May 19, 2023

190: 🐍 How the Cobra Effect Creates Perverse Incentives and Metrics Tyranny

30 minutes

Time- and money-based targets don’t always serve the purpose we intend. In fact, sometimes, they actively work against us. Today we’re spelunking into a few related principles like Goodhart’s Law, The Cobra Effect, and why vanity metrics are often no more than a hungry ghost lurking in the shadows of your business. I couldn’t resist sprinkling pop culture clips throughout to illustrate these concepts, so I hope you enjoy the ride :)

🌟 3 Key Takeaways:

Be mindful when implementing specific numerical targets. Consider how they may lead to behavior that doesn't align with your overall goals and values, sometimes even transforming into perverse incentives that beget negative actions.

Clarify your values. Make it clear to your team what values you prioritize (and ethical behavior more broadly) over short-term gains or “shoulds” based on what everyone else is doing.

Be open to feedback and willing to adjust your strategies. Goodhart's Law says that "When a measure becomes a target, it ceases to be a good measure," ****so take the pressure off by zooming out from overly focusing on any one measure of success to paint a bigger, more holistic picture. Define more creative metrics that indicate you’re living in alignment with your values, and resonating with your community, such as number of enthusiastic email replies per newsletter sent.

📝 Permission: Stop chasing the hungry ghost of vanity metrics in your business. Get clear on your more meaningful metrics and core values, and aim for a holistic picture of those instead.

✅ Do (or Delegate) This Next: To more clearly see the tradeoffs you are willing to make, write your own “even over” statements, like the originators of the Manifesto for Agile Software Development have inspired many businesses to do. As in: “We value {important quality A} even over {important quality B}.”

🔗 Resources Mentioned

Articles: Manifesto for Agile Software Development, The Great Hanoi Rat Massacre of 1902 Did Not Go as Planned, The Cobra Effect: No Loophole Goes Unexploited

TV Shows: Killing It — episode 4 “Carlos” (Peacock), Byron Baes, Black Mirror—Nosedive

Music Video: Dolly Parton’s classic, 9 to 5

Community: Jay Acunzo’s Creator Kitchen and Unthinkable podcast

Software: Referral Candy, HelpScout

Heuristics: Goodhart’s Law, The Cobra Effect

📘Books Mentioned

Free Time: Lose the Busywork, Love Your Business

Pivot: The Only Move That Matters Is Your Next One

The Work Revolution: Freedom and Excellence for All

It Doesn’t Have to Be Crazy at Work

Rework

The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich

🎧Related Episodes

097: How to Find Your Perfect Problem with Jim McKelvey, author of The Innovation Stack (Part One) and 099: (Part Two)

174: What Book Marketing has to do with Glass Blowing: Reflecting on Free Time’s 1-Year Bookiversary 🥂

169: Running a Goal-Free Business with Stephen Shapiro

181: Be Irreplaceable with My Creative Coach Jay Acunzo

189: 💡Jay Acunzo’s IP Development OS — Courtesy of Creator Kitchen

💻 Access Free Time episode transcripts on Podscribe »

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By Jenny Blake

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