What is a good response to failure? More failure!!

I've been reading a lot lately about policy failure. The main thrust of the book is that most policies are amazingly inefficient generating more costs then benefits. Some of the policy failures discussed are the drug review process, various EPA mandates, financial regulations, and highway funding.

I have a few issues with the analysis, the largest of which is that I don't know that all the costs and benefits have been appropriately looked at. This is an issue I have with classical economics in general, they only look at things that can be monetized and modeled leaving out a number of important considerations.

But the real thing that I wanted to talk about was that this article reinforced an idea that has been bouncing around in my head for a while. Performance based policy and vertical goal integration. While that may sound like two idea they are tightly merged in my head.

Performance based policy is the idea that any policy, government or private, should have a specific goal, a concept of how it is to be achieved, what the effects will be on other systems, a standard against which progress can be measured, and a review process to see how you are doing.

Doesn't this sound obvious and rational? Why do something if you don't have a goal, and a way to figure out if your getting there. Without measures and reviews you could waste time, money and energy on something that is totally fruitless.

I think this is especially important when it comes to public policy. I would think that if a politician could say "We were here and now, thanks to your taxes, we are here. And that means we are this much better off" then that person would do quite well in the next election. I suppose they kind of do this already with their earmarks, "Yes I brought $5 million dollars into my district for something completely useless!!"

That brings me to my next point, vertical goal integration. This is the idea that everyone is working towards the same goal at different levels, and knows what role they play. In a company the goal at the top level may be to make the shiniest widgets. The middle management would then have a goal to keep the factory floor clean to make sure no dust made the widgets less shiny. Does this make sense? Goals that work together based on the responsibilities of the person, or group in question.

I heard of one company where this was practiced so well that the janitor knew the company goals, region goals, local factory goals, department goals, and individual goals. He knew exactly where he stood, and how he helped the overall mission of the company. What a great thing not only for efficiency, but for morale as well.

Of course the above story works so well not only because they had goals, but also a way to measure them. If at any level there was consistent problems actions would be taken. Actions may include firing a person, maybe a policy change, or the introduction of new technology. It doesn't really matter what the change is, the point is a feedback loop was created so everyone could see where they were, where they were going, and how they were getting there.

It seems that there is a lack of this understanding all over the place. Almost every company I have worked for has had a hard time with this concept; a failure to recognize these concepts is endemic in government.

With ideas like this that seem so simple and intuitive to me I wonder why they are not practiced, is it because they are not obvious and simple, are other people just stupid, have other people just not been exposed to the idea, or are people threatened by these ideas and actively fight them off?

One thing a can predict, regardless of why these concepts aren't used, until someone starts making and keeping goals there will always be plenty of failure for everyone.