How to Measure Anything, Finding the Value of “Intangibles in Business” Third Edition

How to Measure Anything, Finding the Value of “Intangibles in Business” Third Edition


Measurement is difficult, complex and costly, especially when you are trying to measure something that is intangible. In Chapter 2 of How to Measure Anything, Finding the Value of Intangibles in Business Third Edition , Douglas W. Hubbard uses three allegories to debunk the notion that measurement of intangibles is impossible and always has to be complex and costly.

In the first of the three allegories, Hubbard uses the story of Eratosthenes, the Greek polymath who calculated the circumference of the earth (amongst a long list of other discoveries) sometime during the third century BC. Eratosthenes did so without precise survey equipment, clock, GPS or satellites. He used observations and basic geometry. Eratosthenes started with what was known, used the knowledge at his disposal and made observations to measure something that has never been measured before.

The second story features Enrico Fermi, the father of the nuclear age.  Fermi estimated the force of an atomic blast by observing the distance confetti was blown by the shockwave.  Fermi had broken the problem down into steps. The process is known as the Fermi Question or Fermi Decomposition.  By breaking a problem into steps and estimating the steps based on what is known you can achieve a result that is very close to the actual value. Fermi’s story teaches us that we can think about measurement as a multi-step chain of thought and that solid inferences can be from made from indirect observations (estimates).

The third allegory is the story of Emily Rosa, the youngest person to have a paper published in a peer-reviewed medical journal.  Emily used simple experimental design to devise a single blind approach to study therapeutic touch. The results debunked the idea of therapeutic touch.  The important lesson from Emily’s story was that simple methods used in controlled experiments such as sampling, randomization, and blind studies can be used to collect valid data in an organization to observe and measure a variety of phenomena. In IT organizations, experimentation is often a bad word because is it thought to be complicated, expensive and invasive.  Emily’s story shows us that experiments that generate important information can be simple and easy to implement.

Measurement is a tool to reduce uncertainty.  We can break down what we want to measure into steps. Then we can use estimates and inferences based on what we know to understand what others say can’t be measured, and we can use experiments to gather data or to confirm our inferences.  Useful observations are not necessarily complex, expensive or even beyond the comprehension of Dilbert’s point-haired boss (Hubbard brought this up, not me).  Chapter Two uses stories that reveal anything can be measured.

Previous Installments in Re-read Saturday, How to Measure Anything, Finding the Value of “Intangibles in Business” Third Edition

How To Measure Anything, Third Edition, Introduction

How To Measure Anything, Third Edition, Chapter 1