How to Measure Anything: Finding the Value of Intangibles in Business / Edition 2

How to Measure Anything: Finding the Value of Intangibles in Business / Edition 2

4.2 8
by Douglas W. Hubbard

ISBN-10: 0470539399

ISBN-13: 9780470539392

Pub. Date: 04/19/2010

Publisher: Wiley

Anything can be measured. This bold assertion is the key to solving many problems in business and life in general. The myth that certain things can’t be measured is a significant drain on our nation’s economy, public welfare, the environment, and even national security. In fact, the chances are good that some part of your life or your professional

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Anything can be measured. This bold assertion is the key to solving many problems in business and life in general. The myth that certain things can’t be measured is a significant drain on our nation’s economy, public welfare, the environment, and even national security. In fact, the chances are good that some part of your life or your professional responsibilities is greatly harmed by a lack of measurement – by you, your firm, or even your government. Regardless of your role in business, understanding the power of measurement will make you, those around you, and your organization more efficient and productive.

Using simple concepts to illustrate the hands-on application of advanced statistical techniques, How to Measure Anything, Third Edition reveals the power of measurement in our understanding of business and the world at large. This insightful and engaging book shows you how to measure those things in your business that you may have previously considered immeasurable, including: customer satisfaction, organizational flexibility, technology ROI, and technology risk. Offering examples that will get you to attempt measurements—even when it seems impossible—this book provides you with the underlying knowledge and the necessary steps for measuring anything, especially uncertainty and risk. This revised third edition provides even deeper insights into the fascinating practice of measuring intangibles, with a special emphasis on risk management and customer satisfaction. New and updated chapters also include:

  • A philosophical discussion of different approaches to probabilities, including what is known as the “Bayesian” vs. “frequentist” interpretations of probability
  • Information compiled from other popular works and compelling articles from Douglas W. Hubbard
  • Enlightening new examples of where seemingly impossible measurements were resolved with surprisingly simple methods
  • More measurement myths and other perceived obstacles to measurement debunked

A complete and updated resource with real-world case studies and an easy-to-follow format, How to Measure Anything, Third Edition illustrates how author Douglas Hubbard—creator of Applied Information Economics—has successfully applied his approach across various industries. You’ll learn how any problem, no matter how difficult, ill-defined, or uncertain, can lend itself to measurement using proven methods. Straightforward and accessible, this is the resource you’ll turn to again and again to measure the seemingly immeasurable.

