The McNamara fallacy
This is documented history rather than a laboratory result. The events are well recorded. What they teach is an argument, and the entry makes it openly.
Robert McNamara was one of the most brilliant analysts of his generation, a numbers man who ran the American war in Vietnam. He believed in measuring everything. Under him, the war was tracked with relentless precision: enemy body counts, weapons seized, missions flown, tonnage dropped. Everything that could be counted was counted, charted, and optimised. And the war was lost. The things that decided the outcome, the will of the other side to keep fighting, the loyalty of villages, the meaning of the war to the people living it, could not be put in a spreadsheet, so they were quietly treated as if they did not exist. A sociologist later named the pattern the McNamara fallacy: the step-by-step slide from measuring what matters, to ignoring what cannot be measured, to deciding that what cannot be measured does not matter, to deciding it does not exist.
What you can measure quietly crowds out what matters, because the measurable feels solid and the immeasurable feels like an excuse. So teams optimise the metrics they have and go slowly blind to the things no metric captures: morale, trust, the quality of a relationship, whether the work is any good. The fix is to keep measuring while holding a standing suspicion that the most important factor in a decision might be the one that never appears on the dashboard. When the numbers all look good and the outcome is still wrong, you are usually looking at what could be counted instead of what counted. And the moment a number becomes a target, it stops measuring anything, which is Goodhart's law.
McNamara measured everything that could be counted and lost the war, because the things that mattered could not be. The ostrich effect says people stop looking at their numbers at exactly the point the numbers turn bad. Both fail with numbers, from opposite directions: one looked too hard at the wrong things, the other stopped looking at the right ones. They meet on one point. The ostrich research on active traders found people keep watching numbers they can act on, and McNamara's dashboard was full of numbers nobody could act on. So a metric that captures what matters and that someone is allowed to do something about is the only kind that survives both. The rest either measure the wrong thing or quietly stop being opened.
Source: Named for Robert McNamara, US Secretary of Defense 1961 to 1968. Popularized by Daniel Yankelovich.
Jerry Muller, 2018
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