Measures, targets and Alchemy

When a measure becomes a target, it ceases to be a good measure.

I first heard this quote when dealing with performance measurement and remuneration structures for senior management. In that scenario, the danger is that you get exactly what you measure rather than the good behaviours related to or driven by the metrics chosen. The measure starts as Earnings Per Share (EPS) growth, which is generally a good thing. However, once management do the maths, they realise that reducing dividends to zero will boost EPS growth, even if it means pursing projects with a return lower than shareholders’ cost of capital. Measure becomes a target; measure ceases to be useful.
More on that some other time – it is an interesting point itself.

Now on to the magic and mystery, and science and great skill, and analysis and mathematics and theories, and occasional quack and snake-oil salesman – Search Engine Optimisation. Isn’t there an argument to say that, if the aim of search engines with their great yet imperfect algorithms is to reward fresh, relevant and useful content for relevant search terms, then the best long-term strategy would be to continue to write and publish fresh, relevant and useful content? No quick wins, and with less of the alchemy involved SEO companies wouldn’t get as many customers, but why isn’t this the best advice for long term traffic and search engine ranking? Rather than pursuing loopholes and quirks in any particular (temporary) search system, the measure should match something more fundamental – being a useful website. Difficult for that approach to need to be changed when Google uses “nofollow” links or omits duplicate stories or starts recognising your “invisible white on white text”.
Ok, before the backlash begins, there are practical lessons that can help search engines. “Obvious” things like “search engines are not people and therefore will struggle to read text if it is really a picture embedded in a fancy Flash animation”. This is probably a bad example – I expect fresh, useful and relevant content appears less often in glitzy Flash clips.

So isn’t it time to take the difficult medicine, and build a brand and loyalty and readership and customers and repeat business and structure value and goodwill by actually earning it?

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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