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Abstract
This paper discusses central ideas in the work of Charles Hitch. He is known for his pioneering contributions to defense economics and ‘systems analysis’ and for his introducing program budgeting in McNamara’s Pentagon. We discuss the evolution of his work and ideas, and how his views on systems analysis were influenced by his broader interest in human and organizational behavior. The paper also emphasizes Hitch’s skills as leader and manager of organizations (in particular as the head of the economics department at RAND).
Acknowledgment
We are grateful to Jim March and Harry Rowen for comments on previous versions; and to the referees and the editor for suggestions.
Notes
* This paper started as a very long footnote to a paper about RAND (Augier, March, and Marshall, 2015). As we were not able to give enough treatment to Hitch and his role as manager and leader at RAND, we started writing a separate paper; as well as a longer note on Hitch’s personality and character. This paper focuses mostly on Hitch’s intellectual contributions and his management and leadership, but we do try and integrate how his personality and character mattered.
1. Digby (Citation1988) mentions the ‘Pre-Hitch and McKean’ roots in several RAND projects of the framework of systems analysis, and notes that the label ‘systems analysis’ was in fact first used by Ed Paxson for a study on future operations and the next generation bombers. During the study, the absence of data on costs came up and economists were brought into the study and to the development of systems analysis. Another project headed by a radar engineer, Ed Barlow, to address air defense of the US spanned several disciplines and incorporated costs and investments into the analysis.
2. While our focus is on Hitch, we also will build on work and ideas of James Schlesinger, who, both as Secretary of Defense and before, made significant contributions to our understanding of systems analysis himself and also used the framework and broader vision in his own approach to defense planning (Schlesinger Citation1967). Also, with our focus on Hitch, the paper does not aspire to provide a more elaborate discussion of the history of the fields to which he contributed (but see, e.g. Checkland Citation1983; Melese, Richter, and Solomon Citation2015).
3. Important, however, to keep in mind that problems of national security rarely fits one disciplinary lens neatly, as Hitch himself emphasized in his discussion of national security as a field for economics research (CitationHitch 1960b). Hitch’s approach to national security – recognizing the role of economics but also that a wider lens is needed – can help us understand the importance of human and organizational factors.
4. A useful working definition, then, for systems analysis is that of a broader way of thinking, or philosophy as also emphasized in Enthoven and Smith (Citation2005, 62).
5. Cyert and March were inspired by Hall and Hitch’s analysis from their earliest papers (Cyert and March Citation1955) leading to the Behavioral Theory of the Firm (Cyert and March Citation1963). Sidney Winter (Citation1971) early on recognized the affinity between Hitch and the Carnegie School, noting that although discussions of decision rules in business behavior are associated with Hall and Hitch and Lester, ‘the attempt to go beyond criticism to an actual reconstruction of the theory on behavioralist principles is associated with the names of H.A. Simon, R. Cyert, and J.G March’ (Winter Citation1971, 238).
6. Harry Rowen also mentioned in personal discussions how Hitch would encourage new ways of thinking and doing; and make sure young people were comfortable trying to think outside the box, not afraid of being blamed.
7. And even less written about his leadership style and ability to manage organizations; in defense, research, and education, perhaps because it is an aspect of Hitch less traceable in his written work.
8. In focusing on Hitch and his contributions more broadly, we do not cover the histories of the fields he worked in themselves.
9. There are still many areas in which economic analysis can help us understand defense and security issues, even many of the same ones that Hitch noted in his discussion of ‘National Security Policy as a Field of Economic Research’, Hitch Citation1960b.
10. The range of disciplines here may seem broad; but it was that similar kind of interdisciplinarity that Hitch would later help shape and create at RAND (Augier, March, and Marshall Citation2015; Brewer Citation2017).
11. As he said:
[T]here had been various systems analysis done before. Economists didn’t call them systems analysis; they called them cost benefit analysis but they’re essentially the same thing. … Roland McKean, when he was at RAND, did a cost benefit analysis of water project. … The other was the operations research fraternity, which developed mainly during the war, and they were doing what they called systems analysis. (12)
12. The economics division also benefited from close ties with UCLA and Stanford. They also held seminars and brought in people as part of the social life, and Hitch’s house often served as the focal point for dinners and parties with economists from around the world who came to visit RAND because of Hitch. This kind of mixing social events with ideas and intellectuals was one of several reasons many kindred spirits found RAND an interesting place to be (Augier, March, and Marshall Citation2015).
