The Law of Unintended Consequences

The Cobra story is a classic example of what economists call a Perverse Incentive—an incentive that produces a result contrary to the intentions of its designers.

In the world of Product Management, we live and die by metrics. We set OKRs (Objectives and Key Results). We give bonuses based on numbers. But if you pick the wrong number, you don’t just get no results; you get bad results.

Goodhart’s Law in Action

This phenomenon is formally known as Goodhart’s Law, named after British economist Charles Goodhart. It states:

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

Once people know they are being judged on a specific metric, they will optimize for that metric at the expense of everything else.

3 Ways Tech Companies Breed Cobras

1. The “Velocity” Trap (Engineering)

• The Metric: You judge the engineering team based on “Story Points Completed” or “Velocity.”
• The Intent: You want them to code faster.
• The Cobra Effect: The team starts inflating the estimates. A simple 1-point task becomes a 3-point task. Velocity goes up on the chart, but output stays the same.

2. The “Active User” Trap (Growth)

• The Metric: You judge the marketing team on “Daily Active Users” (DAU).
• The Intent: You want more people using the product.
• The Cobra Effect: The team starts sending annoying push notifications: “Hey! You haven’t logged in today!”Users open the app to clear the notification and immediately close it. DAU goes up, but user annoyance skyrockets, leading to long-term churn.

3. The “Ticket Volume” Trap (Support)

• The Metric: You judge support agents on “Number of Tickets Closed.”
• The Intent: You want to clear the backlog.
• The Cobra Effect: Agents stop solving the root cause. They give a quick, partial answer and close the ticket. The customer has to open a new ticket to ask again. Ticket volume (and closure rate) goes up, but Customer Satisfaction (CSAT) crashes.

How to Fix It: Paired Metrics

The solution to the Cobra Effect is rarely to remove the metric. It is to Pair It with a counter-metric that measures quality.

Never set a “Quantity” goal without a “Quality” guardrail.

• Don’t just measure: Speed of Support Resolution.
• Pair it with: Customer Satisfaction Score (CSAT). (You can’t hang up fast if you need a 5-star rating).
• Don’t just measure: New Signups.
• Pair it with: Activation Rate (Did they actually do something?). (You can’t just buy cheap bot traffic if they need to activate).

Conclusion

Metrics are powerful tools, but they are dangerous masters. Before you roll out a new KPI, ask yourself: “If I were a chaotic genius trying to game this system to get a bonus without doing real work, how would I do it?” If you can find a loophole, your team will too.

The Takeaway: Don’t pay for dead snakes. Pay for a snake-free city. Focus on the Outcome (Safety), not the Output(Carcasses).