Intertwining Evaluation and Empirical Analysis (lb)

The quickest way to understand how values are handled in the method of successive limited comparisons is to see how the root method often breaks down in its handling of values or objectives. The idea that values should be clarified, and in advance of the examination of alternative policies, is appealing. But what happens when we attempt it for complex social problems? The first difficulty is that on many critical values or objectives, citizens disagree, congressmen disagree, and public administrators disagree. Even where a fairly specific objective is prescribed for the administrator, there remains considerable room for disagreement on sub-objectives. Consider, for example, the conflict with respect to locating public housing, described in Meyerson and Banfield's study of the Chicago Housing Authority (5) - disagreement which occurred despite the clear objective of providing a certain number of public housing units in the city. Similarly conflicting are objectives in highway location, traffic control, minimum wage administration, development of tourist facilities in national parks, or insect control.

Administrators cannot escape these conflicts by ascertaining the majority's preference, for preferences have not been registered on most issues; indeed, there often are no preferences in the absence of public discussion sufficient to bring an issue to the attention of the electorate. Furthermore, there is a question of whether intensity of feeling should be considered as well as the number of persons preferring each alternative. By the impossibility of doing otherwise, administrators often are reduced to deciding policy without clarifying objectives first.

Even when an administrator resolves to follow his own values as a criterion for decisions, he often will not know how to rank them when they conflict with one another, as they usually do. Suppose, for example, that an administrator must relocate tenants living in tenements scheduled for destruction. One objective is to empty the buildings fairly promptly, another is to find suitable accommodation for persons displaced, another is to avoid friction with residents in other areas in which a large influx would be unwelcome, another is to deal with all concerned through persuasion if possible, and so on.

How does one state even to himself the relative importance of these partially conflicting values? A simple ranking of them is not enough; one needs ideally to know how much of one value is worth sacrificing for some of another value. The answer is that typically the administrator chooses - and must choose - directly among policies in which these values are combined in different ways. He cannot first clarify his values and then choose among policies.

A more subtle third point underlies both the first two. Social objectives do not always have the same relative values. One objective may be highly prized in one circumstance, another in another circumstance. If, for example, an administrator values highly both the dispatch with which his agency can carry through its projects and good public relations, it matters little which of the two possibly conflicting values he favors in some abstract or general sense. Policy questions arise in forms which put to administrators such a question as: Given the degree to which we are, or are not, already achieving the values of dispatch and the values of good public relations, is it worth sacrificing a little speed for a happier clientele, or is it better to risk offending the clientele so that we can get on with our work? The answer to such a question varies with circumstances.

The value problem is, as the example shows, always a problem of adjustments at a margin. But there is no practicable way to state marginal objectives or values except in terms of particular policies. That one value is preferred to another in one decision situation does not mean that it will be preferred in another decision situation in which it can be had only at great sacrifice of another value. Attempts to rank or order values in general and abstract terms so that they do not shift from decision to decision end up by ignoring the relevant marginal preferences. The significance of this third point thus goes very far. Even if all administrators had at hand an agreed set of values, objectives, and constraints, and an agreed ranking of these values, objectives, and constraints, their marginal values in actual choice situations would be impossible to formulate.

Unable consequently to formulate the relevant values first and then choose among policies to achieve them, administrators must choose directly among alternative policies that offer different marginal combinations of values. Somewhat paradoxically, the only practicable way to disclose one's relevant marginal values even to oneself is to describe the policy one chooses to achieve them. Except roughly and vaguely, I know of no way to describe — or even to understand — what my relative evaluations are for, say, freedom and security, speed and accuracy in governmental decisions, or low taxes and better schools than to describe my preferences among specific policy choices that might be made between the alternatives in each of the pairs.

