Synopses & Reviews
Praise for the Second Edition of How to Measure Anything: Finding the Value of "Intangibles" in Business"How to Measure Anything was already my favorite book (just ahead of Hubbard's second book, The Failure of Risk Management) and one I actively promote to my students and colleagues. But the Second Edition, improving on the already exquisite first edition, is an achievement of its own. As a physicist and economist, I applied these techniques in several fields for several years. For the first time, somebody wrote together all these concerns on one canvas that is at the same time accessible to a broad audience and applicable by specialists. This book is a must for students and experts in the field of analysis (in general) and decision-making."
—Dr. Johan Braet, University of Antwerp, Faculty of Applied Economics, Risk Management and Innovation
"Doug Hubbard's book is a marvelous tutorial on how to define sound metrics to justify and manage complex programs. It is a must-read for anyone concerned about mitigating the risks involved with capital planning, investment decisions, and program management."
—Jim Flyzik, former Government CIO, White House Technology Advisor and CIO magazine Hall of Fame Inductee
Praise for the first edition—The bestselling Business Math book two years in a row!
"I love this book. Douglas Hubbard helps us create a path to know the answer to almost any question, in business, in science, or in life . . . How to Measure Anything provides just the tools most of us need to measure anything better, to gain that insight, to make progress, and to succeed."
—Peter Tippett, PhD, MD, Chief Technology Officer, CyberTrust, and inventor, first antivirus software
"Interestingly written and full of case studies and rich examples, Hubbard's book is a valuable resource for those who routinely make decisions involving uncertainty. This book is readable and quite entertaining, and even those who consider themselves averse to statistics may find it highly approachable."
—Strategic Finance
"This book is remarkable in its range of measurement applications and its clarity of style. A must-read for every professional who has ever exclaimed, 'Sure, that concept is important, but can we measure it?'"
—Dr. Jack Stenner, cofounder and CEO of MetaMetrics, Inc.
"Hubbard has made a career of finding ways to measure things that other folks thought were immeasurable. Quality? The value of telecommuting? The benefits of greater IT security? Public image? He says it can be done—and without breaking the bank . . . If you'd like to fare better in the project-approval wars, take a look at this book."
—ComputerWorld
"I use this book as a primary reference for my measurement class at MIT. The students love it because it provides practical advice that can be applied to a variety of scenarios, from aerospace and defense, healthcare, politics, etc."
—Ricardo Valerdi, PhD, Lecturer, MIT
Review
"
How to Measure Anything was already my favorite book (just ahead of Hubbard's second book,
The Failure of Risk Management) and one I actively promote to my students and colleagues. But the
Second Edition, improving on the already exquisite first edition, is and achievement of its own. As a physicist and economist, I applied these techniques in several fields for several years. For the first time, somebody wrote together all these concerns on one canvas that is at the same time accessible to a broad audience and applicable by specialists. This book is a must for students and experts in the field of analysis (in general) and decision-making."
—Dr. Johan Braet, University of Antwerp. Faculty of Applied Economics, Risk Management and Innovation
"Now, performance measures can be defined for even the most difficult problems. Doug Hubbard's book is a marvelous tutorial on how to define sound metrics to justify and manage complex programs. It is a must read for anyone concerned about mitigating the risks involved with Capital Planning, Investment Decisions and Program Management."
—Jim Flyzik, former Government CIO, White House Technology Advisor and CIO Magazine Hall of Fame Inductee
Praise from How to Measure Anything, First Edition
"I love this book. Douglas Hubbard helps us create a path to know the answer to almost any question, in business, in science or in life...Hubbard helps us by showing us that when we seek metrics to solve problems, we are really trying to know something 'better than we know it now,' to put something into context, to find insight to help us get our jobs done, to be more successful, to discover things, or to build things. How to Measure Anything provides just the tools most of us need to measure anything better, to gain that insight, to make progress, and to succeed."
—Peter Tippett, Ph.D., M.D., Chief Technology Officer at CyberTrust and inventor of the first antivirus software
"Interestingly written and full of case studies and rich examples, Hubbard's book is a valuable resource for those who routinely make decisions involving uncertainty. This book is readable and quite entertaining, and even those who consider themselves averse to statistics may find it highly approachable."
