Document created: 16 June 04
Air University Review, January-February 1970

The Environment and Functions of 
Management Analysis in the 1970’S

Crystal-Balling usually is a high-risk pastime, especially when the results are committed to public print for all to appraise as the future becomes the past. In addressing the subject at hand, however, conventional caveats are unnecessary, for the die already has been cast that will exert the controlling influence on Air Force management analysis during the seventies.

The situation has been described by the Chief of Staff, General John D. Ryan. This article seeks only to break down his broad guidance into specific influences that will be experienced. General Ryan has written:

As long as the threat exists at its present level, we in the Air Force must plan for increased defense responsibilities, though the resources to carry them out may not increase correspondingly in the near term. Hence, the challenge of the 1970’s will be fixed on management.¹

Our interest, then, is in those aspects of the challenge to management that will shape the work and evolution of management analysis.

resources management

The impact of the concept of managing resources in relationship to operating programs probably is gaining force as we move into the new decade. The honeymoon of the early sixties is over, but management by programs rather than by functions seems no less advantageous today than when the concept first began to dominate Department of Defense (DOD) thinking.

The validity of the idea is attested by its survival after most of a decade of often frustrating experience in endeavoring to translate abstract concept into workable practice. The impractical aspects of the early systems designs are being ground off by the real world management of activities. Viable procedures are beginning to emerge. We are driving ahead because of a growing and widespread recognition that military management in the 1970s will require the highest order of effectiveness that the state of the art can afford.

It can be said with assurance that while the work initiated during the sixties will be refined, the basic trend that has been established will not be reversed.

Some of the early ideas of how program budgeting and control systems would be used to strengthen management proved to be unrealistic, however, and have been de-emphasized in favor of more practical concepts. One that has declined is the idea of giving base-level managers increased control over a significantly larger share of the resources used in their operations.

The argument that supported expanded base-level control was that management can be most effective at the scene of operations where resources are consumed. The thesis has validity when applied in an appropriate context, but applied to the services it neglects the nature of large-scale military operations. For example, the manning table of a military unit, which controls a dominant fraction of its total expense, is designed to permit the organization to effectively perform a number of highly specialized functions under a variety of anticipated operating conditions. Manning represents a compromise between the ideal for each function under each condition and a barebones structure that would severely limit operational flexibility.

No doubt an able commander of any one unit at any given Air Force base could modify his manning structure at that base and under current operating conditions both to increase effectiveness and reduce personnel expense. Furthermore, the commander doubtless could modify his equipment list to reduce investment and increase efficiency under the unique conditions of his current situation and mission.

In the context of the Air Force as a whole, the consequences of such autonomous and individualistic management, if generally practiced, would be intolerable. Not only would mobility and operational flexibility be severely impaired, but the planning of central support—such as training, procurement, and logistics—would become virtually impossible. In short, this would be no way to run an air force.

Demolishing the specious argument in favor of expanded local control of resources, nevertheless, does not weaken the valid reasons for continuing the development of resources management by programs. Probably the major weakness of the appropriations budgeting system has been in the area of relating resources required or consumed to programmed activities. There has been little formal basis for justifying resource and dollar requirements in terms of program objectives, i.e., resource inputs related to program outputs. Few would contend that an improved capability of this kind would not be highly desirable as an adjunct to both planning and management control.

With the need for this capability becoming more widely understood and with the revised expense accounting concepts now being adopted, the more extensive management of resources in relationship to operating programs is likely to be a major development of the early seventies. The objectives will be improved operating management at base level, plus improved planning and control at the levels of both the major commands and Headquarters USAF.

While it is not probable that the local manager’s control over resources will be broadened materially, he will become increasingly involved in the Air Force resources programming and management control processes. It is this development that will impact the management analysis function.

The idea of broader local control of resources was sound in that one of its objectives was to take advantage of the first-line manager’s knowledge of operations or activities. The interpretation of base-level operating results at higher echelons frequently lacks the gut knowledge of the on-the-scene manager who can contribute heavily to improved understanding and effectiveness. Hence, a prime problem in centrally managing large-scale, geographically dispersed operations is in communicating to the top the first-line and middle managers’ understanding of events.