In summary, two aspects of the process by which values are actually handled can be distinguished. The first is clear: evaluation and empirical analysis are intertwined; that is, one chooses among values and among policies at one and the same time. Put a little more elaborately, one simultaneously chooses a policy to attain certain objectives and chooses the objectives themselves. The second aspect is related but distinct: the administrator focuses his attention on marginal or incremental values. Whether he is aware of it or not, he does not find general formulations of objectives very helpful and in fact makes specific marginal or incremental comparisons. Two policies, X and Y, confront him. Both promise the same degree of attainment of objectives a, b, c, d, and e. But X promises him somewhat more off than does Y, while Y promises him somewhat more of g than does X. In choosing between them, he is in fact offered the alternative of a marginal or incremental amount off at the expense of a marginal or incremental amount of g. The only values that are relevant to his choice are these increments by which the two policies differ; and, when he finally chooses between the two marginal values, he does so by making a choice between policies.'

As to whether the attempt to clarify objectives in advance of policy selection is more or less rational than the close intertwining of marginal evaluation and empirical analysis, the principal difference established is that for complex problems the first is impossible and irrelevant, and the second is both possible and relevant. The second is possible because the administrator need not try to analyze any values except the values by which alternative policies differ and need not be concerned with them except as they differ marginally. His need for information on values or objectives is drastically reduced as compared with the root method; and his capacity for grasping, comprehending, and relating values to one another is not strained beyond the breaking point.

The Way They Think at TRW

On the greensward of the drowsy old farm nestled in the Vermont hills, looms a gnarled, majestic elm that the agronomists guess must be at least two hundred and fifty years old. And lounging under its shade this summer day, in slacks and open-throat shirt, Vice Chairman Simon Ramo of TRW Inc. — some 3000 miles removed from his Los Angeles office — is conversing with a quartet of companions. For all the serenity of the surroundings the talk is pretty intense. 'We surely have to anticipate,' Ramo is saying, `that at some point there will be a major effort to break the nuclear stalemate. And it may well take the form of research in systems — in which TRW could take a prime role — that will make major use of advanced technology as a psychological and strategic tool for the enforcement of peace. For example, the development of a global, real-time orbiting system capable of detecting and destroying illegitimate intruders in space.'

Ramo and some forty-eight other top TRW executives gathered in small groups about the premises are on their annual hegira to this pastoral retreat, which is the modest ancestral homestead of Frederick C. Crawford, the company's retired chairman. Here, away from the pressures of daily operations, they spend a solid week each summer in frank and philosophical discussion of the company's problems and potentials, and in the structuring of its long-term plans and goals.

The practice, of course, is not unique with TRW. It is a common complaint of corporate managers that they are often imprisoned by their own bureaucracy, and become so involved in the multiplicity of business doings that they don't have time to draw back and think. So every so often they pick up in a body and flee. Union Carbide maintains a lodge in the Thousand Islands, and Continental Oil, a ranch in Texas, for such occasional soul-searching. Periodically, several hundred General Motors' executives take over the Greenbrier in White Sulphur Springs, West Virginia, for several days of reviewing and previewing corporate policies and plans. Each company has its own style of doing these things.

For the TRW executives, who have been holding these Vermont meetings since 1952, it must be said that the living is extremely simple, and the work load fairly full. Fred Crawford's house can sleep only four or five guests. The rest put up at various small motels and hotels in the area, and drive over each morning to answer the summons of the ancient bell that starts the session promptly at nine o'clock. The formal meetings are held, literally, in a barn. It has been spruced up some, to be sure, and is equipped with a make-do microphone, a screen for showing visuals and a lectern. For the various panel sessions and casual tete-a-tetes, the conferees usually prefer an out-of-doors setting in some nook or corner of the farm. The men take all their meals cafeteria style, carrying their plates to a tent-topped patio that leads out from the small dining room of the house. There is no cocktail hour.

Under the normal schedule, the morning sessions last until twelve-thirty, followed by lunch. The afternoons are free for recreation. Most of the men drive some twenty miles to the Mountain View Hotel's nine-hole golf course, where they stage an annual tournament of sorts, with amusing, inexpensive prizes for winners and losers. At six o'clock they return to the farm for dinner — after which, back to the barn for an evening session that lasts until about nine-thirty. Nobody wears a tie all week, and jackets are slipped on only if the night air chills.

