I would like to emphasize, as far as my opinion is concerned, and I offer it in all humility, that there are no easy solutions to a problem with so many facets as this. However it may be organized, the military effort will inevitably involve multitudinous forms of planning, procurement, production, transportation, communication, training, supply, and actual fighting. The problem is how to coordinate all of these grand divisions and all of their subdivisions.
There is one analogy which occurs to me out of my own experience in business. In the early years of this century following the formation of such great business enterprises as the United States Steel Corporation, the General Electric Co., and other large industrial concerns there was a cogue of consolidation. To some extent this was repeated in the 1920’s. Some of those were successful, and General Motors is one I have in mind, and some were not. By and large, I believe that the economies gained through consolidation of administrative functions obviously seem bound to produce great savings, and therefore greater profits to the shareholders of the new combined enterprise; in actual practice it is frequently discovered that these probabilities that seemed so clear on paper were often difficult to transform into reality. You will recall that one architect of railroad consolidations, I believe it was Mr. James J. Hill, finally decided no one man could run more than 10,000 miles of railroad.
I think any executive of a great corporation resulting from consolidation will tell you how difficult it is to preserve the vitality and initiative of these units of the combination which, as separate entities, have those qualities. Once swallowed in the amorphous mass of a vast and new organization, they are apt to be hamstrung by the very inertia of size.
The point I am making simply is that size is no guaranty of efficiency. From my own experience in a small segment of the national war effort, I know how difficult it is to maintain contact with the individuals throughout the organization who really do the work. Organization charts are very fine things but they are of no value unless human beings, who have to make them work, have the necessary qualifications. Personally, whether in business or government, I would rather let the chart follow experience than the reverse.
That was then Undersecretary of the Navy James Forrestal in an April 1944 hearing on postwar reorganization of the military. He later the first Secretary of Defense — which is ironic since Forrestal was perhaps the most vocal opponent to the creation of the position. By the end of his tenure, however, he sought to increase the power of the Secretary.
In the quote above, Forrestal made three important points:
First, he realized that local knowledge in complex organizations cannot be adequately centralized, necessitating “multitudinous” plans and processes. The difficulty was ensuring all the parts pursued a common end.
Second, he pointed out the bias of overestimating the benefits of consolidation through economies of scale and underestimating the limits to the size of administration. Forrestal would know better than most, having been called “boy wonder” in his years on Wall Street after he orchestrated his firm’s takeover of Goodyear and Dodge.
Third, and most importantly, Forrestal distinguished between seen and unseen costs. Consolidation may reduce the seen costs of duplication and overlap, but it may also reduce the unseen “vitality and initiative” of operational units.
Leave a Reply