This problem in the Air Force, as well as in the other services, has been intensified by the fact that operations have been managed at base level with one set of facts while important aspects of top-level planning and programming have not been done in corresponding terms. Organizational activities have been provided resources in terms of budget projects and elements of expense; but organizations (other than mission units such as combat squadrons) generally have not been identified to the elements of the force structure used at the departmental level in planning and estimating resource requirements. Consequently, there has been no easy means for the first-line manager to communicate his experience and problems meaningfully to the high-level staff.

This situation now is being remedied in part by modifying the program structure so that organizations can be identified more readily to program elements. More important, the systems through which resources are programmed and their use is recorded are being modified so that the identity of program elements is maintained. The result is that a data base is being established which can be used in common by the base-level operator and the higher-level manager. A common language of understandable facts is being established for interechelon communications.

This development opens the door for a management analysis function of first-order importance. Through analysis, the first-line and middle managers’ interpretation of events and evaluation of programs can be communicated in terms that will make their observations directly applicable in management functions at the top level of the organization. Before the mid-seventies, a long-standing objective should be attained. A flow of analysis up the chain of command should be established that will help to close the management loop and make the base-level operator a more effective participant in departmental programming, budgeting, and management control.

decentralization of Defense management

The McNamara era demonstrated how rapidly and profoundly a forceful executive can influence management philosophy and practices. Events of the past year suggest that the seventies are going to provide another demonstration: we are observing how transient a philosophy of management can be after its protagonist has departed.

Of course, important aspects of the McNamara imprint will remain, but centralized management of the kind he introduced in Office of the Secretary of Defense (OSD) above the service departments is being extensively modified. As the pendulum reverses, however, it is well not to forget the situation of the early sixties that at least in part motivated the effort to improve DOD management. The performance of the services in managing some of their own programs had been less than exemplary. It could be contended that management was transferred to OSD by default. If appropriate decentralization is, in fact, more effective than extreme centralization, the early seventies will be the time when it is demonstrated.

Emphasis in the Air Force will be on the design and development of management systems for use at levels of primary responsibility for effective program execution and on information reporting to meet the needs of high-level planning and control. Management analysis should be heavily involved as a prime source of assistance to the functional staff in the systems design effort, as it has been for the past several years in the development of Selected Acquisitions Information and Management Systems (SAIMS) and more recently in Selected Acquisition Reports (SAR). The work, however, will not be limited to major procurement programs but will be extended to cover the subsystems (research and development, operations, personnel, logistics, facilities, etc.) of the basic Five Year Defense Plan (FYDP).

When these management systems come into being, the data base for both program and progress analysis will be enormously enriched. There will be a new commonality in the data used at all echelons of management, and the systems framework will provide a new degree of coherence among resources programs. The latter advantage will greatly enhance the potential for meaningful analysis of program balance and interrelationships.

The pressure to control activities in detail at the topmost echelon of an organization, which normally is above the optimum level for effective operating management, often results from lack of confidence in the performance of delegated responsibility. If the Air Force effectively manages the programs which are delegated to the service departmental level of responsibility, the re-establishment of confidence will depend heavily on effective communication between the MAJCOM’s and Hq USAF, as well as between the Department of the Air Force and the Office of the Secretary of Defense.

Neither OSD nor Hq USAF is likely to relinquish the detailed visibility of activities that the new management systems provide. However, well-designed selective reporting, accompanied by effective analysis of problems and events, can generate true reliance on Air Force management.  Such reporting makes it evident that in reaching sound management decisions there is no substitute for the knowledge and understanding of the manager who is directly involved in an activity.

To meet one of the challenges of the seventies, the management analyst must effectively design these reports and support them with acute interpretive analysis. He will have the responsibility of anticipating the need for analysis by evaluating the flow of information to and from his organization and, in fact, of working with the systems designers to ensure the availability of the information needed.

