Private Business to Public Service: Robert McNamara’s Management Techniques and Their Limits in Peace and War by Albert J. Beveridge A dissertation submitted to Johns Hopkins University in conformity with the requirements for the degree of Doctor of Philosophy Baltimore, Maryland May, 2014 © 2014 Albert J. Beveridge All Rights Reserved ABSTRACT This dissertation evaluates Robert S. McNamara’s management practices during his tenure as Secretary of Defense, concluding that over- centralized decision-making proved to be the central feature of his management style with one significant exception. When it came to war, notably the Vietnam War, he undermanaged important aspects of that conflict. To better understand McNamara’s management decisions, this dissertation sets them in the context of his brilliance as a student in college and later in graduate school where he absorbed the technocratic management techniques then developing at the Harvard Business School. He applied his education successfully in the Army Air Force during World War II and later at the Ford Motor Company. As Secretary of Defense he initiated a rigorous analytic approach to the defense budget and weapons acquisition through the Planning- Programming-Budgeting System (PPBS) he installed and the associated discipline of systems analysis that he brought to the department. Yet those innovations had the perverse effect of encouraging his proclivity to concentrate on managing data rather than managing people. Through costly errors such as the TFX plane controversy, McNamara discovered the limits ii of technocratic business procedures in a public service environment which required a politically sensitive and socially adept approach. McNamara disregarded many contemporary managerial techniques and models which emphasized delegation, flexibility, and informal communication. His reluctance to delegate left many subordinates and colleagues without significant institutional roles in decision-making and thus without personal investment in the success of directives emanating from the office of the Secretary. More importantly, the plethora of low-level procedural decisions he funneled through his office took his time and attention away from more important high-level policy issues like the war. When viewed in the full context of his responsibilities, his overconcentration on budgets, logistics, and procedural details contributed to his relatively passive acceptance of the military’s battle strategies in Vietnam, which deserved closer examination. Bridging the histories of politics, war and public administration, this dissertation interrogates the context and consequences of McNamara’s application of current business management practice to public institutions. Adviser: Louis Galambos Readers: Ronald G. Walters, Angus Bergin, Steven M. Teles, Adam D. Sheingate iii ACKNOWLEDGEMENTS After almost a decade as a graduate student, I have many to thank, especially the Johns Hopkins History Department. There are few institutions in the country that would have accepted a superannuated lawyer like myself as a graduate student, but Hopkins’s unique admission policy and the tolerance and kindness of the members of the department have made the past ten years among the happiest of my life. My thanks go, above all, to Lou Galambos, doyen of business historians, a wonderful scholar and observer of twentieth-century America, who acted as my adviser. He not only accepted me as a mentee but introduced me to a new field of history which I have found both fascinating and challenging. In addition, by including me as his teaching assistant, he has shown me how to retain the interest of undergraduates both in lectures and discussions, as well as how to improve my prose through rigorous editing. He has been unfailingly kind, rigorous, and supportive with a marvelous overlay of humor. I owe three chairmen of the history department immense thanks: Gaby Spiegel who encouraged me to enroll in Hopkins and smoothed the admissions process, Bill Rowe who supported my quest for an adjunct lectureship and Phil Morgan who spurred me on when my spirits were iv flagging. So too am I indebted to Peter Jelavich and Dorothy Ross, leaders of the two best seminars I have ever experienced. Each of them revealed how history has changed in the 50 years since my college days and how exciting “new history” is. I owe a special debt to two fellow graduate students who have had a major impact on this dissertation. The first, Jonathan Gienapp, came to me as an editor and research assistant. It was at a low point in the project, and he found a dispirited author. With his native optimism and ebullience, he pointed me toward several approaches that offered a way forward. During the two years that we worked together, I discovered that Jonathan is a brilliant student, with enormous potential as a scholar and teacher. He is also a great raconteur, sports buff and delightful companion. I am confident that we will hear from him in the future. Rachel Whitehead, another graduate student of great promise, took over from Jonathan. She is a great editor who saved me from numerous potential missteps. I have received tremendous support from many within the Hopkins community including the members of my dissertation committee: Ron Walters, Angus Burgin, Steve Teles and Adam Sheingate. Their perceptive comments helped me sharpen my thinking on the significance of Robert McNamara as an important figure of the mid-20th century. I also owe a deep v sense of gratitude to many in the marvelous staff of the Eisenhower Library whose assistance I sought throughout the dissertation process as well as in the development of my course in the history of U.S. environmental policy. I would especially like to thank Jim Gillispie and Abby Collier for their assistance. Outside the Hopkins community, I owe special thanks to Erin Mahan, Chief Historian of the Historical Office of the Secretary of Defense and her assistant, Ryan Carpenter. Together they were the models of accommodation in making the collections of the office accessible. Innumerable friends and acquaintances have made contributions to the dissertation; some in the form of interviews or written comments about McNamara and his style of management, others in offering invaluable suggestions as to organization and narrative approach. I would especially like to thank Charles Rossotti, Norm Augustine, the late Terry Williams, Paul Ignatius, Tony and Ellie Carey, Cary Woodward and Richard Davis. I also owe the firm of Beveridge & Diamond thanks. Many of its staff has contributed to the project, especially Susan Hopkins and Mike Fassler, principally in helping me cope with the technological hurdles of long- distance research. vi Finally, I owe a special debt to my wife Madzy. When I left the active practice of the law, she was entitled to a husband who would devote himself more to the activities she wanted to pursue in gratitude for the many years she devoted to raising our family and accommodating his wants. Instead, she got a graduate student full of the anxieties and frustrations that accompany such a status. She has been marvelously supportive of her husband’s entry into academe and has my eternal thanks. vii TABLE OF CONTENTS Page Abstract........................................................................................................... ii Acknowledgements.........................................................................................iv Introduction......................................................................................................1 Historical Context: World War & Economic Crisis Pull Private Managers In And Out Of Government ..........................................5 Historiographical Review.........................................................................16 Methodology: McNamara As A Case Study.............................................20 Chapter Overview.....................................................................................24 Chapter 1 The Making of a Business Manager ............................................31 McNamara’s Early Years.........................................................................33 Business School ........................................................................................36 Army Air Force.........................................................................................44 Ford Motor Company...............................................................................56 Chapter 2 The New Secretary.......................................................................93 Taking Charge..........................................................................................93 The Budget and the Planning-Programming-Budgeting System (PPBS)........................................................................................107 Analytical Framework............................................................................115 Procedure ...............................................................................................121 Consequences .........................................................................................127 Chapter 3 Working for McNamara.............................................................135 Centralization .........................................................................................139 Isolation at the Top: McNamara and His Chief Aides...........................150 The Challenge of Cooperative Communication.....................................166