How it presents in early-stage companies
In an early-stage technology company, performance is often measured informally, if at all — a small team with constant, direct visibility into each other’s work has less structural need for formal metrics, because the founder or a small leadership group can simply observe performance directly. The risk at this stage is not usually measurement distortion in Ridgway’s sense; it is the absence of any measurement discipline at all, which becomes a liability only once the company scales past the point where direct observation can substitute for it.
How it presents in hypergrowth companies
As a company enters a period of very rapid headcount and revenue growth, performance measurement typically becomes more formal, and Repenning and Sterman’s capability trap becomes highly visible: teams under intense pressure to ship features and hit growth targets have every immediate incentive to work harder within existing processes rather than pause to build the underlying engineering or operational capability that would make future work more sustainable. The credit structure Repenning and Sterman describe compounds this — “nobody ever gets credit for fixing problems that never happened” — so investment in preventing future strain competes, in the moment, against visible, immediately rewarded output, and usually loses.
How it presents in maturing technology companies
In a more mature technology company, where growth has slowed to a steadier pace, Ridgway’s original concern becomes more visible: formal metrics, now well-established and comparable across a large organisation, start producing the specific dysfunctional consequences Ridgway documented — teams optimising precisely for what is measured, sometimes at the expense of outcomes the metrics were only ever a proxy for. The urgency that once made “working harder” understandable has eased, but the metrics built during the hypergrowth period often remain unchanged, continuing to reward exactly the behaviour that made sense under pressure that no longer exists in the same form.
How it presents in newly public companies
A technology company transitioning to public ownership experiences a distinct further shift. Steven Kerr’s research on reward systems is directly relevant here: public markets reward predictable, quarter-over-quarter delivery against externally stated targets, which creates strong pressure to optimise for metrics that are legible to external analysts — often revenue growth and margin trajectory — over metrics that better reflect the underlying health of the business but are harder to explain in a quarterly earnings call. A company can find itself, almost overnight, managing to a narrower, more externally-legible set of numbers than the richer internal picture it had been tracking as a private company, and Kerr’s research would predict exactly what tends to follow: behaviour drifts toward what is now most visibly rewarded, which is not always what best serves the company’s longer-term position.
What explains the variation
The common thread is the relationship between pressure and time horizon. Under acute pressure, the capability trap dominates — the immediate reward of visible output outweighs the delayed reward of underlying capability. Once pressure eases, Ridgway’s more general observation about measurement distortion takes over, because the metrics that made sense under pressure persist past the point where the pressure justified them. Neither pattern is a sign of poor management; both are structural consequences of applying performance measurement without revisiting it as the company’s own stage of growth changes.
The public-market transition fits this same frame from a different angle: it introduces a new, external source of pressure — quarterly reporting — layered on top of whatever internal growth pressure already existed, and Kerr’s incentive mechanism operates on both simultaneously. A company can find its internal metrics distorted by hypergrowth pressure and its externally reported metrics distorted by market pressure at the same time, with the two not always pointing in a consistent direction, which is part of what makes performance management at this specific transition point unusually difficult to get right.
It is worth adding that founders and early leaders often recognise, intuitively, when growth pressure is easing, but formal metrics rarely carry that same intuitive update — a dashboard built during a hypergrowth quarter continues measuring hypergrowth-era priorities long after the company’s actual position has shifted, simply because updating it was never anyone’s explicit responsibility.
Where this shows up
The pattern described here is most recognisable in technology companies, part of the wider Professional and Knowledge-Based grouping. The same organisational questions appear, under different names, in other sectors.
Questions worth considering
- Which stage does this company’s current performance measurement approach actually reflect — its current stage of growth, or an earlier one?
- Where is the organisation currently rewarding visible effort over less visible, longer-term capability, and is that trade-off still the right one?
- If growth pressure eased tomorrow, would the company’s existing metrics still be measuring the right things?
- Has anyone reviewed whether the company’s internally-used metrics and its externally-reported metrics are pulling the organisation in the same direction?
Your team is facing similar challenges?
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