While the levels of management to which authority is delegated have the responsibility for selectively communicating the information required for full understanding of activities at the top of the organization, the environment of the seventies also will impose responsibilities on each echelon with respect to the downward chain of authority.

Communications and data-handling technologies will make any degree of detail readily available simultaneously at all levels of the management structure. In effect, all who are concerned will be able to watch what is happening as it happens. The temptation at the top may be strong at times to intervene directly at the operating level, but the success of decentralization will be endangered unless managers at the higher levels discipline themselves to recognize that delegated responsibility must not be usurped and delegated authority must not be undercut. With the information-handling technology of the seventies, there will be time for consultation before taking action.

The effectiveness of the middle or first-line manager, when consulted from above, will depend heavily on the quality of the analytical work by which he is supported at his own echelon. The management analyst will be actively involved in keeping the commander and staff prepared for this kind of participation in the management process.

use of management sciences techniques

The continuing advance of the state of the art in the management sciences, coupled with the coming of the third- and fourth-generation electronic data-processing/ communications (EDP/C) environments, will contribute to further evolution of management analysis functions. The primary techniques are linear and dynamic programming for use in allocating resources; model construction and simulation for use in guiding research and development, evaluating operating programs, selecting weapon and support systems, and designing force structures; and statistical procedures for use in developing and validating planning and control data.

In the area of improving information used in planning and controlling the use of resources, the tasks generally will involve appropriate analytical techniques supported by the new EDP/C capabilities. Computer programs for accessing and arranging data in arrays to picture the status of activities and facilitate analysis will be developed and stored in central processors for use at remote consoles. Today’s periodic management reports will give way to information that can be called out of the system as needed, arrayed as desired, and analyzed by computer programs while decisions are being formulated. Projections of the future will be made as managers work with problems, and simulations will be used to examine alternatives.

There also is the unfolding field in which combinations of these techniques are used in evaluating options for increasing efficiency and reducing costs through the improvement of organizational structures. This may prove to be one of the most fruitful areas for the application of management science techniques during the seventies, since the potentials for major savings are large. The setting is appropriate for two major undertakings: (1) reevaluation of the intermediate-level command structure as it is being affected by the new EDP/C technology; (2) resolution of the organizational relationship between functional management and program management.

Starting in the late fifties, data-processing and communications technologies began to profoundly alter command and control procedures. The capability of the major command battle staff to direct and control combat forces quite literally has made a quantum advance. The need for intermediate commands in managing the air battle is being radically diminished, if not eliminated.

Parallel developments in the areas of administration and resources management have somewhat lagged the transformation of command and control; but the lag, it is now clear, will disappear rapidly in the years ahead. Thus, with advanced technology supporting management as well as combat command and control functions, many of the resources of intermediate echelons may be released to meet critical requirements that otherwise could not be supported.

The second aspect of the organizational structure that will receive increasing attention is the growing overlap of program and functional management. The past decade has seen management by programs move into the ascendancy, but to a large degree program management has been superimposed upon or placed side by side with functional management. The visibility of the relationship between resource requirements and operating programs has been improved but as yet at the cost of a considerable increase in administrative overhead and some confusion over lines of authority. The new systems have not extensively replaced the old. Only slowly are the two being reconciled so that the data produced by one can be related to those derived from the other.

In addition to the trend in the Defense and other governmental departments, industry has been adopting program management because of its clear-cut advantages. But a definitive solution to the problems of duplication, increased overhead costs, and administrative confusion has not yet been found. Only when program-oriented reorganization has accompanied adoption of the new systems has some headway been made. It would seem that this is the direction of the future. For many years major programs have been managed within the context of the dominantly functional organization. During the seventies means will be developed for managing functions within the context of the evolving program-oriented organization.

In the organizational realignments that will result from the compression or elimination of middle command echelons and from increased program orientation, advanced management techniques will play an important role. By no means all of this effort will be within the capabilities of the management analyst, but his share of the responsibility will be heavy. The capability for systems analysis of management functions is being established, and the climate for acceptance and support is favorable.

