What is a Golden Hammer?

A golden hammer is a rule of thumb that people depend on too much.

How Does a Golden Hammer Work?

For example, when it comes to marketing, we often assume that the 18-34 demographic is the 'holy grail' and that we should gear products and services to people in that age group if we want to have the best sales, biggest returns, or most buzz. Although this demographic is indeed large and influential, assuming that the best marketing plan is the one that focuses on this demographic is a golden hammer -- it is not the right approach for everything, and it can even have significant drawbacks. Nonetheless, many companies continue to rely on marketing to this demographic because 'that's the way it's done.'

Golden hammers take different forms, but generally they revolve around overrelying on standard practices, customary analytics, traditional approaches, or what experts say.

Why Does a Golden Hammer Matter?

In carpentry, sometimes a hammer is the right tool for the job. But it isn't the only tool, and some jobs need different tools. A golden hammer is a tendency to use the same tool over and over, despite the fact that it may not be the best tool for the job. In business, companies may similarly overrely on certain analytics, marketing strategies, or rules of thumb out of habit rather than because they're the best tools for the job.

Ask an Expert about Golden Hammer

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Golden Hammer.

Be the first to ask a question

If you have a question about Golden Hammer, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.