Lessons from RAND's Work on Planning Under Uncertainty for National Security

by Paul K. Davis

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Research Questions

  1. How has RAND's work addressing uncertainty evolved, as reflected in seven broad approaches? (1. Buy time/defer decisions, 2. buy information, 3. take a conservative approach, 4. buy flexibility and insurance as hedges, 5. anticipate and plan accordingly, 6. prepare to cope with agile responses, and 7. preemptively deal with potential roadblocks.)
  2. How have related analysis theory, tools, and methods changed in the past 20 years?

Abstract

A first step in dealing with uncertainty is confronting its existence, ubiquity, and magnitude. A second step is dealing with it when informing assessments and decisions. As the Cold War waned, RAND developed new methods that urged sketching the no-surprises future, listing known branch-style uncertainties, and stretching the imagination to envision potential shocks, good or bad (e.g., Soviet Union disintegration or Saddam Hussein's invasion of Kuwait). Major surprises will nonetheless occur, and some of RAND's most important work on uncertainty has to do with coping with surprise developments.

RAND's progress in national security uncertainty analysis benefited from a confluence of developments in computer and software technology, theory and practice in strategic planning and decisionmaking, analytic theory and methods, and theory of complex adaptive systems. Work has emphasized facing up to deep uncertainty in many dimensions, performing exploratory analysis of "the possibility space," identifying regions of that space that pose special risks or opportunities, finding options to improve capabilities, and using portfolio analysis to conceive and compare strategic options for economically dealing with the diversity of challenges. A cross-cutting RAND theme is finding flexible, adaptive, and robust (FAR) strategies. Ultimately, different problems call for different approaches to uncertainty.

If the theory of planning under uncertainty and preparing to cope with surprise effectively is difficult and complex, this report makes clear that implementing and maintaining corresponding changes is even more difficult and suggests that policymakers to be constantly vigilant in ensuring that related initiatives are not undercut or allowed to wither.

Key Findings

Approaches to Uncertainty: Common Themes

  • Uncertainty analysis requires creative, divergent work to understand the range of possibilities, and then more convergent work to assist decisionmakers in conceiving and choosing among strategies. In both phases, there is need for human-intensive work (e.g., brainstorming, gaming, and judgment) as well as more analytical methods, including computational discovery.
  • There is a need for both theory-driven and data-driven approaches. Competition between approaches can help stimulate progress.
  • Experimentation and iteration are often crucial for uncertainty reduction and discovery.
  • In practice, strategy will often be revisited and modified over time, despite the common assumption of once-and-for-all decisionmaking.

Implementation

  • A common concept of good analytic practice for dealing with uncertainty when in a report to a policymaker is to show key assumptions, watch for the policymaker to acknowledge the assumptions, and then present results. Even if policymakers know the assumptions and believe them to be reasonable, this approach is inadequate because it does nothing to encourage hedging.
  • Policymakers are open to uncertainty analysis — if it helps them reach decisions.
  • Any initiative for planning under uncertainty can be seen by some elements of an organization as a threat to more general norms and activities (i.e., what organization theory refers to as a "precarious value").
  • If the theory of planning under uncertainty and preparing to cope with surprise effectively is difficult and complex, implementing and maintaining corresponding changes are even more so.
  • Policymakers need to be constantly vigilant, or their initiatives may be undercut or allowed to wither.

Recommendations

  • Policymakers should demand analysis that aids in finding flexible, adaptive, and robust (FAR) strategies.
  • The appropriate standard for analysts should include being sure that omitting considerations because of uncertainty does not critically affect study conclusions; that conclusions identify reasonable ways to hedge against consequences of uncertainty, to include preparing for adaptation; and that policymakers are sensitized to the importance of such hedging.
  • Planning should anticipate the need for adaptations and identify signals that should trigger them.
  • Strategic adaptations should be built into all options.
  • When conducting portfolio analysis it is necessary to estimate how well alternative strategies attend to all of the various objectives. Scenario evaluation of strategies is traditional and useful, but the scenarios should be chosen systematically and analytically to provide a set of "stress tests" addressing the diverse objectives and risks.
  • Planning should hedge by providing general capabilities and organizational agility that allow adaptations to unanticipated developments.
  • Major surprises will nonetheless occur, so planning should also provide general capabilities and organizational agility for adapting to such unanticipated developments, both positive and negative.
  • Narrowing the analysis for the study at hand should not be based on conventional wisdom or the desire to avoid controversy.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    A Cross-Cutting Analytic Method: Exploratory Analysis

  • Chapter Three

    Strategic Planning

  • Chapter Four

    Acquisition Management

  • Chapter Five

    Logistics

  • Chapter Six

    Manpower Research

  • Chapter Seven

    Crisis Decisionmaking

  • Chapter Eight

    Organization and Implementation

  • Chapter Nine

    Conclusions

  • Appendix

    More General Literature

The research for this paper was conducted within 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.

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