Customer Reviews

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

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Some things are easy to measure. Time, money, exercise, calories, location - all of these are relatively straightforward to repeatably determine or calculate.

But how does one go about measuring happiness? What about compassion, or public influence, or creativity? These are more intangible, harder to pin down to a number that means anything.

Douglas Hubbard has written an impressive work called "How To Measure Anything: Finding the Value of Intangibles in Business."

While it's written primarily for business people, the lessons transfer smoothly to self-experimenters. Hubbard begins with a compelling case for why to measure intangibles:

"Often, an important decision requires better knowledge of the alleged intangible, but when a [person] believes something to be immeasurable, attempts to measure it will not even be considered.

As a result, decisions are less informed than they could be. The chance of error increases. Resources are misallocated, good ideas are rejected, and bad ideas are accepted. Money is wasted. In some cases life and health are put in jeopardy. The belief that some things--even very important things--might be impossible to measure is sand in the gears of the entire economy.

Any important decision maker could benefit from learning that anything they really need to know is measurable."

He goes on to explain in detail how to measure intangibles, including sections on how to clarify problems, calibrate estimates, measure risk, sample reality, and use Bayesian statistics to add to available knowledge. He also describes his Applied Information Economics (AIE) Approach that ties together several threads of his ideas:

"The AIE approach addresses four things:

1. How to model a current state of uncertainty

2. How to compute what else should be measured

3. How to measure those things in a way that is economically justified

4. How to make a decision"

I'm working my way through the book, and am incredibly grateful to Douglas Hubbard for writing it.

This book provides the link between the college statistical classes and the "real" world that is full of uncertainty, incomplete information and things that seemingly are impossible to measure. The most important aspects of the book are not the mathmatical techniques but the conceptual groundwork that help break down previously held paradigms about measurement. Once these barriers have been removed then possibilities open up. Highly recommended.

Mr. Hubbard provides a very well written analysis on how the things most people think can't be measured really can be measured. The book provides very thought provoking insights on how many of today's most popular "risk assessment" frameworks fall short and often introduce more error. It also provides proven and very practical and useful ways (with examples) to think about risk that helps management better communicate the uncertainty they have in their assessments and defining a proven method for setting up measurements that can produce a more consistent result that provide a lot of power in decision making. The book also outlines the need for risk analysts to get "calibrated" which is something that was very eye opening and game changing and crucial to improving our risk and decision making. All in all one of the best books I have ever read related to risk management that goes way beyond theory, and uses proven techniques deployed in the insurance and science areas.

The magic of this book is giving you tools that anyone with a reasonable grasp of maths - not just statisticians - can apply to solve tough problems.

"Will upgrading our computers produce efficiency dividends worth the cost?" "Will this new initiative generate greater employee engagement?" "How much should I pay for my insurance excess?"

The book answers a few of these questions pretty directly, but the main thing it does is give you a new way of looking at all these problems, and a solid grasp of why nothing can't be measured!

Be warned that some of the concepts can sit uncomfortably with people who are unused to them (especially if they haven't read the book), so it can take effort before businesses accept the legitimacy of what you're measuring.

I do a fair amount of work in software and project measurement. Well written. Several techniques I can use myself.

Hubbard's explanations are very good. Even the Bayesian techniques are explained with unusual clarity.

Get it.

Hubbard's book did nothing short of help me realize that I have misunderstood the concept of measuring its self, throughout many years of education and employment in engineering and physics. Although this misunderstanding was subtle, it was responsible for throwing up roadblocks when trying to make estimations under non-ideal conditions.

The approaches he describes may not sit easy with some, as they directly challenge many traditional assumptions about management and the value of uncalibrated "expert opinions". If you start by accepting that "measurement" is the act of reducing uncertainty, it's clear that anything can be measured one way or another.

If you expect this book to contain a perfect metric for everything that you in particular want to measure, you'll likely be disappointed. Hubbard, as best as I can tell, has the goal of correcting some widespread misconceptions, and providing some practical examples of how easy it can be if you just think about the problem and apply quantitative methods. It's definitely a "teach a man to fish" approach.

(This review originally posted for the First Edition of this book)

Sometimes you run across a business book that isn't just a good read, but one that actually changes how you look at things in your own professional life. `How to Measure Anything' is one such book.

