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Business metrics can become counterproductive when underlying economics change, making it essential for leaders to periodically reassess whether measures still encourage the right behaviour
Businesses frequently use a simple rule of thumb, or heuristic, to measure an important result (Photo: Wikimedia Commons)
Prakash Nedungadi Bengaluru 5 min read Last Updated : Sep 23 2026 | 11:07 PM IST
"What gets measured gets managed" is an oft-used adage in business management. It usually encourages chief executive officers (CEOs) and business leaders to measure progress on important result areas as closely as possible, to ensure that the organisation is acting on moving them in the right direction.
Businesses frequently use a simple rule of thumb, or heuristic, to measure an important result. Sales growth may be tracked through primary sales volume: the quantity shipped to distributors. Profitability may be judged by the gross margin percentage. Such measures are necessary because they simplify business life. They align people around a single figure and become the common language, or shorthand, for discussing performance.
The problem begins when the economics of the business change but the measure does not. A metric that was once sensible can start encouraging precisely the wrong behaviour.
Think of it as a ship’s operating compass. If its true north is even slightly wrong, the crew may work with complete discipline and still take the ship towards a destination the captain never intended.
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