13. Thus, although the focus was different than the Carnegie school’s emphasis on understanding issues in business firms, Hitch’s instinct to pursue problem driven and behaviorally oriented work was very similar in spirit. No surprise, then, that Hitch corresponded quite a bit with Simon, trying to get him to come and spend more time at RAND than he did. (correspondence between Hitch and Simon located in the Carnegie Mellon University Archives).
14. Even later when he became president of UC California he had ‘no thought of becoming president’ (Berkeley Oral History with Hitch, November 11, 1987, 192).
15. Those character traits stayed with him of course, and were also pointed out as key aspects of his leadership of the UC system. Noting that he was a leader through challenging times with student revolts and violence, Hitch’s ‘leadership was marked by total integrity, steadfast good judgment, great intelligence, and seemingly inexhaustible patience’ (San Francisco Chronicle, September 12, 1995).
16. PPBS (Planning, Programming, Budgeting System) was brought in as an integrated management perspective focusing on the different decision-making processes (planning, programming, budgeting, operations and evaluation) and trying to integrate them. McNamara pointed out that PPBS and systems analysis were the major tools ‘we put to work’; but also noted that ‘management tools and techniques are only that – they assist, but only assist, in the decision-making process’ (McNamara Citation1964, 15).
17. Within the Pentagon, the role of systems analysis was ‘downgraded’ first by Melvin Laird when he became Secretary of Defense and urged that systems analysis be limited to evaluation and review and not develop stand alone proposals. Later, under Nixon and Kissinger, various National Security Decision Memoranda made changes to the organization, centralization, and coordination in ways that would further diminish the role of systems analysis.
18. Personal conversation with Alain Enthoven. This led to Enthoven applying for a job in the office of the Director of Defense Research and Engineering and moving there.
19. Upon inviting Herb Simon to a conference on ‘Business Enterprise’ at RAND in 1953 that he that empirical research on business firms had been designed to test concept suggested by abstract and ‘ingrown’ economic theory (such as profit maximizing) or quantify concepts such as production functions; but he did find that there was room to supplement and broaden economics by inductive and empirical research – and that OR / Systems analysis could be useful (Letter from Hitch to Simon, 12 June 1953. Herbert Simon Archives).
20. Several other people at RAND early on (such as Goldhamer (Citation1950), Schlesinger (Citation1967) as well as Enthoven (Citation1975) were aware of the importance of factors such as organizations, limits to rationality, uncertainty, and judgment. As Enthoven noted, ‘good analysis is the servant of judgment., not a substitute for it.’ Whereas much modern (economic or political science dominated) analysis apply frameworks with assumptions not applicable to most modern dynamics, Enthoven noted: ‘A good analysis will search out and highlight the key questions of value, the uncertainties and the intangibles, and not bury them … no one discipline has all the skills needed for … analysis’ (Citation1975, 456, 458).
21. Enthoven (Citation1963, 422) argues that two person game theory is useful for understanding uncertainty about enemy behavior. But that only works if the players behave in ways consistent with the assumptions of two – person games which is rarely the case. Wargames / gaming (as different from game theory) and scenarios tried to address some of the problems by focusing not on the certainties but uncertainties of the future.
22. As Hitch wrote: ‘Nothing is more important in systems studies than to define the right ones [objectives]. Working out solutions, however elegantly, with the wrong objectives is equivalent to answering the wrong question, seldom a useful exercise’ (Citation1960c, 1).
23. Hence, Marshall and others called it ‘New Toolism’. Schlesinger also warned against systems analysis become too focused on developing formal models and that this often ‘leads to the neglect of important variables’ (Citation1967, 3). Hitch himself also pointed to the limitations of applying OR models to national security / planning issues, reserving such models for lower level problems:
24. The office of systems analysis has changed names as well quite a few times, including PA&E (program analysis and evaluation) and (currently) CAPE (cost assessment and program evaluation). The current website for CAPE mentions the roots of the office in the 1960s and a brief history (see https://www.cape.osd.mil).
25. ‘A good analysis should help the decision-maker by telling him how the choice depends on key judgements, rather than trying to tell him what the answer is’ (Enthoven Citation1975, 456).