For years, record labels measured success partly by how many albums they shipped to retailers.
The problem was that retailers could return what they didn’t sell.
So a label could ship a million copies, earn platinum certification, trigger bonuses and celebrate a major success even if hundreds of thousands of those albums eventually came back.
The people inside the system were not necessarily behaving irrationally. Quite the opposite.
They were responding rationally to the rules they had been given.
If recognition, compensation and advancement were tied to shipments rather than actual sales, then shipping more records was exactly what the system encouraged.
That is the danger of a poorly designed metric.
Over time, people stop optimizing for the underlying objective and begin optimizing for the measure that stands in for it.
The metric becomes the mission.
This happens everywhere. A nonprofit can begin chasing people served rather than lives changed. A school can prioritize test scores over learning. A company can maximize quarterly results while weakening its long-term position.
The important leadership question is not simply:
What are we measuring?
It is: What behavior will this measurement cause?
Every metric is also an incentive. Every scoreboard quietly tells people what matters.
Before adopting one, imagine everyone in the organization becoming exceptionally good at maximizing it.
If that prospect makes you uncomfortable, you may be measuring the wrong thing.