TRW has, perhaps, a rather special need for an annual commingling of this kind. A highly diversified company headquartered in Cleveland, it is the product of a merger of two distinctly different corporate groups, based in two widely separated sectors of the country, which still have a lot to learn about and contribute to each other. The progenitor of TRW was Thompson Products of Cleveland, founded in 1901, a mass manufacturer of precision parts for the automotive and aircraft industries. In 1953, Chairman J. David Wright decided to use some of Thompson's money to back the ambitions of two young California scientists, Simon Ramo and Dean Wooldridge. Ramo and Wooldridge promptly went out and won a contract for the systems engineering and technical direction of the U.S. Air Force's entire ICBM program. In 1958 the two companies were formally merged as Thompson Ramo Wooldridge. In May, 1965, the corporate title was truncated to TRW Inc.

Today the former Ramo Wooldridge unit, together with its subsequent acquisitions in the electronics field, operates out of Los Angeles as two groups - TRW Systems and TRW Electronics. The California contingents accounted for roughly 40 per cent of the corporation's total of $665-million sales in 1965. Though Systems still handles the Minuteman program, its principal activity now is in space. It is a prime contractor or major sub-system supplier for numerous Defense Department and NASA projects - Gemini, Apollo, Pioneer, and so on - and is building a series of global satellites for Comsat. TRW Electronics produces components for both the military and industry, and is a major supplier of coils and color convergence yokes for color T V.

On the Cleveland side of the house there are also two groups. The Equipment group produces parts for military and commercial aircraft jet engines, power systems for missiles and space-craft, and Army and Navy ordnance. The Automotive group supplies valves, steering linkage, bearings, and other parts on a worldwide basis to the automobile and truck companies and to the independent replacement aftermarket'.

After a few difficult years, all four groups are prospering. Total TRW sales in 1965 increased 20 per cent over the previous year. Net income, at $29 million, was up 24 per cent, and earnings per share increased 29 per cent. For the first six months of this year sales were running nearly 30 per cent ahead of 1965 and are expected to exceed $850 million for the year. Still, the top management of TRW feels that the corporation hasn't begun to exploit the opportunities inherent in a more integrated approach of all its talents to the many massive projects - civilian and military, government and commercial - that must be undertaken in the decades ahead in response to critical national and human needs. They believe that TRW is equipped, for example, to play a three-sided role in technological programs for the solution of such pressing civic problems as urban renewal, mass transportation, and pollution and waste. TRW has the systems capability to design and direct the concept of such programs, the electronics capability to supply the required communication and controls, and — in its great Cleveland shops — the capacity and skills to furnish much of the instrumentation and structural equipment required.

Successive Limited Comparisons (Branch)

1b Selection of value goals and empirical analysis of the needed action are not distinct from one another but are closely intertwined.

2b Since means and ends are not distinct, means-end analysis is often inappropriate or limited.

3b The test of a 'good' policy is typically that various analysts find themselves directly agreeing on a policy (without their agreeing that it is the most appropriate means to an agreed objective).

4b Analysis is drastically limited:

(i)            Important possible outcomes are neglected.

(ii)           Important alternative potential policies are neglected.

(iii)          Important affected values are neglected.

5b A succession of comparisons greatly reduces or eliminates reliance on theory.

Assuming that the root method is familiar and understandable, we proceed directly to clarification of its alternative by contrast. In explaining the second, we shall be describing how most administrators do in fact approach complex questions, for the root method, the 'best' way as a blueprint or model, is in fact not workable for complex policy questions, and administrators are forced to use the method of successive limited comparisons.

Toward Bigger Contracts

Merely to state the sales volume, however, is only part of the task of describing and structuring a long-term corporate goal. Where the creativity of the group in Vermont was most needed and exercised was in the exploration and development of a new set of subsidiary or qualitative goals, which the company must pursue in the new multi-billion-dollar environment toward which it appears to be headed. In short, what you must plan to do differently as you grow to twice your present size.

Typical is the point raised by Rube Mettler on the issue of diversification. It has always been a basic policy of TRW — particularly in government work where cancellations can come suddenly — to eschew contracts of a size that would dominate division's business. Like many other companies in defense work, it would rather take on ten $20-million contracts than one $200-million contract. `We pride ourselves,' says Mettler, `on the fact that no one contract accounts for as much as 10 per cent of sales. And it is a policy that has been very useful in the past. But how important to us will it be over the next seven years, when the size of contract we now tend to shy away from will represent only 21 per cent of the company as a whole? We ought to start looking at some of these opportunities in terms of our new capabilities.