—Strategic Finance
"Hubbard has made a career of finding ways to measure things that other folks thought were immeasurable. Quality? The value of telecommuting? The risk of IT project failure? the benefits of greater IT security? Public image? He says it can be done—and without breaking the bank.... If you'd like to fare better in the project-approval wars, take a look at this book."
—ComputerWorld, August 2007
"I use this book as a primary reference for my measurement class at MIT. The students love it because it provides practical advice that can be applied to a variety of scenarios; from aerospace & defense, healthcare, politics, etc."
—Ricardo Valerdi, PhD, Lecturer, MIT
"This book is remarkable in its range of measurement applications and its clarity of style. A must-read for every professional who has ever exclaimed, 'Sure, that concept is important, but can we measure it?'
—Dr. Jack Stenner, Cofounder and CEO of MetaMetrics, Inc.
Synopsis
This new edition continues to boldly assert that any perception of immeasurability is based on certain popular misconceptions about measurement and measurement methods. It shows the common reasoning for calling something immeasurable, and sets out to correct those ideas. Practical methods for measuring a variety of intangibles are explained including approaches to measuring customer satisfaction, organizational flexibility, technology risk, technology ROI and other business problems. The new edition adds new measurement methods and shows how they can be applied to areas such as risk management and customer satisfaction.
Synopsis
Now updated with new research and even more intuitive explanations, a demystifying explanation of how managers can inform themselves 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 that, until now, you may have considered "immeasurable," including customer satisfaction, organizational flexibility, technology risk, and technology ROI.
- Adds even more intuitive explanations of powerful measurement methods and shows how they can be applied to areas such as risk management and customer satisfaction
- 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"
- Adds recent research, especially in regards to methods that seem like measurement, but are in fact a kind of "placebo effect" for management – and explains how to tell effective methods from management mythology
Written by recognized expert Douglas Hubbard-creator of Applied Information Economics-How to Measure Anything, Second 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.
Synopsis
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.
Building up from simple concepts to illustrate the hands-on yet intuitively easy application of advanced statistical techniques, How to Measure Anything, Second 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, until now, you may have considered "immeasurable," including technology ROI, organizational flexibility, customer satis-faction, and technology risk. Offering examples that will get you to attempt measurements—even when it seems impossible—this book provides you with the substantive steps for measuring anything, especially uncertainty and risk.
Don't wait—take a look inside and find out:
The three reasons why things may seem immeasurable but are not
Inspirational examples of where seemingly impossible measurements were resolved with suprisingly simple methods
How computing the value of information will show that you probably have been measuring all the wrong things
How not to measure risk
Methods for measuring "soft" things like happiness, satisfaction, quality, and more
How to fine-tune human judges to be powerful, calibrated measurement instruments
How you can use the Internet as an instrument of measurement
A complete resource with case studies and a robust accompanying Web site providing downloadable spreadsheet-based examples, How to Measure Anything, Second Edition illustrates how author Douglas Hubbard—creator of Applied Information Economics—has used 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 easy-to-follow, this is the resource you'll turn to again and again—beyond measure.
About the Author
DOUGLAS W. HUBBARD is the inventor of Applied Information Economics (AIE), a measurement methodology that has been used in IT portfolios, entertainment media, military logistics, R&D portfolios, and many more areas where big decisions are based on factors that seem difficult or impossible to measure. He is an internationally recognized expert in metrics, decision analysis, and risk management, and is a popular speaker at numerous conferences. He has written articles for InformationWeek, CIO Enterprise, Architecture Boston, Analytics and OR/MS Today and is also the author of The Failure of Risk Management: Why It's Broken and How to Fix It.
