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

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More specifically, how to measure anything that is especially important, including intangibles [Posted on 2008-09-09]

"I wrote this book to correct a myth that permeates many organizations today: that certain things can't be measured." Douglas Hubbard goes on to note that he has made a career out of measuring the sorts of things many thought were immeasurable. Intangibles, for example, "that appear to be completely intractable to be measured...in a way that is economically justified." Hubbard notes that there are several common misconceptions about intangibles. He offers what he characterizes as a "universal approach," Applied Information Economics (AIE), to measure an intangible, providing with that explanation some "interesting methods for particular problems."

He duly recognizes that only what is most important (tangible or intangible) should be measured; also, that what is currently most important may not retain that importance; and, that information needs change, sometimes significantly and unexpectedly. That said, basic questions must constantly be asked and answered:

1. What are our most important information needs? Why?

2. How best to obtain and then verify that information?

3. What will we then do with that information?

4. How can we then measure (accurately, consistently, and sufficiently) the impact of actions taken based on that information?

To his credit, Hubbard makes every effort to provide information, explanations, and recommendations that are (in his words) as "simple as can be"; nonetheless, some of the material may prove daunting, at least it did to me. I appreciate the inclusion of dozens of real-world examples that illustrate key points. Hubbard also makes effective use of other reader-friendly devices, such as checklists inserted throughout his narrative. In his own words, here is how he organizes his material:

In Section One (Chapters 1-3), he "makes the case that everything is measurable and offers some examples that should inspire readers to attempt measurements even when it seems impossible."

In Section Two (Chapters 4-7), he "begins to get into more specific substance about how to measure things - specifically uncertainty, risk - and the value of information."

In Section Three (Chapters 8-10), he "deals with how to reduce uncertainty by various methods of observation including random sampling and controlled experiments."

And then in Section Four (Chapters 11-14), Hubbard offers "an eclectic collection of interesting measurement solutions and case examples."

Many readers will appreciate having the Appendix (Pages 269-278) which provides both the questions and answers for various calibration tests, including "Calibration Survey for Binary: B" that also includes percentages to indicate degree of confidence that the respondent is correct.

Earlier, I suggested that this is by no means an "easy read." It isn't. Nor will this book respond directly to every executive's immediate needs and objectives. However, it will generously reward those who need assistance with finding and measuring the intangibles in business if they absorb and digest the material with appropriate care. To those about to begin reading this book, Douglas Hubbard offers this recommendation: Write down those things they believe are immeasurable or, at least they are not sure to how to measure. "After reading this book, my goal is that you are able to identify methods for measuring each and every one of them." I presume to add another recommendation: Highlights key passages and titles of checklists. By doing so, you will be able to facilitate, indeed expedite frequent review of key concepts and insights later.

Superb [Posted on 2008-09-24]
A fantastic introduction into probabalistic way of thinking about what you know or think, and how you can develop this into usefull objective measurement frameworks for those things your previously thought were "intangible" or "unknowable"

Great for IT People Trying to Quantify The Value of What They Do [Posted on 2008-10-03]
One of the primary challenges with managing and governing IT effectively is that many of the questions that we need to answer are difficult to measure. What is the expected value of a new software project? What is the chance of success? How long will the project take? What architectural strategy is best? How effective is a development technique? What is our level of quality? How good is our production data? And so on.


Although these questions are hard to answer, luckily this book provides some proven advice for easily taking measures that enable us to improve our decision making. To understand the value, and ease of, taking presumably difficult measures, in Chapter 2 Hubbard works through examples from past of great thinkers who didn't give up in the face of the "impossible". For example, around 200 BC Eratothenes estimated the circumference of the Earth by observing the lengths of shadows, Enrico Fermi estimated the power of the first atomic bomb by observing the distance that it blew confetti, and at the age of nine Emily Rosa (who became the youngest person to publish in a scientific journal at the age of 11) measured the ability (or more accurately lack there of) of people claiming to have the ability of therapeutic touch. Chapter 3 goes on to discuss the illusion of intangibles, motivating you to abandon the self-defeating belief that some things are just too hard to measure. Chapter 4 clarifies the measurement problem, focusing on uncertainty and risk, putting you in a better position to effectively reduce business risk through relatively simple measurement.


Chapters 5 through 7 describe more of the fundamentals behind measurements and the value of improved information, and chapters 8 through 10 describe strategies for doing measurements. Being a firm believer in strategies which reflect human behavior, I was particularly interested in chapters 11 through 14 which cover the human issues around measurement, making a hard science soft again.


If you're tasked with improving your internal metrics program, improving your governance strategy, or simply want to learn about strategies to find out what the heck is actually going on within your organization or industry then this book will prove to be a good idea. Hubbard uses straightforward, easy to understand examples throughout the book, thereby simplifying many complex ideas for the reader.

How to use measurements as a tool for better decision making [Posted on 2008-10-20]
Measuring seeming intangibles can be a very tricky task, and Hubbard does a masterful job walking the reader through the process of moving from a position of limiting their applicability of measurement to a position where they can essentially quantify anything. This text is very well written and only basic math skills are needed to apply the content. In a few isolated instances, the author walks the reader through some calculations that require knowledge of statistics beyond basic math, and even limits his discussion to Microsoft Excel functions in at least one case where he feels the math might be a little too inaccessible to the reader, although even in this scenario the math is by no means very advanced. In this reviewer's opinion, this feat is rather incredible, because the resources typically available on this subject matter are typically saturated with statistics, and the method of problem solving the author presents should make most readers very comfortable regardless of background. While this book can help measure tangibles, the intent here is to guide the reader to a point where they can measure what are typically viewed as intangibles, such as risk, quality, performance, value, demand, etc. While the background of the author is technology, and much of the discussion can be applied to nonfunctional architectural qualities, the book demonstrates that there really is no limit to measuring traditional intangibles. As Hubbard indicates in his first chapter, "anything can be measured. If a thing can be observed in any way at all, it lends itself to some type of measurement method. No matter how 'fuzzy' the measurement is, it's still a measurement if it told you more than you knew before. And those very things most likely to be seen as immeasurable are, virtually always, solved by relatively simple measurement methods". The author is careful to point out that this work is not intended to cover every single subject matter, but "focus on measurements that are relevant - even critical - to major organizational decisions and yet don't seem to lend themselves to an obvious and practical measurement solution. The book addresses some common misconceptions about intangibles, describes a 'universal approach' to show how to go about measuring an 'intangible', and backs it up with some interesting methods for particular problems". The author explains that the key obstacle to overcome in this space is the very definition of measurement itself: "a set of observations that reduce uncertainty where the result is expressed as a quantity". Measurement does not need to be exact. In fact, it is often the case in many fields of work that exact measurement is not even possible, and in other cases the cost is too high or time is too short to arrive at exact measurements. Probability calibration is one of the tools presented in the early chapters of this book to prepare the reader for what follows. Essentially, the goal of this tool is to help the reader assign levels of confidence to numeric estimates of quantifiable items in order to help move to estimates of the seemingly immeasurable. Many practical examples are discussed throughout the book. Diagrams and sidebars are extremely well placed. Very well recommended.

Required reading for business decision makers [Posted on 2008-11-16]
I made this book a required read for my MBA Business Research Method class. It addresses some of the key falacies in thinking about the research for decision making. I have a more detailed review on [...].

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