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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

#81

Post by boringg »

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…

While your experience sounds painful it also sounds like something that would have happened in the 90s. I don't think most tier 1 organizations still think in that way.

Re: The McNamara fallacy: Measurement is not understanding

#82

Post by bb88 »

boringg wrote: post #81
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…

While your experience sounds painful it also sounds like something that would have happened in the 90s. I don't think most tier 1 organizations still think in that way.

The company exists for the stockholders, not for the employees.

Stack ranking is still used widely throughout Fortune 500 companies, which is one of the most culture destroying management practices known to man.

Re: The McNamara fallacy: Measurement is not understanding

#83

Post by shellback3 »

McNamara cut his teeth on real world problems in the AAF's Office of Statistics and worked with General Curtis LaMay to plan how best to use the B29 bombers. He became an expert with statistics and other math tools and thought they could be widely applied to business and, of course, war. Once he had these marvelous tools he found nails everywhere.

For instance the rate of German tank production was accurately estimated by collecting the serial numbers of all the tanks (and some tank components) that were knocked out. Best methods of attacking submarines was worked out this way as well as well as where to place armor in bombers, etc.

Re: The McNamara fallacy: Measurement is not understanding

#85

Post by milesvp »

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 common response is that we need to figure out how to measure it, thinking there was some single magic number that things could be distilled down to. But often even if you figured out how to measure some of them, there's always other intangibles you're not tracking. So you need to always be conscious of it.

Re: The McNamara fallacy: Measurement is not understanding

#86

Post by bb88 »

jacobr1 wrote: post #46
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…

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 the company could cut wages 50% across the board and then give the executives 20% raises for saving 50% in labor, they would do it in a heartbeat.

Re: The McNamara fallacy: Measurement is not understanding

#87

Post by hn_version_0023 »

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’m not the type to pass up making a Star Wars reference, so here goes:

“One would think you Jedi would understand the difference between knowledge and… heh heh… wisdom”

Re: The McNamara fallacy: Measurement is not understanding

#88

Post by serial_dev »

missedthecue wrote: post #78
sandworm101 wrote: post #60

What is the name for the fallacy of thinking that wars are always meant to be won? Throughout history wars have been fought without any intention of "winning". Sometimes a war can serve a religious or ceremonial purpose, one that doesn't require a clear winner. Other wars have been fought for completely economic reasons. Others are proxy contests whereby greater powers can demonstrate their abilities without directly…

Wars might have unclear objectives and mission-creep, but I don't think anyone is fighting to lose.

The question is about what "winning" means for the people who start wars and keep fighting them. It might not be the same as for you.

To quote Julian Assange, "The goal is to use Afghanistan to wash money out of the tax bases of the US and Europe through Afghanistan and back into the hands of a transnational security elite. The goal is an endless war, not a successful war".

Re: The McNamara fallacy: Measurement is not understanding

#89

Post by apohn »

boringg wrote: post #81
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…

While your experience sounds painful it also sounds like something that would have happened in the 90s. I don't think most tier 1 organizations still think in that way.

Less than a decade ago I worked at a company that was acquired by a private equity group. What jscode said matches my experience. For a while I also tracked (on Glassdoor and some other sites) companies that were purchased by that firm, and seems like employees at different companies had the same experience. EBITA was king, nothing else matters.

Re: The McNamara fallacy: Measurement is not understanding

#90

Post by serial_dev »

sf_rob wrote: post #76

This isn't a great article IMO (I say as someone who is a big fan of qualitative user research, mixed methods, etc). Per the first example, many types of attitudinal data can be quantified and conflating attitudinal data with qualitative data is itself a fallacy. It's possible that there were quantitative attitudinal signals that could have been captured or created as inputs to a more accurate model. Per the second e…

My thoughts, too. It's not that quantitative data is bad, he just picked the wrong one.
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