Robert S. McNamara was the United States Secretary of Defense from 1961 to 1968. He was one of the "Whiz Kids" hired by Henry Ford II to install in the Ford Motor Company the then-modern principles of planning and management control. Central to this effort was a measurement and metrics orientation, which McNamara later applied to managing the Department of Defense, and particularly, the U.S. tactics and strategy for the Vietnam War.
The McNamara Fallacy is the idea (discredited) that one can manage the missions of complex organizations by deriving guidance solely from numeric measurements of inputs and outputs. If these "metrics" are correctly chosen, so says the fallacy, they constitute a model of the system under control. To make appropriate decisions, one need only examine these metrics. [Baskin 2014]
According to the Fallacy, which is also known as the quantitative fallacy or managerialism [Muller 2019], attributes of operations and resources that cannot be measured objectively, and cannot therefore be represented as numeric data, can be safely ignored. They can be ignored because they cannot be proven. That's the essence of the McNamara Fallacy. The weakness of the approach isn't the use of metrics; rather, it is the ignoring of non-quantifiable factors.
Management-by-metrics fails not because metrics are unworkable. It fails because the effects of non-quantifiable factors can be as important as — or more important than — the effects of the quantifiable factors. In the case of the Vietnam War, for example, management-by-metrics emphasized attention to deaths of enemy combatants. That did not account for the differences in levels of commitment of the populations of the nations involved. Nor did it account for the effects on data quality due to the way the metrics were used.
Implications for organizational management
If your task The McNamara Fallacy is the idea (discredited)
that one can manage the missions of complex
organizations by deriving guidance solely from
numeric measurements of inputs and outputs is to manage the missions of a complex organization, the McNamara Fallacy offers a seductively safe harbor. It reduces the management problem to one of creating a metrics-based "model" of the missions. Then, having collected the data the metrics specify, decision-making is straightforward. All that's required is choosing interventions that drive the metrics to the desired goal values. If the problem is too complex for intuition, numeric simulations can test the results of proposed approaches, enabling a rational choice from among available options.
Belief in the McNamara Fallacy has a tight grip on many a management team even today. There's just one problem. It doesn't work. To understand one reason why it fails, consider the parable of the drunk and the streetlight.
The Streetlight Effect
There is an old joke that goes something like this:
One night after midnight, a policeman sees a drunk under a streetlight on his hands and knees searching the ground. He asks the drunk what he has lost. The drunk says he lost his keys, so they both look under the streetlight for a bit. Then the policeman asks the drunk if he is sure he lost the keys here. The drunk replies, "No, I think I lost them over there under those trees." The policeman asks why he is searching here, and the drunk replies, "The light is better over here."
This parable has led to identification of the Streetlight Effect, which has important lessons for problem solving. [Freedman 2010] In problem solving, the Streetlight Effect can be expressed as the tendency to favor searching for problem solutions in areas where we feel we have mastery, rather than in areas where we're more likely to find solutions.
The Streetlight Effect also has lessons for managers in organizations. It explains the tendency to manage according to metrics for which data is relatively easy to collect reliably even if those metrics might be less relevant to the process we're controlling. The Streetlight Effect can also cause us to be averse to basing management action on judgment or other system attributes that cannot be quantified. It might then suggest a reason why the McNamara Fallacy still has adherents, given that the Fallacy specifically claims that we can base decisions solely on metrics, and ignore non-quantifiable factors like judgment and intuition.
When next you notice a group basing an important decision solely on metrics, ask yourself if the decision feels right. If you feel a slight pang of doubt, consider asking others a question like, "Does anyone have a slightly queasy feeling about this?" Top Next Issue
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