GRE’isation of entrepreneurship

Eric Ries(2011) introduced the concept of Actionable metric and Vanity metric by taking the example of a test preparation company called Grockit. This made me think about the formidable role Lean-startup played in the matricization of entrepreneurship culture.

According to Eric Ries, “When cause and effect is clearly understood, people are better able to learn from their actions. Human beings are innately talented learners when given a clear and objective assessment”.

As a combo, the lean-startup has introduced many other concepts like Validated learning, Innovation accounting, etc as part of their metricization drive.

Because of this, I thought it is more than appropriate to call the role played by the lean-startup in bringing measurement culture to the entrepreneurship domain as the “GRE’isation of entrepreneurship” (after the Graduate Record Examinations).

The problem here is the complete ignorance of the complexity of the real world. In complex domains, you can’t have the perfect objective answer or action. There is not even an objective goal. Everything is dynamic and co-evolving.

Secondly, In a complex domain like entrepreneurship, emergent property is a key feature. The idea you initially had can emerge into a radically new formation, an emergent property that you could have never imagined before. For E.g. Instagram was started as an HTML5 supported location-based service; Facebook was started as an app to compare two people’s pictures and the rate which one was more attractive.

When you introduce a metric to a radically changing, complex, dynamic, and emergent system like a startup, it will amount to the manifestation of Goodhart’s Law that suggests that “when a measure becomes a target, it ceases to be a good measure”. When people set an objective metric-driven goal, people will tend to optimize for that objective regardless of the consequences. It is extremely troublesome if the metric is introduced as a target in a domain that is dynamic and emergent like that in entrepreneurship. Here the measurement based on metric itself is not a problem, but the effect of such metric fixation(Muller, 2021) will stagnate the startup and uncouple the venture from ecological realities and opportunities. 

And that is absolutely a problem.

Part of Esoloop Framework

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