Mandeles argues convincingly that recognizing the inevitability of error may be the single most important factor in the design of effective organizations and procedures to foster and enhance innovative technology and concepts…
Three aspects of the B-52’s history are striking because they challenge conventional wisdom about rationally managed innovation.
First, Air Force personnel working on the B-52 program did not obtain the aircraft they assumed they would get when the program began.
Second, the development process did not conform to idealized features of a rational program. While a rationally organized program has clear goals, adequate information, and well-organized and attentive leadership, the B-52 development process exhibited substantial disagreement over, and revision of, requirements or goals, and ambiguous, imperfect, and changing information.
Third, the “messy” development process, as described in the book, forestalled premature closure on a particular design and spurred learning and the continuous introduction of new knowledge into the design as the process went along.
That was from the introduction to Mark Mandeles excellent book, The Development of the B-52 and Jet Propulsion.
Project histories like this are important for teaching acquisition professionals how poor our foresight really is. Usually big projects like a bomber carefully avoid trial-and-error or parallel developments because of their expense. But the bigger the project, the less clear it is that a single best solution can go from paper to hardware according to prediction.
These paper predictions are called systems analyses. More than 60 years later, we still don’t have an adequate answer to Armen Alchian’s question:
For some problems, great gains will come from unique binding choices resulting from systems analyses; for others the gain will come from diversity of actions… In what situations is the latter principle of diversity preferable? And in what situation is the former appropriate? Do systems analyses help us to answer these questions? Does it help us select the diverse or unique actions?
Alchian’s critique of systems analysis is one of the most profound papers ever written in DOD acquisition. Here are Alchian’s conclusions:
1. Systems analyses are machines for generating implications of postulated initial information; they do not generate decisions.
2. Under uncertainty, the criterion of decisions is not simple maximizations; the essence of the decision process is to affect the scope of random factors so as to give a “good” probability distribution of outcomes. The insurance principle is to decisions what maximizations are to analytic implications.
3. Insurance requires diversity of investment—not variety of possible environments or flexibility of particular weapons.
4. Optimal diversity in concrete situations cannot be ascertained. But institutional arrangements, wherein biases are created against diversity and toward identification of analysis with decision, are prima facie evidence of a system that yields suboptimal diversity.
5. Stratification of the military problem into categories according to those in which diversity is economical and not optimal will facilitate an appreciation of purpose and usefulness of systems analyses.
This was during Alchian’s time at RAND. I believe his experience with weapon systems influenced his classic 1950 paper, Uncertainty, Evolution, and Economic Theory, which in turn informed his critique of acquisition. See how those evolutionary ideas show up in the Chef, Gourmet, and Gourmand.
(By the way, did you know that Alchian’s 1950 Evolution paper was responding to his boss at RAND, Charles Hitch? Hitch found in 1939 that managers actually set prices according to rules of thumb, like average cost, and not the profit maximizing marginal cost rule. It implied that managers were not rational. Hitch was head of the economics department at RAND, helped invent the PPBS, and became McNamara’s ASD Comptroller in 1961 where he implemented tight central control. Hitch never accepted Alchian’s economic themes of uncertainty and evolution.)
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| Armen Alchian spent years at RAND before becoming a professor at UCLA. |
Alchian also performed one of the best early studies on aircraft learning/progress curves in 1947.
This sentence from Alchian would make defense policymakers’ heads explode:
We, therefore, must recommend the development of a menu of several alternative weapons—guaranteeing that ignorant or malevolent critics will be able to show that a large majority of them were “useless” and “wasted” millions of dollars—but assuring ourselves flexibility in order to have safety and economy with optimal weapons in actual use.
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