A problem of somewhat the same tenor is posed by Sid Webb in discussing his group's approach to the new micro-circuit technology. 'It will require at some point a major commitment on our part because there is no doubt that in the long run a company will have to be big to be a factor in micro-circuits . . . There's nothing that comes anywhere near matching the tremendous impact, both positive and negative, that micro-circuits will have on the electronic-component business. This is an instance of where we'll have to be much bigger or we're apt to be much smaller.'

If dissent from tradition appears to be brewing here, Wright and Shepard are not of a mind to quell it. Wright rises to say: `I think we'll all agree that our basic diversification policy is a sound one. We don't want to be locked in with one big customer as some companies in this business are. But in regard to a single large contract, why, as a billion-dollar company we can and we should raise our sights.' And Shepard calls over to Webb, 'As to how big your micro-circuit division should be, the answer is "No limit ".'

Successive Comparison as a System

Successive limited comparisons is, then, indeed a method or system; it is not a failure of method for which administrators ought to apologize. None the less, its imperfections, which have not been explored in this paper, are many. For example, the method is without a built-in safeguard for all relevant values, and it also may lead the decision-maker to overlook excellent policies for no other reason than that they are not suggested by the chain of successive policy steps leading up to the present. Hence, it ought to be said that under this method, as well as under some of the most sophisticated variants of the root method — operations research, for example — policies will continue to be as foolish as they are wise.

Why then bother to describe the method in all the above detail? Because it is in fact a common method of policy formulation, and is, for complex problems, the principal reliance of administrators as well as of other policy analysts.' And because it will be superior to any other decision-making method available for complex problems in many circumstances, certainly superior to a futile attempt at superhuman comprehensiveness. The reaction of the public administrator to the exposition of method doubtless will be less a discovery of a new method than a better acquaintance with an old. But by becoming more conscious of their practice of this method, administrators might practice it with more skill and know when to extend or constrict its use. (That they sometimes practice it effectively and sometimes not may explain the extremes of opinion on 'muddling through', which is both praised as a highly sophisticated form of problem-solving and denounced as no method at all. For I suspect that in so far as there is a system in what is known as 'muddling through', this method is it.)

One of the noteworthy incidental consequences of clarification of the method is the light it throws on the suspicion an administrator sometimes entertains that a consultant or adviser is not speaking relevantly and responsibly when in fact by all ordinary objective evidence he is. The trouble lies in the fact that most of us approach policy problems within a framework given by our view of a chain of successive policy choices made up to the present. One's thinking about appropriate policies with respect, say, to urban traffic control is greatly influenced by one's knowledge of the incremental steps taken up to the present. An administrator enjoys an intimate knowledge of his past sequences that 'outsiders' do not share, and his thinking and that of the `outsider' will consequently be different in ways that may puzzle both. Both may appear to be talking intelligently, yet each may find the other unsatisfactory. The relevance of the policy chain of succession is even more clear when an American tries to discuss, say, antitrust policy with a Swiss, for the chains of policy in the two countries are strikingly different and the two individuals consequently have organized their knowledge in quite different ways.

If this phenomenon is a barrier to communication, an understanding of it promises an enrichment of intellectual interaction in policy formulation. Once the source of difference is understood, it will sometimes be stimulating for an administrator to seek out a policy analyst whose recent experience is with a policy chain different from his own.

This raises again a question only briefly discussed above on the merits of like-mindedness among government administrators. While much of organization theory argues the virtues of common values and agreed organizational objectives, for complex problems in which the root method is inapplicable, agencies will want among their own personnel two types of diversification: administrators whose thinking is organized by reference to policy chains other than those familiar to most members of the organization and, even more commonly, administrators whose professional or personal values or interests create diversity of view (perhaps coming from different specialties, social classes, geographical areas) so that, even within a single agency, decision-making can be fragmented and parts of the agency can serve as watchdogs for other parts.