The book is a superb mix of theory and practical advice - in fact for most business and IT execs, the first 100 pages alone are enough to make you rethink how you approach investment decisions, consider the topic of intangibles, define measurement problems, and think about the value of information. All of it is done in a straight-forward, compelling, easy-to-read manner.

As an IT management consultant, I've done good work for clients in strengthening the way they make IT investment decisions. Having said that, I'd wish I had this material available for several of my former clients. It would have strengthened the case I've intuitively been making for years, and would have given stronger quantitative grounding to the final product.

The potential audience for this book is wide, but I particularly recommend it to all C-level execs and IT management who have anything to do with technology investments.

If you want to know "what's in this book", read the Editorial review - it is spot on.

If you want to know "what can this book do for me?", give me just a moment:

I serve in an organization that has been attempting to quantify what has been previously considered an "intangible." Disagreement as to whether these so-called intangibles could be measured or even should be measured has kept us from attempting to "nail jello to the wall."

Mr. Hubbard's book immediately paid for itself in the very first reading! His methods helped me to ask the right questions to begin identifying what we do know; in turn, that began the process of uncovering areas of where these so-called intangibles had impact on our organization - and then to begin actually measuring the effect of those impacts.

By the time I reached the end of his book, I was able to provide to our organization initial measurements of effectiveness as well as the financial value they represent! His extremely well-written and practical how-to book has measurably changed our thinking from the worn-out: "we are so unique, our impact cannot be measured" to a new: "here's how we can measure the impact we make and the value it has to our organization."

I am not a statistician, an accountant, nor a numbers-guy; but I have easily understood his formulas and methods. After my third reading, I can tell say I glean more each time I read it.

I have looked but have not found any other book that is specifically written to measure what is considered an intangible. His accompanying website provides forum discussions and downloads which has added to my learning experience. I most highly commend this book to your reading.

As a Manager in a medium-sized financial investments firm in Dallas, measurement is an on-going aspect of the job. But the big problem with managing investments, potential investments, and portfolio combinations (in other words, how much of each security from a specific industry should we add to our holdings to raise or lower our risk and therefore possible income) is knowing WHAT to measure and HOW to go about trying to turn a "squishy" or as the author more accurately puts it, intangible aspect of an investment into an aspect we can quantify, measure, and follow.

The CEO of GoDaddy once said that everything gets better when you measure it. After all of our staff read this book, that has become one of our company's de facto standards. We find that if we closely follow data related to our progress as a company AND as individuals that all our stats improve and over time our company's wealth as well as our own incomes rise accordingly. That is the key to why How to Measure Anything: Finding the Value of Intangibles in Business has become part of my desk reference in many ways. It taught me to focus on measurements that I was not doing and it allows our other Managers to do the same much more effectively. You can't just buy a statistics package for a PC and think you're measuring anything helpful! That kind of Black Box approach doesn't cut it because you don't know the WHY behind what is being tracked and often you don't know the underlying algorithm that produced those measurements.

I really want to stress that the major benefit How to Measure Anything had on my company and why the impact was so important is due to us learning that many of the factors before that we assumed could not be measured were just wrong. Not that the factors were wrong, WE WERE for thinking there were pieces of important data that we simply couldn't measure well or accurately. If it's important, it CAN be measured and we are fully versed now in separating out what we need to measure and then systematically going about doing so. Thinking something was immeasurable was our biggest mistake and correcting that mistake has turned our company into a measuring machine. There is just NO WAY that our competition is following the same data and therefore getting the same results we have been since we changed the way we approach our key data. And even though I'm in the investment field this book would be invaluable in so many other places, more so than I could ever think of but of course engineering, banking, brokerages, education, and financial-related policy jobs certainly NEED the info here. This should be required reading of every pre-MBA student as well as every employee at any firm that needs to track data closely to improve bottom-line results.

Mssr. Hubbard has taken the art of persuasion and turned it into a science. He offers several practical means of quantifying abstractions like quality and satisfaction. His techniques exploit a little bit of data and make it go a long way to reduce uncertainty/risk in decision-making. If you prefer fact-based decisions and can handle entry-level statistics this book is for you.