The Real Impact of Operational Research

The Centre for Operational Research and Analysis, where I worked for 33 years, likes to refer to their work as decision support.  However, I heard many times, while I worked there, the complaint that "if only the decision makers would follow our advice, things would be so much better".

I am reminded of a paper by Donella Meadows called Places to Intervene in a System.  This paper lists 12 leverage points in increasing level of importance.  Meadows is specifically referring to Systems Thinking but the lowest and highest leverage points are relevant to the discussion here.

The lowest leverage point is numbers.  Most operational research studies produce numbers.  Many operational researchers are physical scientists or mathematicians. Therefore, they are predisposed to look at problems numerically.  However, Meadows suggests that numbers rarely change behaviour and have little long-term impact.

The highest leverage point is paradigm shift.  This involves changing decision makers' mental models and world-view.  Although this can be a difficult and long process of hard work, it can be very worthwhile.

One paradigm that can be traced back to operational research is the idea of constrained optimization.  Most of the work in operational research is either a methodology or application of constrained optimization.  Constrained optimization is the first subject that is taught in a university operational research program.

The concepts behind constrained optimization have become a major paradigm in decision making today.  All leaders and managers implicitly know what a constraint is and what it means to maximize or minimize an objective.  They also know that if they can overcome a constraint, they can achieve a breakthrough to a new level of value or benefit.

Military leaders may wish to minimize the number of casualties subject to the constraint that they win the battle or the war.  Or they may wish to maximize the performance of a new weapon system subject to a budget constraint.

However, operational researchers are not the only people who realize that paradigms matter.  One of the paradigms from microeconomics may help operational researchers understand why many decision makers fail to accept their globally optimized results.

This is the concept of Pareto Improvement, in which, a change in allocation of resources will only be made if the result improves one person's situation and does not adversely affect anyone else.  For example, a naval admiral would be unwilling to give up a naval capability so that the money saved could be spent on an air force capability, even if the reallocation led to a greater amount overall capability for the Canadian Forces as a whole.

Another appreciation of this paradigm can be related to an individual decision maker and is referred to by Richard Thaler as the endowment effect.  In this case, a decision maker will value a capability they already have, more than a new capability that they might acquire by giving up the existing capability.

Thus, we have a case of the competing paradigms of global optimization and Pareto Improvement.  This could well be resolved by operational researchers taking more consideration of the current environment as it might constrain in their optimization calculations.