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RAND OFFICES SANTA MONICA, CA • WASHINGTON, DC PITTSBURGH, PA • NEW ORLEANS, LA • JACKSON, MS • BOSTON, MA CAMBRIDGE, UK • BRUSSELS, BE www.rand.org Preface This monograph grew out of a presentation in May 2013 at a special meeting of the Military Operations Research Society. The meeting, “The Role of Analytics in Addressing the New Budget Environment,” discussed current challenges facing the U.S. Department of Defense and how analysis could assist such activities as the Quadrennial Defense Review. This longer document describes my view of how analysis can be more useful than it sometimes has been in the past by exploiting improvements in the state of the art and by rediscovering and supple- menting classic principles. It reflects my experience over decades as an analyst at the Institute for Defense Analyses, an analyst and senior executive in the Office of the Secretary of Defense with responsibili- ties for both strategy and program analysis, and—for many years—an analyst and manager at the RAND Corporation. The monograph’s primary intended audience includes defense analysts, their managers, and the policymakers who are consumers of defense analysis. That said, most of the principles outlined here apply to other government agencies and to strategic analysis generally. Com- ments are welcome (email: [email protected]). The research for this monograph was conducted within the Inter- national Security and Defense Policy (ISDP) Center of the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community. For more information on the RAND ISDP Center, see iii iv Analysis to Inform Defense Planning Despite Austerity http://www.rand.org/nsrd/ndri/centers/isdp.html or contact the direc- tor (contact information is provided on the web page). Contents Preface ............................................................................. iii Figures ............................................................................. ix Tables .............................................................................. xi Summary .........................................................................xiii Acknowledgments ............................................................. xxv CHAPTER ONE A Setting of Great National Security Challenges ........................... 1 Fiscal Constraints Are Only Part of the Problem .............................. 1 A Pollyannish Perspective on Tight Budgets? ................................... 3 Endnotes ............................................................................ 4 CHAPTER TWO Analysis to Aid Decisionmaking ............................................... 5 Classic Tenets Remain Valid ...................................................... 5 Additional Tenets Are Needed ................................................... 6 A New Principle and Implications for the Analysis Profession ............... 8 The FARness Principle .......................................................... 8 Why FARness Is Neither Common Sense Nor Easily Obtained .......... 9 New Professional Responsibilities for Analysts ..............................11 Endnotes ...........................................................................12 CHAPTER THREE Concrete Suggestions for Analysis ............................................15 The Concept of an Analysis Campaign .........................................15 Supporting Policymakers: It Is Not Just Decision-Aiding ...................17 v vi Analysis to Inform Defense Planning Despite Austerity Depth: Balancing the Simple and Complex ...................................18 Simplicity’s Dominance in More Routine Analysis .........................18 Achieving Valid Simplicity ....................................................19 Simplicity and Complexity in Historical Studies ...........................21 Breadth: Using Diverse Models and Tools .................................... 22 Recognizing Multiple Criteria .................................................. 26 Multiple Objectives, Including Risk Management ........................ 26 Uncertainty and Disagreement ............................................... 28 Measuring Qualities of an Option Under Uncertainty ....................31 Exploratory Analysis for Capabilities-Based Planning ....................... 38 Endnotes ...........................................................................41 CHAPTER FOUR Creating Capability Models ...................................................47 Definitions and Examples .......................................................47 Definition ........................................................................47 Examples ........................................................................ 50 Illustrative Simple Models Used in Defense Studies ........................55 Building Capability Models .....................................................55 Low-Resolution Capability Models ...........................................55 Motivated Meta Models ........................................................58 Complex Models That Can Support Capability Analysis ................. 60 The Special Issues of Social-Science and Other “Soft” Considerations .....62 Models Relating to Terrorism and Insurgency ..............................62 Soft Factors in Models Generally ............................................ 64 Myths and Realities About Validation .........................................65 Model Validation ...............................................................65 Validity of Human Games, Historical Analysis .............................67 Analysis Validation ............................................................ 68 Endnotes ...........................................................................69 CHAPTER FIVE Finding Suitable Options ......................................................73