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Table of Contents

Preface     xi
Acknowledgments     xv
Measurement: The Solution Exists
The Intangibles and the Challenge     3
An Intuitive Measurement Habit: Eratosthenes, Enrico, & Emily     7
How an Ancient Greek Measured the Size of Earth     8
Estimating: Be Like Fermi     9
Experiments: Not Just for Adults     12
Notes on What to Learn from Eratosthenes, Enrico, and Emily     16
The Illusion of Intangibles: Why Immeasurables Aren't     19
The Concept of Measurement     20
The Object of Measurement     24
The Methods of Measurement     27
Economic Objections to Measurement     33
The Broader Objection to the Usefulness of "Statistics"     34
Ethical Objections to Measurement     36
Toward a Universal Approach to Measurement     39
Before You Measure
Clarifying the Measurement Problem     43
Getting the Language Right: What "Uncertainty" and "Risk" Really Mean     45
Examples of Clarification: Lessons for Business from, of All Places, Government     47
Calibrated Estimates: How Much Do You Know Now?     53
Testing Your Ability to Assess Odds     53
Calibration Exercise     55
FurtherImprovements on Calibration     59
Conceptual Obstacles to Calibration     61
The Effects of Calibration     65
Measuring Risk: Introduction to the Monte Carlo Simulation     71
An Example of the Monte Carlo Method and Risk     74
Tools and Other Resources for Monte Carlo Simulations     79
The Risk Paradox     82
Measuring the Value of Information     85
The Chance of Being Wrong and the Cost of Being Wrong: Expected Opportunity Loss     86
The Value of Information for Ranges     89
The Imperfect World: The Value of Partial Uncertainty Reduction     92
The Epiphany Equation: The Value of a Measurement Changes Everything     95
Summarizing Uncertainty, Risk, and Information Value: The First Measurements     99
Measurement Methods
The Transition: From What to Measure to How to Measure     103
Tools of Observation: Introduction to the Instrument of Measurement     105
Decomposition     109
Secondary Research: Assuming You Weren't the First to Measure It     113
The Basic Methods of Observation: If One Doesn't Work, Try the Next     115
Measure Just Enough     117
Consider the Error     119
Choose and Design the Instrument      124
Sampling Reality: How Observing Some Things Tells Us about All Things     127
Building an Intuition for Random Sampling: The Jelly Bean Example     132
A Little About Little Samples: A Beer Brewer's Approach     133
The Easiest Sample Statistics Ever     138
A Biased Sample of Sampling Methods     141
Measure to the Threshold     147
Experiment     151
Seeing Relationships in the Data: An Introduction to Regression Modeling     155
Bayes: Adding to What You Know Now     161
Simple Bayesian Statistics     161
Using Your Natural Bayesian Instinct     165
Heterogeneous Benchmarking: A "Brand Damage" Application     170
Getting a Bit More Technical: Bayesian Inversion for Ranges     174
Beyond the Basics
Preference and Attitudes: The Softer Side of Measurement     183
Observing Opinions, Values, and the Pursuit of Happiness     183
A Willingness to Pay: Measuring Value via Trade-offs     187
Putting It All on the Line: Quantifying Risk Tolerance     192
Quantifying Subjective Trade-offs: Dealing with Multiple Conflicting Preferences     195
Keeping the Big Picture in Mind: Profit Maximization versus Subjective Trade-offs     199
The Ultimate Measurement Instrument: Human Judges     203
Homo absurdus: The Weird Reasons behind Our Decisions     204
Getting Organized: A Performance Evaluation Example     207
Surprisingly Simple Linear Models     208
How to Standardize Any Evaluation: Rasch Models     210
Removing Human Inconsistency: The Lens Model     214
Panacea or Placebo?: Questionable Methods of Measurement     219
Comparing the Methods     226
New Measurement Instruments for Management     229
The Twenty-First-Century Tracker: Keeping Tabs with Technology     229
Measuring the World: The Internet as an Instrument     232
Prediction Markets: Wall Street Efficiency Applied to Measurements     235
A Universal Measurement Method: Applied Information Economics     243
Bringing the Pieces Together     244
Case: The Value of the System That Monitors Your Drinking Water     248
Case: Forecasting Fuel for the Marine Corps     253
Ideas for Getting Started: A Few Final Examples     260
Summarizing the Philosophy     267
Calibration Tests     269
Index     279

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4.3 out of 5 based on 0 ratings. 8 reviews.
RolfDobelli More than 1 year ago
Finding the answers to most questions usually begins with measuring. But when it comes to answering questions that plague business and society – Will this new product succeed? Will that company fail? How valuable is a human life? – the usual tools of measurement fall short. Metrics expert Douglas W. Hubbard offers a logical, reasoned explanation of how to assign a dimension to anything, especially intangibles or “soft” issues. He makes a strong case for why failing to measure such issues can lead to unsatisfactory or even disastrous decisions. His straightforward approach to the sometimes off-putting field of statistics will appeal to even the most numerically challenged. getAbstract recommends his advice to anyone charged with making critical decisions.
ChrisDyer More than 1 year ago
This is a truly eye-opening book. I, too, once fell into the trap of thinking that certain things were simply not measurable. But this book has clearly pointed out the fallacy of that way of thinking. Anything can be measured if you understand that measurement is not always an exact figure but rather is a way of reducing uncertainty. This book explains these ideas very clearly and includes many tips and shortcuts to help you. I highly recommend this book.
Guest More than 1 year ago
Do you think the most important things can't be measured? Of course, they can, says Doug Hubbard. I picked this up as a skeptic and I have to say that Hubbard has completely addressed every reason I ever said something was 'immeasurable'. He carefully identifies, and then demolishes, every myth about measurement and its alleged impossibility in so many situations. I particularly liked his treatment of established methods for measuring uncertainty, risk, and the value of information. He even shows how various studies measured happiness and how much we value endangered species or our own safety - all by examining the choices we make. This is the only measurement book I've ever found worth recommending.
CaptJason More than 1 year ago
It's taken me a while to get to this volummme, but so far, I've found it enlightening and thought-provoking. Hubbard takes a very obtuse approach to looking at what might be thought of as common things and drawing interesting conclusions as to how they can be more meaningfula dn useful as metrics. i am throughly enjoying this book.
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