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The McNamara fallacy: Measurement is not understanding

mcnamarafallacy.com

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Re: The McNamara fallacy: Measurement is not understanding

#91

Post by apohn »

jscode wrote: post #23

Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…

I worked at a company that went through a private equity acquisition and I have a question you might be able to answer.

If you exclude layoffs and incentivized retirement, it seemed to be that a greater percentage of individual contributors left as compared to managers. Lots of managers stuck around for 12+ months, and it seemed like the percentage of managers of managers (e.g. directors, VPs) who stuck around was even greater. Almost the entire C-suite stayed for years after the acquision.

Was there any financial or other incentives given to managers to stay? As an individual contributor, the morale was just terrible. I just couldn't understand why the managers and other people in leadership positions stuck around.

Re: The McNamara fallacy: Measurement is not understanding

#92

Post by jkingsbery »

jscode wrote: post #23

Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…

"Frupidity" is a term I've heard used for this.

Re: The McNamara fallacy: Measurement is not understanding

#93

Post by jkingsbery »

eumoria wrote: post #22

McNamara basically admits this himself in the documentary The Fog of War: https://en.wikipedia.org/wiki/The_Fog_of_War It's worth a watch but it's very soft on him and his role. Still a very good documentary.

I haven't seen that one, but I've been watching the Ken Burns documentary recently. It seems suitably fair. Where maybe some of the proposed "McNamara Fallacy" breaks down from OP, according to archives that they go through in the documentary he knew his approach wasn't working for a long time, he just did not (or would not, or could not, depending on your perspective) say so publicly and didn't seem to have any other way to measure progress.

Re: The McNamara fallacy: Measurement is not understanding

#94

Post by jscode »

apohn wrote: post #91
jscode wrote: post #23

Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…

I worked at a company that went through a private equity acquisition and I have a question you might be able to answer. If you exclude layoffs and incentivized retirement, it seemed to be that a greater percentage of individual contributors left as compared to managers. Lots of managers stuck around for 12+ months, and it seemed like the percentage of managers of managers (e.g. directors, VPs) who stuck around was ev…

> I just couldn't understand why the managers and other people in leadership positions stuck around.

Money. Investors typically carve out equity to retain key personnel (i.e., management units/stock). The units are worthless unless the company appreciates in value, so management becomes laser-focused on doing whatever it takes to increase the company's valuation. Everything else becomes a secondary concern.

Re: The McNamara fallacy: Measurement is not understanding

#95

Post by calyth2018 »

smaug7 wrote: post #69
eumoria wrote: post #22

McNamara basically admits this himself in the documentary The Fog of War: https://en.wikipedia.org/wiki/The_Fog_of_War It's worth a watch but it's very soft on him and his role. Still a very good documentary.

Was looking for this comment. In McNamara's reflection, a tenant he called out was to understand the enemy. US didn't understand the Viet Congs motivation for fighting the war (freedom from colonizers) whereas the US viewed the war as a larger Cold War. This is the same as what happened in Afghanistan that we didn't learn.

I'd argue the US has not tried to understand the enemy since the Cuban missile crisis. There are more failures outside of Afghanistan, and I think the US is going to walk right into another one.

Re: The McNamara fallacy: Measurement is not understanding

#96

Post by rossdavidh »

I believe the McNamara Fallacy is a real thing, although I would say Goodhart's Law expresses the more fundamental issue. But, the examples they give (Vietnam and Afghanistan wars) are bad examples, because in both cases the issue was primarily not that the U.S. military was relying too much on quantitative metrics, but rather that it was being asked to do a job which militaries are not good at.

In neither case, despite what many deniers and apologists proclaim, was the war "winnable" by the military, because in both cases the primary problem was that the government of the nation in question did not have the respect (and thus support) of its people. There is no strategy that an outside military can use, which will fix this, because it's not a military problem, and a military has the wrong personnel, the wrong training, and thus the wrong institutional mindset.

It is as if you sent the Red Cross in to defeat the Viet Cong or the Taliban, and then concluded that the reason they failed was that they were measuring numbers of hospital beds and counting how much medical equipment they needed. It was the political leadership, who decided this was a job for a military to perform, that was the root problem. McNamara's metrics were neither here nor there.

Re: The McNamara fallacy: Measurement is not understanding

#97

Post by p_l »

johnp271 wrote: post #70

Does the McNamara Fallacy have any application to our response to COVID? I often hear pundits of all sorts, medical doctors, epidemiologists, politicians, CDC scientists, etc, make statements such as "the data shows this" and "the data says that" and then follow up with "therefore the science says we must all do such-and-such". I hold a rather narrow, rigorous - maybe closed minded - opinion of what is 'science' (so…

More like the data about COVID is used as fig leaf for metrics in other areas actually driving the decisions, or ideology/dogma.

If you go with hard data and experience, you'd do hard moves like China (and many other asian countries did). In fact, similar moves have been done in the past in Europe (on the communist side of Iron Curtain) to stop epidemics, including even manual contact tracing.

But because a non-trivial force in decision making has strong other incentives, and because of dogma like disbelief in aerosol transmission, we end up with really bad decisions with fig leaf of data analysis.

Re: The McNamara fallacy: Measurement is not understanding

#98

Post by calyth2018 »

eumoria wrote: post #22

McNamara basically admits this himself in the documentary The Fog of War: https://en.wikipedia.org/wiki/The_Fog_of_War It's worth a watch but it's very soft on him and his role. Still a very good documentary.

I haven't live in that era, so maybe it's not my place for me to say whether Morris was particularly soft on him. I think the fact that he said that it was the president's responsibility, that revealed a lot about him.

On the other hand, given the Fog of War did play back a recording where Johnson had a much different view on Vietnam than JFK, I wouldn't put the burden solely on McNamara's shoulders either.

Regardless of what one might think of his role, it was still quite enlightening, and I think more people should watch it. I think the lessons outlined in it are useful, but too few have taken heed of it.

Re: The McNamara fallacy: Measurement is not understanding

#99

Post by skybrian »

Maybe a better way of thinking about it is that a process that gathers numbers can be useful, but understanding the context in which the numbers were gathered (methodology and whatever else is happening at the time) is more important than the numbers themselves. Without context, you don't know what you have.

For example, surveys gather numbers, but if you don't understand how the people who answered the questions interpreted them, you don't know what the numbers mean. Asking people what they really meant by their answer is only possible for the people doing the survey.

Re: The McNamara fallacy: Measurement is not understanding

#100

Post by Aeolun »

bb88 wrote: post #86
jacobr1 wrote: post #46

Earlier quoted context omitted.

Having dealt with 2 PE exists, rarely is the proposal something as upfront and silly as slash everyones pay. That probably does happen for a company being restructured in the red, but the more subtle actions tend to be things like: * Comp bands for are now targeting p50 averages rather than p75 or top of market. So you can't close new hires that are going competitors. And you can't give raises to your top performers…

Cash is still King. The more cash on hand, the easier it is for the business to survive in an economic downturn, and the more dividends and stock buybacks can happen for the investors. Software engineers from a CFO perspective aren't any really different than plumbers or carpenters. It's just labor. Getting a cheaper rate on labor is far more beneficial to the company than say making sure it's employees are happy. If…

> Getting a cheaper rate on labor is far more beneficial to the company than say making sure it's employees are happy.

Whoa, citation needed. I’m fairly certain yhis isn’t true unless you are optimizing for just the next month.

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