How to Measure Anything Finding the Value of Intangibles in Business

by Hubbard, Douglas W.

• ISBN13: 9781118539279
• ISBN10: 1118539273
• Edition: 3rd
• Format: Hardcover
• Copyright: 2014-03-17
• Publisher: Wiley

Summary

Now updated with new measurement methods and new examples, How to Measure Anything shows managers how to inform themselves in order to make less risky, more profitable business decisions

This insightful and eloquent book will show you how to measure those things in your own business, government agency or other organization that, until now, you may have considered "immeasurable," including customer satisfaction, organizational flexibility, technology risk, and technology ROI.

• Adds new measurement methods, showing how they can be applied to a variety of areas such as risk management and customer satisfaction
• Simplifies overall content while still making the more technical applications available to those readers who want to dig deeper
• Continues to boldly assert that any perception of "immeasurability" is based on certain popular misconceptions about measurement and measurement methods
• Shows the common reasoning for calling something immeasurable, and sets out to correct those ideas
• Offers practical methods for measuring a variety of "intangibles"
• Provides an online database (www.howtomeasureanything.com) of downloadable, practical examples worked out in detailed spreadsheets

Written by recognized expert Douglas Hubbard—creator of Applied Information Economics—How to Measure Anything, Third Edition illustrates how the author has used his approach across various industries and how any problem, no matter how difficult, ill defined, or uncertain can lend itself to measurement using proven methods.

Author Biography

DOUGLAS W. HUBBARD is the inventor of Applied Information Economics (AIE), a measurement methodology that has earned him critical praise from The Gartner Group, Giga Information Group, and Forrester Research. He is an internationally recognized expert in the field of decision analysis and challenging measurements and is a popular speaker at numerous conferences. He has written articles for Information Week, CIO Enterprise, and DBMS Magazine. He is the author of The Failure of Risk Management: Why It’s Broken and How to Fix It and Pulse: The New Science of Harnessing Internet Buzz to Track Threats and Opportunities.

Table of Contents

Preface to the Third Edition

Acknowledgments

About the Author

Part I: Measurement

The Solution Exists

Chapter 1 The Challenge of Intangibles

The Alleged Intangibles

Yes, I Mean Anything

The Proposal: It’s About Decisions

A “Power Tools” Approach to Measurement

A Guide to the Rest of the Book

Chapter 2 An Intuitive Measurement Habit: Eratosthenes, Enrico, and Emily

How an Ancient Greek Measured the Size of Earth

Estimating: Be Like Fermi

Experiments: Not Just for Adults

Notes on What to Learn from Eratosthenes, Enrico, and Emily

Notes

Chapter 3 The Illusion of Intangibles: Why Immeasurables Aren’t

The Concept of Measurement

The Object of Measurement

The Methods of Measurement

Economic Objections to Measurement

The Broader Objection to the Usefulness of “Statistics”

Ethical Objections to Measurement

Reversing Old Assumptions

Notes

Part II: Before You Measure

Chapter 4: Clarifying the Measurement Problem

Toward a Universal Approach to Measurement

The Unexpected Challenge of Defining a Decision

If You Understand It, You can Model It

Getting the Language Right: What “Uncertainty” and “Risk” Really Mean

An Example of a Clarified Decision

Notes

Chapter 5 Calibrated Estimates: How Much Do You Know Now?

Calibration Exercise

Calibration Trick: Bet Money (or Even Just Pretend to)

Further Improvements on Calibration

Conceptual Obstacles to Calibration

The Effects of Calibration Training

Notes

Chapter 6 Measuring Risk through Modeling

How Not to Measure Risk

Real Risk Analysis: The Monte Carlo

An Example of the Monte Carlo Method and Risk

Tools and Other Resources for Monte Carlo Simulations

The Risk Paradox and the Need for Better Risk Analysis

Notes

Chapter 7 Measuring the Value of Information

The Chance of Being Wrong and the Cost of Being Wrong: Expected Opportunity Loss

The Value of Information for Ranges

Beyond Yes/No: Decisions on a Continuum

The Imperfect World: The Value of Partial Uncertainty Reduction

The Epiphany Equation: How the Value of Information Changes Everything

Summarizing Uncertainty, Risk, and Information Value: The First Measurements

Notes

Part III: Measurement Methods

Chapter 8 The Transition: From What to Measure to How to Measure

Tools of Observation: Introduction to the Instrument of Measurement

Decomposition

Secondary Research: Assuming You Weren’t the First to Measure It

The Basic Methods of Observation: If One Doesn’t Work, Try the Next

Measure Just Enough

Consider the Error

Choose and Design the Instrument

Notes

Chapter 9 Sampling Reality: How Observing Some Things Tells Us about All Things

Building an Intuition for Random Sampling: The Jelly Bean Example

A Little about Little Samples: A Beer Brewer’s Approach

Is Are Small Samples Really “Statistically Significant?”

When Outliers Matter Most

The Easiest Sample Statistics Ever

Experiment

Seeing Relationships in the Data: An Introduction to Regression Modeling

Notes

Chapter 10 Bayes: Adding to What You Know Now

The Basics and Bayes

Using Your Natural Bayesian Instinct

Heterogeneous Benchmarking: A "Brand Damage" Application

Bayesian Inversion for Ranges: An Overview

The Lessons of Bayes

Notes

PART IV: Beyond the Basics

Chapter 11 Preference and Attitudes: The Softer Side of Measurement

Observing Opinions, Values, and the Pursuit of Happiness

A Willingness to Pay: Measuring Value via Trade-offs

Putting It All on the Line: Quantifying Risk Tolerance

Quantifying Subjective Trade-offs: Dealing with Multiple Conflicting Preferences

Keeping the Big Picture in Mind: Profit Maximization versus Purely Subjective Trade-offs

Notes

Chapter 12 The Ultimate Measurement Instrument: Human Judges

Homo absurdus: The Weird Reasons behind Our Decisions

Getting Organized: A Performance Evaluation Example

Surprisingly Simple Linear Models

How to Standardize Any Evaluation: Rasch Models

Removing Human Inconsistency: The Lens Model

Panacea or Placebo?: Questionable Methods of Measurement

Comparing the Methods

Notes

Chapter 13 New Measurement Instruments for Management

The Twenty-First-Century Tracker: Keeping Tabs with Technology

Measuring the World: The Internet as an Instrument

Prediction Markets: A Dynamic Aggregation of Opinions

Notes

Chapter 14 A Universal Measurement Method: Applied Information Economics

Bringing the Pieces Together

Case: The Value of the System that Monitors Your Drinking Water

Case: Forecasting Fuel for the Marine Corps

Case: Measuring the Value of ACORD Standards

Ideas for Getting Started: A Few Final Examples

Summarizing the Philosophy

Notes

Appendix: Calibration Tests (and Their Answers)

Index