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The McNamara fallacy: Measurement is not understanding

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Re: The McNamara fallacy: Measurement is not understanding

#211

Post by toss1 »

Drunk person, near streetlight, lost key ...

Of course it is much easier to manage things that you can measure.

That does NOT mean that if you cannot quantitatively measure it, that it can't be managed

It certainly does not mean that if you haven't yet developed an effective metric, that it does not matter -- it's just mind-blowing that McNamara went that far.

The way to do it is to FIRST figure out what matters.

Then figure out if it can be measured, and if not, how to qualitatively assess it. Then also figure out how to ensure that the metrics don't become the goal (with perhaps the sole exception being if you are in sports and the goal is winning races/games, so that's a pretty good metric in a suite of metrics).

Re: The McNamara fallacy: Measurement is not understanding

#212

Post by AmpsterMan »

gen220 wrote: post #174
ren_engineer wrote: post #129

Earlier quoted context omitted.

this is basically the micro example behind the deindustrialization of the United States. Mitt Romney type corporate raider MBAs outsourcing everything to China for cost savings to maximize short term profit expand this over 50 years by 1000s of similar groups of people doing the same thing and you go from the "Arsenal of Democracy" to begging China for masks and ventilators

An oldie that may be an interesting read for those who have had similar thoughts: https://www.theatlantic.com/magazine/archive/1993/12/how-the...

What a fascinating article. Thank you for sharing!

Re: The McNamara fallacy: Measurement is not understanding

#213

Post by aeturnum »

thaumasiotes wrote: post #36
aeturnum wrote: post #21

Earlier quoted context omitted.

This seems untrue. There are also genuine uncertainties about the future: things that neither side knows but will impact the outcome. Because of that, there is always a range of outcomes for a conflict, and so both sides would still have an incentive to carry out the war. Consider, for instance, if there are two countries (A and B) looking at conflict with perfect information. Given their relative strengths, the war…

> Consider, for instance, if there are two countries (A and B) looking at conflict with perfect information. Given their relative strengths, the war will cost both $1 billion, but A will win and reap $1 billion + $1 in plunder. In your model, B will always surrender and give A $1 In the perfect information scenario, B will surrender more than $1. B is better off at any tribute level up to $1,000,000,000.

Sure, I didn't go far into detail, but it's actually worse than either of us has said because once B surrenders anything ($1 or $1,000,000,000), they are at even greater disadvantage and "logically" should surrender more money. In fact, they should surrender the entire country, as once they are at a disadvantage A can keep coming back forever.

Effectively, the idea that war would not happen with perfect information suggests that the logical thing to do is for all countries to surrender control to the strongest country immediately.

Re: The McNamara fallacy: Measurement is not understanding

#214

Post by missedthecue »

trasz wrote: post #204
missedthecue wrote: post #102

Earlier quoted context omitted.

I just don't buy that line of thinking at all. If that is truly their goal, there are way easier and subtle ways to do it without causing a collapse in political capital for the parties and politicians involved, which the Vietnam, Iraq, and Afghanistan wars did.

Such as? What other mechanism makes it possible to pay 700 billions per year to the private sector for something that the taxpayer can't see, because it's secret?

Medicare for All would cost well over $4 trillion per year according to the Lancet. That would be going to privatized hospitals, doctors, big pharma, medical consultants, supplies, equipment, diagnostics, lab companies etc...

But I would point out to you that the military's budget is $700B regardless of whether the US is engaged in foreign armed conflict or not, and half of that is personnel costs like salary and housing allowance. Only about $300B goes to procurement of all types (weapons, clothing, food, cleaning supplies, fuel, paint, etc...)

Re: The McNamara fallacy: Measurement is not understanding

#215

Post by vlovich123 »

tomrod wrote: post #16
vlovich123 wrote: post #4

Earlier quoted context omitted.