Thus, another challenge to the management analyst will be the high level of technical competence required by his function in the environment of the seventies. He will need to be master of a broad array of formalized analytical techniques that the advancing management sciences will make available. His skills will require frequent updating, for like the Red Queen he will be running as rapidly as possible just to stay in the same place. Fortunately, however, the computer will assist in solving this problem that it has helped to create. Computer-assisted teaching will vastly shorten the time required to stay abreast of the analytical profession.

electronic data processing/communications networks

During the seventies, the advent of the third- and then fourth-generation EDP/C networks with universal (but controlled) access to the common data base will sharply accelerate the reduction in the flow and use of recurring hard-copy reports that was initiated in the sixties. The electronic data base will be accessed as information is required. This does not imply that the use of remote consoles by commanders and functional managers is to become general practice within the decade. It does mean that the executive will look to an expert to use the facility for him. The management analyst will assume this function as an evolution in the technique of providing the commander and the functional staff with management information.

At MAJCOM’S and Hq USAF each major staff element is likely to require a small in-house management analysis capability to perform the service, using its own remote console. In this environment the central management analysis activity under the Comptroller will be responsible for interrelating functional information in across-the-board summaries for the commander, for special analyses involving multiple staff functions, and for technical support of the analytical activities of the other functional staff elements.

By the middle of the decade ahead, the reduction in the use of hard-copy documents will have a pronounced influence on our working environment. Since we are now in the very early stages of the transition to the third-generation EDP/C network, some description of the changes that are coming is necessary.

The activities of the Air Force are guided and directed by the P-series of program documents. Resources to support the directed activities are provided by P-series documents and by funding programs. Reports describing the progress of activities and the status of resources, including funds, then are compiled from operating statistics, manning records, inventories, civil engineering records, fiscal records, the accounting system, and a variety of lesser sources.

Until not many years ago all of this documentation was maintained on paper. Action documents moved down the chain of command, with copies retained at each echelon, until they finally reached operating organizations. Likewise, operating organizations, which maintain statistical and financial records of original entry, compiled reports on paper and started them back up the chain for use at successive echelons and for consolidations on the upward trek. The flow of paper in both directions was enormous, for reports are recurrent and programs are constantly being modified by interim changes between the successive issues of basic documents. The procedure was costly, slow, and fraught with opportunities to introduce errors because many steps involved manual transcription.

By the mid-seventies most of what remains of this procedure will be changed. As the P-series programs are developed at Hq USAF, they will be entered in the data bank of the EPD/C network. Using a catalog of the data bank and a user-identifier code (which controls access to safeguard security), the commands, with their remote consoles, will call out the sections of the programs with which they work. The information will be available either on cathode-ray tube (CRT) displays when hard copy is not required or as print-outs when working papers are needed. Note, however, that any print-out from the data bank will be regarded as the official program only at the time it was obtained from the computer. The only official program at any subsequent point in time—the current program reflecting all changes—will be in the data bank. There will be no reason to file print-outs except as a record of the data used for some specific purpose. All operating actions will be based on the continuously updated program information available from the data bank.

At this point, a comment may be in order to alleviate the concern of the reader who is visualizing the need for every Air Force organization to continuously monitor the CRT display of its remote console to catch hour-to-hour changes in its programs. The problem will be avoided in several ways. First, the use of the seventies’ electronics will impose a discipline in programming that long has needed strengthening. The casual changing of programs simply will have to be prohibited and even necessary changes made subject to strong controls. Second, when changes are demonstrably required and entered in the data bank, it will be a simple matter to have a stored program in the computer signal all organizations that must react. They will then call out the program in question. With the aid of the EDP/C network and such procedures, even the standard 10 percent who never get the word may be markedly reduced.

Such a method of electronically updating programs in the field should increase the emphasis placed on program analysis, as well as improve its quality. The program will take on the aura of a living thing that is visibly dynamic. Each change will be spotlighted for attention by both manager and analyst. Adjustments in operating programs, such as flying hours or training loads, can be analyzed promptly for impact on resource requirements and availabilities. Supporting resource programs will be brought into line with altered requirements, or deficiencies will be identified. Within hours, problems can be briefed to the commander or appropriate functional manager for decision as to actions to be taken.

