Fixating on Metric Data Biases Us to the Short Term

Measurement culture compels us to fixate on the short term even at the expense of longer-term goals and ambitions. Longer-term aims are by their nature more difficult to measure, and so we by nature subordinate these goals shorter-term ones that provide more immediate feedback.

Metric fixation has distorted our view of the economy, with organizations seeking to maximize short-term profit over longer-term investments to appease money managers whose focus is on quarterly results. Organizations are therefore disincentivized to to invest in longer-term initiatives including research and development, or even in their own employees. In some cases, as Sinek points out, a focus on short-term metrics rather than longer-term visions or missions may lead to incentivizing bad actor behaviour, rewarding those who have achieved their goals by questionable means and overlooking those who act with integrity but do not see the same level of measured success.

For example, Muller argues that the use of scorecards to measure the quality of postsecondary institutions subordinates education to producing capacity for future earnings; as a result, many other benefits of an education are neglected. As well, institutions pursue strategies that befit the kinds of students who show up well on the scorecard, to the detriment of others who may not respond well to those methods. Because college completion rates have been prioritized as a key performance indicator, institutions intake students who may not be qualified and then subsequently lower the standards for awarding a degree.

Organizations are attracted to the illusion of certainty: they are fundamentally risk-averse and will pursue tactics that they believe are sure things rather than pursue less knowable, but potentially more profitable, lines of inquiry. Because savings are easier to measure than potential gains, organizations will tend to seek the comfort of what is knowable over what is possible and cut costs rather than invest in the future.

Short-termism further leads organizations to lose sight of their longer-term mission. As well, it can also expose organizations to risk.


Related

Citations

Madsbjerg, Christian. Sensemaking: The Power of the Humanities in the Age of the Algorithm. Hachette Books, 2017.

Muller, Jerry Z. The Tyranny of Metrics. Princeton: Princeton University Press, 2018.

Sinek, Simon. The Infinite Game. New York: Portfolio, 2019.


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