Simple Laws with Counter Effects

If your care for your family life, performance at work and healthy living then this post may interest you.

Simplify is a good thing. Is oversimplification desirable?

Incentivizing employees with money, is it incentivizing?

Focus your measurement on one indicator, even if simplifying procedures, but does it pay dividends?

The more training a trainee receives, the better she/he gets, how true is this in spite of the simplicity of this guiding rule?

Let me explain above questions with real stories.

A rich man promised a huge bonus for any player who scores against the counter team in a derby soccer match. The team lost with a heavy score.

The breakdown of an instrument caused delays to the employees using it in a drug manufacturing company. The productivity of these employees went down and so their money incentives. The company later decided to buy a new instrument. Things settled for a while, but the breakdown of the instrument recurred painfully more than before.

The management of a company being aware of the cost of turnover of employees decided to keep only the divisions heads who managed to keep the turnover rate below 10%. A year later, the company went bankrupt.

A father fed up with the performance of his son in math decided to bring him a private tutor. The sons’ grade improved. The father then decided to recruit more teachers to teach his son at home. The grades downgraded.

A company decided to recruit the services of few influencers to increase the sales of their products. The company benefited little and could not recover the cost of the influencers.

Are the above examples too different to share same causes of e problems? Alternatively, is there a common denominator among them?

There are two simple rules to answer the above questions. If you have not already been familiar with then it is time to be.

When the rich man promised a huge reward for any player who scored a goal, he assumed he was doing the team a favor. It did not work because every player wanted the reward for himself. The team cohesion disintegrated and instead of the players playing as one team then segregated into eleven teams. They lost.

Focusing on one measure is what I call “The measure effect”, in emulation of the “observation effect”. It makes the measure a negative one blinding the management of maneuvers the employees produce discretely to offset the measure.

What the rich man did was that he focused the attention of the players on one measure of success. That is self-scoring as many goals as possible. Intentions if good use of a measure that worked in opposite direction to the intention.

When we focus our attention on one measure, we corrupt it. This is the Goodhart's law

This is true for many of the examples above. In the case of focusing the attention on one measure such as the turnover rate, the resulting corruption led to the bankruptcy of the company.

You may ask why. Well, the answer is that the division heads became obsessed and focused on reducing the turnover rate. The employees soon realized that and went loose. They did not report on time, their conflicts increased and their productivity went down. They knew they were safe because the division’s heads were busy with keeping their positions safe.

The cases of the equipment breakdown, private tuition and training examples again the same law is playing its shadowing effect along with another law, the law of Shriky Principle. This law states that Institutions will try to preserve the problem to which they are the solution.

The real problem with the breakdown of the equipment in the pharmaceutical company was that the employees did not know how to take care of the equipment. This led to its failure. Instead of “fixing” the employees, the company worked on fixing the instrument in vain.

The same issue is with the student. Instead of his father enhancing his self-desire to learn he decided to “fix” his son by bringing private teachers. The teachers shall be happier to give more lessons to gain more money.

Judging the success of training workers by the number of employees trained spoiled the measure and invited the Shirky principle to operate behind the scene.

“Fixing” workers by more training is less effective than enhancing their capacity for self-rewarding by self-learning.

For example, in case the son was mine, I would make buy short videos for him to learn by himself. Even better option was to show him how to make the videos by himself. This way he feels that any improvement is his own-making and he shall thrive on making little progress. He then feels the value of self-rewarding.

Using one measure such as the customer net promotion score, customer net effort score and customer life value score is counter-productive They all share focusing on one measurement only to spoil the measure and thus leading to misleading results.

In politics, setting as a rule that decisions shall only be approved by consensus might sound fair at the first insight. Fairness was intended. It was later discovered that consensus seeking permits a minority faction to control a majority.

Beware of simple issues that may have considerable back counter effects. We intend to get certain results from focusing on a measure only to end worse than we started with. Beware of “innocent” intentions that may lead us astray.

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