That's a fallacious line of reasoning on several fronts. A) The beneficiaries of a war need not be the ones who pay the cost. If you personally stand to benefit from the war itself, regardless of win or lose, you want the war. B) It's applying a rational economics approach when it's pretty clear that humans aren't rational. Japan kept fighting even when it was clear they would lose. Pride, image, your future after th…

(1) Externalities are handled in the game theory literature (2) Preference definitions are not in scope for most game theory lit; what you're describing are preferences and expected utility, which ARE in the literature and metamodel (3) This is not really true. It depends on how big you are and how big your coalition is. Consider that Saddam Hussain is no longer in charge of Iraq. (4) Yes, potential outcomes are cons…

I took OPs statement at face value:

> If each side really knew the true strength of the other side, it would be clear which would win and therefore actual war is illogical and unnecessary.

No, knowing the true strength is insufficient. I laid out other kinds of pieces of information that also influence the war being logical and necessary as well as the war being illogical and unnecessary and still happening.

Now, you could strengthen the argument and say "what OP meant was that if we had all the information needed to build a model to accurately predict the exact outcome to a high degree of confidence". To me that's the same as the "god of the gaps" argument though because at the most reduced state you end up with the classical position of "well, if I had the state of every particle in the universe I could predict what would happen". The simulation aspect is physically impossible as far as we know according to [1] because the amount of compute needed would be the universe itself. So now you have to start building a model that trades off error and complexity so that you could actually make a decision before the heat death of the universe.

[1] https://arxiv.org/abs/1704.03880

Re: The McNamara fallacy: Measurement is not understanding

#216

Post by thaumasiotes »

aeturnum wrote: post #213
thaumasiotes wrote: post #36

Earlier quoted context omitted.

> Consider, for instance, if there are two countries (A and B) looking at conflict with perfect information. Given their relative strengths, the war will cost both $1 billion, but A will win and reap $1 billion + $1 in plunder. In your model, B will always surrender and give A $1 In the perfect information scenario, B will surrender more than $1. B is better off at any tribute level up to $1,000,000,000.

Sure, I didn't go far into detail, but it's actually worse than either of us has said because once B surrenders anything ($1 or $1,000,000,000), they are at even greater disadvantage and "logically" should surrender more money. In fact, they should surrender the entire country, as once they are at a disadvantage A can keep coming back forever. Effectively, the idea that war would not happen with perfect information s…

The norm is that you pay regularly occurring tribute until such time as you feel you probably don't have to anymore. But there's no norm of surrendering control; that's a conquest, not a tribute.

Re: The McNamara fallacy: Measurement is not understanding

#217

Post by mahkeiro »

erosenbe0 wrote: post #190
mahkeiro wrote: post #182

Earlier quoted context omitted.

Just look at Intel to see a company that was managed by the accounting people. Great numbers for a few years, large dividend, etc, but now they have to spend billions and billions to put the company back on track and give it a future.

Disagree. Intel has had continuous dividends for at least 30 years. Few giant American companies have been as consistently successful as Intel. I can think of only Microsoft, one or two energy conglomerates like ExxonMobil, a telecom or two like Verizon, and maybe a bank like Goldman Sachs.

Sorry should have been more precise but I was also counting in the very large stock buyback that came to a end in early 2021.

Re: The McNamara fallacy: Measurement is not understanding

#218

Post by snovv_crash »

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…

It can be more insidious than that. For example, as time goes on more and more of the engineering might be shifted from product development to contracting. In this way you see revenue growth without realising that there is a hard limit and you're throwing away the company's future.

Re: The McNamara fallacy: Measurement is not understanding

#219

Post by trasz »

missedthecue wrote: post #214
trasz wrote: post #204

Earlier quoted context omitted.

Such as? What other mechanism makes it possible to pay 700 billions per year to the private sector for something that the taxpayer can't see, because it's secret?

Medicare for All would cost well over $4 trillion per year according to the Lancet. That would be going to privatized hospitals, doctors, big pharma, medical consultants, supplies, equipment, diagnostics, lab companies etc... But I would point out to you that the military's budget is $700B regardless of whether the US is engaged in foreign armed conflict or not, and half of that is personnel costs like salary and hou…

“Medicare for All” can’t be hidden from the taxpayer though. Also it doesn’t exist.

Re: The McNamara fallacy: Measurement is not understanding

#220

Post by sirspacey »

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 just completed running a transformation of a F500 company and these were the players who shut it down.

We were on the cusp of turning the corner and the consequences of their approach are staggering in terms of people, revenue, and client relationships.

I’m looking to discover how I might more effectively engage them in the future.

Any advice?

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