Table of Contents
Preface xi
Acknowledgments xv
SECTION I MEASUREMENT: THE SOLUTION EXISTS 1
CHAPTER 1 Intangibles and the Challenge 3
Yes, I Mean Anything 5
The Proposal 6
CHAPTER 2 An Intuitive Measurement Habit: Eratosthenes, Enrico, and Emily 9
How an Ancient Greek Measured the Size of Earth 10
Estimating: Be Like Fermi 11
Experiments: Not Just for Adults 13
Notes on What to Learn from Eratosthenes, Enrico, and Emily 18
CHAPTER 3 The Illusion of Intangibles: Why Immeasurables Aren't 21
The Concept of Measurement 22
The Object of Measurement 26
The Methods of Measurement 28
Economic Objections to Measurement 35
The Broader Objection to the Usefulness of "Statistics" 37
Ethical Objections to Measurement 39
Toward a Universal Approach to Measurement 41
SECTION II BEFORE YOU MEASURE 45
CHAPTER 4 Clarifying the Measurement Problem 47
Getting the Language Right: What "Uncertainty" and "Risk" Really Mean 49
Examples of Clarification: Lessons for Business from, of All Places, Government 51
CHAPTER 5 Calibrated Estimates: How Much Do You Know Now? 57
Calibration Exercise 59
Further Improvements on Calibration 64
Conceptual Obstacles to Calibration 65
The Effects of Calibration 71
CHAPTER 6 Measuring Risk through Modeling 79
How Not to Measure Risk 79
Real Risk Analysis: The Monte Carlo 81
An Example of the Monte Carlo Method and Risk 82
Tools and Other Resources for Monte Carlo Simulations 91
The Risk Paradox and the Need for Better Risk Analysis 93
CHAPTER 7 Measuring the Value of Information 99
The Chance of Being Wrong and the Cost of Being Wrong: Expected Opportunity Loss 100
The Value of Information for Ranges 103
The Imperfect World: The Value of Partial Uncertainty Reduction 107
The Epiphany Equation: How the Value of Information Changes Everything 110
Summarizing Uncertainty, Risk, and Information Value: The First Measurements 114
SECTION III MEASUREMENT METHODS 117
CHAPTER 8 The Transition: From What to Measure to How to Measure 119
Tools of Observation: Introduction to the Instrument of Measurement 120
Decomposition 124
Secondary Research: Assuming You Weren't the First to Measure It 127
The Basic Methods of Observation: If One Doesn't Work, Try the Next 128
Measure Just Enough 131
Consider the Error 132
Choose and Design the Instrument 136
CHAPTER 9 Sampling Reality: How Observing Some Things Tells Us about All Things 139
Building an Intuition for Random Sampling: The Jelly Bean Example 141
A Little about Little Samples: A Beer Brewer's Approach 142
Statistical Significance: A Matter of Degree 145
When Outliers Matter Most 148
The Easiest Sample Statistics Ever 150
A Biased Sample of Sampling Methods 153
Measure to the Threshold 162
Experiment 165
Seeing Relationships in the Data: An Introduction to Regression Modeling 169
One Thing We Haven't Discussed—and Why 174
CHAPTER 10 Bayes: Adding to What You Know Now 177
Simple Bayesian Statistics 178
Using Your Natural Bayesian Instinct 181
Heterogeneous Benchmarking: A "Brand Damage" Application 187
Bayesian Inversion for Ranges: An Overview 190
Bayesian Inversion for Ranges: The Details 193
The Lessons of Bayes 196
SECTION IV BEYOND THE BASICS 201
CHAPTER 11 Preference and Attitudes: The Softer Side of Measurement 203
Observing Opinions, Values, and the Pursuit of Happiness 203
A Willingness to Pay: Measuring Value via Trade-offs 207
Putting It All on the Line: Quantifying Risk Tolerance 211
Quantifying Subjective Trade-offs: Dealing with Multiple Conflicting Preferences 214
Keeping the Big Picture in Mind: Profit Maximization versus Purely Subjective Trade-offs 218
CHAPTER 12 The Ultimate Measurement Instrument: Human Judges 221
Homo absurdus: The Weird Reasons behind Our Decisions 222
Getting Organized: A Performance Evaluation Example 227
Surprisingly Simple Linear Models 228
How to Standardize Any Evaluation: Rasch Models 230
Removing Human Inconsistency: The Lens Model 234
Panacea or Placebo?: Questionable Methods of Measurement 238
Comparing the Methods 246
CHAPTER 13 New Measurement Instruments for Management 251
The Twenty-First-Century Tracker: Keeping Tabs with Technology 251
Measuring the World: The Internet as an Instrument 254
Prediction Markets: A Dynamic Aggregation of Opinions 257
CHAPTER 14 A Universal Measurement Method: Applied Information Economics 265
Bringing the Pieces Together 266
Case: The Value of the System that Monitors Your Drinking Water 270
Case: Forecasting Fuel for the Marine Corps 275
Ideas for Getting Started: A Few Final Examples 281
Summarizing the Philosophy 287
APPENDIX Calibration Tests (and Their Answers) 289
Index 299