With activities as complex as those of the Air Force, perfect balance among programs is unlikely to be attained, no matter how reactive the management system has become. The prompt identification and analysis of problems, however, will greatly enhance the capability for improvement. A commander or first-line manager can be brought into the program adjustment process during its early stages, when corrective actions can minimize the disruption of activities and curtail avoidable expense. During the early seventies management analysts at all echelons will be conducting continuing program analyses to support the commanders and staffs in this activity.

The EDP/C network of the seventies will have equal influence on the management analyst’s involvement in the upward reporting of progress and status information. Original entries in the data bank will be made and verified electronically at the operating level. All of the network’s users or “subscribers” will draw from the common data base so that no entry will be made more than once or duplicated elsewhere in the system. Conflicts in information caused by the use of divergent sources will tend to become a thing of the past.

Reports will not be submitted to higher echelons in the sense of today’s procedures; rather, under future procedures, each headquarters will access the data bank as its needs dictate. All echelons will be reading from the same electronic files, each from its own point of view. With the upward reporting of hard copy quantitative data drastically reduced, periodic reports to higher echelons will take on a new character. The commander and his staff, aided by the management analyst, will watch their continuing inputs to the data bank, identifying subjects that require analysis for purposes of internal management, as well as those that should be interpreted for full understanding at higher levels. Upward reporting, as such, then, will be made up largely of analyses of selected items which it is felt should be elaborated and emphasized by including them in a periodic summary for higher echelons.

the altered posture of management analysis

In summary, the influence of the advancing seventies will be seen in the altered posture of management analysis. It is not foreseen that the essence of the function will significantly change. The primary contrast between the management analysis of the late sixties and that of the middle or late seventies will be in the how, not the what, of its services.

This is not surprising if one reflects that no marked change is foreseen in the essence of management, even though procedures of management are expected to change radically and at accelerating rates. The need of the commander for analytical support, which constitutes the raison d’ệtre of management analysis, will change only in that it will be intensified as management itself becomes increasingly sophisticated.

The first aspect of the altered posture of seventies, then, will be the more sophisticated management analyst. To play the role has been forecast herein, the function must be manned with officers and professional civilians who are qualified for creative technical leadership. They must apply advanced techniques to keep analytical support abreast requirements of advanced management.

Being qualified to work with the sophisticated manager of the seventies, the management analyst will experience intensified direct involvement with the commander and functional staff. In many respects, the management analyst will be the expert assistant in exploiting the management improvement potential of the EDP/C network. He will be at the interfaces where managers and that technological resource interact. He also will be involved with the EDP/C specialists, to assist in designing systems that have the assured capability of meeting management requirements.

With management reports tending toward analytical rather than undigested statistical content, management analysis will give increased emphasis to the identification of significant problems and trends for internal managerial action or interpretation to higher echelons. This activity, plus EDP-supported analytical capabilities, will expand the scope and utility of special studies of current or anticipated problems.

Finally, and hopefully, in some back room in the Pentagon will be a small protected group with a bent that is more scientific than analytical. They will be crystal-balling the 1980s and perhaps discovering truths which in that distant decade will actually form the basis for a science of management analysis.

Hq United States Air Force

Note

 1.General John D. Ryan, “The 1970s—A Challenge to Management,” The Air Force Comptroller, Vol. 3, No. 4 (October 1969), p. 38.

Contributor

Dal Hitchcock is Associate Director of Management Analysis, Comptroller of the Air Force, Headquarters USAF. After attending Antioch College (1925-29) and Columbia University Graduate School of Industrial Engineering (1932-33) and six years with a management engineering firm, he was appointed Chief, Postwar Industrial Readjustment Division, Bureau of Labor Statistics. During World War II he served in the Army Air Forces (1943-45). Subsequently, he was Assistant to the Comptroller of the Air Force for Management Systems (1946-51), and Director of Industrial Mobilization Programs, National Security Resources Board (1951-53). Mr. Hitchcock has been in his present position since 1957.

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