Table of Contents
History of McNamara Fallacy
Robert McNamara was US secretary of defense between 1961 to 1968 in John F. Kennedy’s administration.
McNamara was the world’s first EFFICIENCY EXPERT. Former President of Ford Motors, and future head of the World Bank, McNamara, had standardized computer analytics-based decision-making.
First Fail in Vietnam War
The Vietnam war saw US intelligence collecting piles of data. By 1968, the US had lost many men and money in war. McNamara wanted to know, “When will the US win the war.”
So, his team fed all the acquired data to computers to have predictive analytics of the war. In 1968, computers were less efficient. So it took a little time. But it did predict.
And McNamara predicted that the day the US would win the war would be 7th March 1965!
We all know the outcome and reality of that prediction. Don’t we?
King Phillip II’s Obsession with Numbers and Analytics
Much before McNamara, Spanish king Phillip II was the one who was the number expert. He was notorious for not trusting people and relying on data and numbers. Phillip would gather data about everything and anything. He would keep records of even the tiles of the palace. He considered himself the war expert because he could gather intelligence and data and process them better than anyone else.
He decided to convert England into a Spanish colony based on his expertise. In May 1588, a Spanish Fleet named Armada set into the Ocean to defeat the British and make England a Spanish colony. Armada is regarded as one of the greatest war fleets.
While Phillip relied on his data and analysis, England’s Queen Elizabeth, on the other hand, in 1587, ordered Sir Francis Drake, one of her most experienced sea captains, to lead a daring raid on the Spanish port at Cadiz. The April raid proved extremely successful, severely damaging preparations for the Armada – so much so that it forced Philip to postpone the invasion campaign.
England finally managed to defeat Spain’s invasion of England because they relied on ground forces and experience, whereas Spain was overconfident thanks to their superior data and intelligence. Phillip II proved the McNamara fallacy true almost 380 years before the McNamara fallacy came into existence.
Germany’s Doom in World War II due to Intelligence Frenziness
When it comes to intelligence, if one entity has set the standard, it has to be the Nzis in Germany during the second world war. They took intelligence to a whole new level. Their radio communication and interception units helped them with early wins. But eventually, reliance on their data and intelligence was the major factor that led to the doom of Germany. Just as how Spain had overanalyzed the Armada fleet’s mission, Germany had underestimated the Russian resilience through their overanalysis when they had attempted to seize St. Petusberg, which eventually led to German doom in the world war.
Why do simulation and predictive analytics fail?
There are two aspects of decision-making. The first is the quantitative analysis; the second is the qualitative analysis. Unfortunately, computers then and even now can’t handle qualitative information. So, we get lost in Quantitative analytics.
The world is connected from history to the present, from us to our ecology to the earth, and to the universe through the earth through the objective truth of quantum principles. The observable universe and data are just part of the subjective reality perceivable to our senses. What wee see, feel, hear, experience, taste smell, we do because there is the objective truth, not because there is a pattern in the subjective reality.
Therefore, analytics are a great way to help us make sense of microtrends at the smallest time fraction, but neither a reflection of the objective truth, nor even a true reconstruction of the entire multi-dimensional subjective reality.
Quantified qualification of any observable data help us to transform data to information, and information to insight. But it needs experience to use the insight and combine them with actions, to funnel the observations through knowledge to transform all the above into experince, and then finally decades to transform the experince into wisdom.
Analytics is neither a replacement for wisdom, nor a means to acquire wisdom, the exact way that wisdom is just the candle for the journey, and not the horse of the journey.
Be is SoftBank, VCs, Pandemic experts, and Stock Market experts take themselves and their data way too seriously. North Vietnamese won the war and because they were more hungry for the win, and they sacrificed more. No computer could predict that.
Use analytics to screen and observe to take decisions, and have some rationality and method behind what you do. However, they are never the replacement for doing and failing. Nothing teaches as much as pain, and nothing transforms observation to learning than pain. There is no replacement to actions.
You play any game by taking one game at a time, taking the game in levels and practicing and winning each level.
McNamara Fallacy led Failures in the Business and Startup World
Let us take, for example, why a lot of investment fails. The investment fails because most of the decision is taken by data. Market dynamics, company 52-week performance, the performance of the domain, PE ratio, index. No one evaluates the people, the culture, or the fire.
In the startup world, a lot of investment fails due to similar reason. A lot of decisions are taken based on the balance sheet, unit economics, competitive edge, and market potential. However, in the end, what matters is the founder’s background and the team’s hunger and chemistry which is hard to measure.
A lot of problems in healthcare today are also due to data. You see the values in pathology tests and asses the health. It goes beyond that, the psychology, the physiology, the aspirations, doubts, and so many factors.
Conclusion
You need data to select, not elect. Be very worried when data looks in your favor. You need to sharpen your observation game to win in this world. You got to pick up human clues and biases and fears and aspirations.
The game is all yours, don’t leave it on numbers.
