, and their cascading effect can easily hit many businesses hard.
One example is electric cars. They badly hit repair centers because electric cars need little service and spare parts, apart from saving on the expensive fuel. Countries that are keen to keep the environment clean welcomed electric cars. Many sellers of spare parts and maintenance centers closed their doors accordingly.
What about the impact of artificial intelligence (AI)? This has been the subject of massive research. One good reference is that written by Bernard Marr. He summed up the impact of AI as follows:
AI is predicted to replace 7 million UK jobs between 2017-2037, impacting economic, legal, political, and regulatory aspects. However, it can improve workplace efficiency, job satisfaction, healthcare, autonomous transportation, and crime reduction.
AI is disrupting societies in many ways, which shall result in the emergence of new technologies and breakthroughs, and may also lead to some social disturbances before the wind of change settles.
This tightrope walking between efficiency and awareness of new trends is a necessity if businesses are to survive. The integration of the two and when to abandon one are most necessary in our uncertain world.
Strategic forecasting skills are increasingly essential to address the major changes that await us in the world of work in general and developing strategic forecasting skills is now an indispensable skill for companies and the professionals who assist them: the constantly evolving context in which we live, characterized by the rapid rise of artificial intelligence and innovative forms of work, makes it essential to develop an anticipatory mindset to orient oneself in what will be the future of the world of work. Possessing forecasting skills can be a discriminating factor, capable of marking the difference between success and failure, anticipating means knowing how to read the future in an evolutionary key, realizing the challenges that one will be subjected to, but also the opportunities to capitalize and seize to ride the wave of change.
Staying in tune with the latest trends is essential for business owners who want to be at the forefront. Companies must anticipate future changes and prepare accordingly to remain competitive. Although some trends have remained unchanged compared to past years, the ability to adapt to emerging trends is essential for long-term success.
Aldo Delli Paoli
Ably and masterfully you covered many important points that warrant our attention.
Effective business plans must incorporate the latest trends, thanks to AI and data availability. Staying on top of trends allows businesses to predict industry futures and adapt strategies.
Prediction, I may add, might not be very right, but it is also training for improved efforts next time.
Constant change leads to growth, and entrepreneurs must pay close attention to market evolution, consumer trends, and technological advancements. Preparing for tomorrow’s landscape requires intuition and flexibility.
This is vital I say. Markets and technology are dynamics and keep changing and so cause more changes such as the preferences of customers and the shift in prevailing trends.
Thank you Aldo for you focused on vital issues. 🌹 💡
Thank you for your support and sharing your wide experience. Your inspiration is great.
Have a good weekend!
Thankyou, Aldo and I wish you the same
Brother Ali,
A wonderful post. As usual there is so much here that sparks m thinking:
Goodhart’s Law – I wasn’t familiar with it and I confess to struggling with it a bit. Is it that once I set a measure as a target I am less likely to observe and engage in the measurement process objectively?
Succeeding at school but failing at life seems to have many causes -as you suggest -social interaction of group work versus individual requires social skills. Also school tests memory and cognitive ability, life tests the ability to learn and improve and the flexibility of knowing when to build competence and when to hire the already competent.
The balance of innovation and improvement or as Dr. Eric Zabagalski says balancing exploration and exploitation seems also a requirement in a VUCA world.
You and I have had many conversations about VUCA and the alternate description Cynefin. We live in a world that is changing rapidly -as your examples of the impacts of online commerce, electric cars, and machine learning and generative artificial intelligence amplify. It seems to me that success in such an environment requires constant objective data gathering, experimentation (action learning), and flexibility to succeed. And it also requires a firm view of that you wish to remain constant, bedrock values, that one might find another way to achieve but will not abandon. To succeed there one must consider unintended consequences and how to mitigate them.
Thanks for a great inquiry.
Alan Culler I wish you joy as much the joy you make me feel upon reading your fabulous comment, Brother Alan,
You explained and added great ideas to the post as well as highlighting its important ideas.
The post discusses the importance of Goodhart’s Law, social interaction, memory, cognitive ability, learning, and flexibility in a rapidly changing world.
It emphasizes the need for balance between innovation and improvement, exploration and exploitation, and a firm view of staying constant in bedrock values.
The post also highlights the challenges of adapting to the rapid changes of online commerce, electric cars, machine learning, and artificial intelligence.
Great comment that made my day joyful. Thank you, Brother