When we think of data in the business world, it is something we treat with high regard, like a treasure map. It precisely guides us to where we need to go, but it does not show us everything. Then there is the McNamara Fallacy: when businesses focus too much on measurable data, ignoring important factors that are harder to quantify. Named after Robert McNamara, whose strategy during the Vietnam War relied heavily on counting numbers and body counts, it reminds us that not everything we need to count can be easily counted.
How the McNamara Fallacy Shows Up in Business
This fallacy most commonly occurs in four steps: (1) measure what can easily be measured, (2) ignore what cannot be easily measured or just make up a number for it, (3) presuppose that what cannot easily be measured is not essential, and (4) deduce that what cannot be measured does not exist. That mindset of 'well, it works on paper' is dangerous. Here are a few examples of how it can go wrong.
Real World Examples
In the Tech World: What if a tech company took it to mean their app was a success if just the number of people logging into that app every day was high? They brushed off feedback around concerns for privacy because that is not as easily measured as user numbers. What happened? Lots of upset users and damaged reputation.
In Retail: A big retail chain reorganized their shop layout based on nothing more than foot traffic flows, and it seemed like a good idea, right? Wrong because they failed first to test whether users were able to navigate through the store in the new layout. It's not something you can slap a number on or give a score for. Everyone lost sales because there was no excellent shopping experience for people.
How The 4Nineteen Group Can Help
At The 4Nineteen Group, we know that properly blending the directions presented by the data with the 'harder to measure' things is crucial. Our business advisory services enable businesses to look beyond the numbers.
People Insights: We can focus on areas such as how happy your people are or how loyal your customers are, which are decisive areas for long-term success but often missed in the data.
Strategy with Smarts: We work with businesses to build strategies that leverage complex numbers and the softer insights. You will then see the entire story of what is going on and, just as important, what needs to be done about it.
Staying Agile: We also urge companies to try and be agile about their strategies—to change them as new data come in and not be glued to what the original numbers might say.
Keeping the McNamara Fallacy in our minds will help keep our eyes open to the things that truly matter and aren't told by sheer numbers. We partner with you here at The 4Nineteen Group to combine solid data with accurate insights to effectively navigate your way through a complex landscape in the present business environment.