Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The McNamara fallacy: Measurement is not understanding

mcnamarafallacy.com

Post reply on HN
Print view View original

141–150 of 223 posts

Re: The McNamara fallacy: Measurement is not understanding

#141

Post by jbay808 »

serverlessmom wrote: post #63
jancsika wrote: post #32

Earlier quoted context omitted.

> The moral of the story is that people with analyst mindsets play an essential role in our economy, but sometimes giving those people power over large organizations can have disastrous consequences. I'm gonna cosplay an "analyst mindset": 1. Need to measure costs and benefits of slashing benefits/pay. 2. A benefit-- slashing benefits/pay allows us to hit some obvious financial goal 3. A cost-- Uh oh, I don't yet kno…

I definitely agree with you. I would further argue that the "analyst mentality" has become so engrossed in the foundation of capitalism(and always has been, really) that we see companies across many industries closing down due to the "worker shortage". When in reality the CEO's of the companies complaining the loudest that "no one wants to work" have decided that paying living wages in a deeply competitive job market…

The CEOs whose own compensation has been skyrocketing because that's just the market rate for talent, right?

Re: The McNamara fallacy: Measurement is not understanding

#142

Post by zeruch »

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…

Spent 3 years under a PE group, and the "management by spreadsheet" was very real, and utterly corrosive. The constant squeeze meant eventually everyone started to realize the only people who were going to make any real money/have benefit was a handful of PE folks and their satellites; everyone else would be squeezed until breaking. Even where our CoC were good (as mine was), we knew the eventual pressure would make it all buckle, so get out before it breaks you.

Some of us chose to keep ourselves sane.

Re: The McNamara fallacy: Measurement is not understanding

#143

Post by asdff »

mcguire wrote: post #118
asdff wrote: post #56

Earlier quoted context omitted.

In real life the battle of mogadishu saw Americans with 10x fewer casualties. Most modern battles have numbers like this with an order of magnitude fewer casualties on the American side, because American logistic planners try to ensure a massive power advantage.

And yet...

And yet what? Are you not convinced by the casualty data?

Re: The McNamara fallacy: Measurement is not understanding

#144

Post by jwsteigerwalt »

The core premise of the McNamara fallacy is not wrong. However, this article makes a critical mistake about the origin. McNamara was not just a business executive that believed he could take his knowledge to the Defense Department. He was an officer in the Army Air Force Statistical Control office that organized the Air Force during World War II into the successful machine that it became.

The fallacy is not that success in business is transferable to war, The fallacy is that the successes in World War II were transferable to Vietnam.

Re: The McNamara fallacy: Measurement is not understanding

#145

Post by craigyk »

milesvp wrote: post #85
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 started to go through the "you can't improve what you don't measure" phase. In general it was good for the org I was in, but I used to have to remind management that there's a corollary to that saying, which is: you necessarily improve things you measure at the expense of the things which are difficult or impossible to measure. This seems to be a hard one for some types to truly grok. A com…

I also like to point out in a few similar contexts: even if you could measure all the things, and you could create a perfect/optimal cost function, there would still be no guarantee that you'd be able to find the optimal global solution. So relax.

Re: The McNamara fallacy: Measurement is not understanding

#146

Post by vanderZwan »

jasonhansel wrote: post #109
rossdavidh wrote: post #96

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, desp…

To quote C. Wright Mills, writing in 1960: > They know of no solutions to the paradoxes of the Middle East and Europe, the Far East and Africa except the landing of Marines. Being baffled, and also being very tired of being baffled, they have come to believe that there is no way out—except war—which would remove all the bewildering paradoxes of their tedious and now misguided attempts to construct peace. In place of…

While we're here I might as well add a link to Scott Atran's RSA lecture about his book Talking To The Enemy, where he discusses his findings about radicalization and deradicalization, a topic very much related to the discussion here. It's one of those youtube videos I wish more people would watch:

https://www.youtube.com/watch?v=6ijmBd69878

Re: The McNamara fallacy: Measurement is not understanding

#147

Post by mcguire »

asdff wrote: post #143
mcguire wrote: post #118

Earlier quoted context omitted.

And yet...

And yet what? Are you not convinced by the casualty data?

I don't seem to recall Mogadishu being any kind of "victory". It's almost like the casualty data didn't tell the whole story.

Re: The McNamara fallacy: Measurement is not understanding

#148

Post by TheOtherHobbes »

jscode wrote: post #52
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…

>> Having dealt with 2 PE exists, rarely is the proposal something as upfront and silly as slash everyones pay. Agreed, but a gradual erosion can occur over the course of several years. PEGs and the operating company's management team have massive incentives to hit their growth metrics. If decreasing 401K contributions helps management hit their EBITDA target, many would argue that they should do exactly that. Howeve…

The reality is that this kind of stupidity is built into accounting systems. It's not even the people with the spreadsheets. They're doing what they've been taught to do. It just happens to be completely wrong-headed - if you're interested in tangible long term growth and not quarterly plunder which moves money around without seeding genuine real value.

Which is why companies can "grow" in accounting terms while actually being hollowed out as going concerns with a future.

Likewise with the planetary economy, which appears to be growing financially while in ecological terms it's almost literally eating its own seed corn.

A better approach needs a revolution in accounting. Current accounting practices are built on so many false assumptions they cannot possibly produce lasting long term opportunity, except for a tiny minority of exceptionally and unhealthily privileged people.

Re: The McNamara fallacy: Measurement is not understanding

#149

Post by rob_c »

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…

Granted bean counters fail as leaders (typically) but I would strongly argue it's the job of leaders to explain up front costs and value to been counters.

E.g. yes not providing free/cheap coffee/drinks in the office saves money, but it has a damaging cost in terms of employee attitudes and getting people to talk openly in a friendly environment about what they're working on and being able to ask for help.

These things can't be directly easily measured but can be quantified in a way that bean counters see the true value of the little extras...

Re: The McNamara fallacy: Measurement is not understanding

#150

Post by gilgoomesh »

The article attacks measurement based approaches, in general, which I don't think is supported by the anecdote of McNamara's failings in Vietnam.

Kill count was simply a terrible metric of victory.

Vietnam was a civil war, which requires a political victory. This means allegiance of local leaders and populist support – both of which are measurable values. A kill count is often inversely correlated with political support.

McNamara's failing here is more like the XY problem [1]. He incorrectly assumed that a brutal display of military power was the way to political victory and so he measured the wrong value.

[1] - https://en.wikipedia.org/wiki/XY_problem

Post reply on HN