How to Measure Anything Workbook

Finding the Value of Intangibles in Business

Douglas W. Hubbard

• Publisher: Wiley
• Year: 2014
• Print ISBN: 9781118752364
• eBook ISBN: 9781118860397
• Edition: 1
• Topic: Economics
• Subtopic: Statistics for Business & Economics
• Index: Economics

The invaluable companion to the new edition of the bestselling How to Measure Anything

This companion workbook to the new edition of the insightful and eloquent How to Measure Anything walks readers through sample problems and exercises in which they can master and apply the methods discussed in the book.

The book explains practical methods for measuring a variety of intangibles, including approaches to measuring customer satisfaction, organizational flexibility, technology risk, technology ROI, and other problems in business, government, and not-for-profits.

• Companion to the revision of the bestselling How to Measure Anything
• Provides chapter-by-chapter exercises
• Written by industry leader Douglas Hubbard

Written by recognized expert Douglas Hubbard—creator of Applied Information Economics— How to Measure Anything Workbook 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.

PART I
Questions

CHAPTER 1
The Challenge of Intangibles

LEARNING OBJECTIVES

• Describe different definitions of intangibles.
• Explain why measurements matter.
• Explain the different reasons for measurements.
• Explain the purpose of a decision-oriented framework for measurement.
• Describe the key steps in the Applied Information Economics approach to measurement.
• Explain why we use “power tools” for measurement.
• Provide an outline to the remainder of the book.

CHAPTER OVERVIEW

Chapter NaN proposes that anything can be measured and explains why measurements are critical to business, government, and life, and it outlines the case for this in the book. In business, there is an unlimited array of so-called “intangibles” like management effectiveness, research productivity, and public image, each of which turns out to be measurable by methods that are simpler than the reader may think.

The book proposes a “decision-oriented” framework for measurement. It is preferable to use quantitative models over unaided subjective intuition. For each decision, there are many “micro-decisions” about what to measure.

A method called Applied Information Economics (AIE) is introduced as a universal approach to measurement problems. The complexities of measurement can be simplified with a “power tools” approach to statistics.

QUESTIONS

1. Two common understandings of the word “intangible” apply to things that can be measured but are not _______, and things that cannot be measured at all. One purpose of this text is to argue that the second type of intangible _______.
   1. Physically touchable; does not exist
   2. Physically touchable; is the best-working definition of the word
   3. Analyzed; does not exist
   4. Analyzed; is unavoidable to some degree
   5. None of the above
2. To which type of decisions does this book apply?
   1. Government policy
   2. Personal decisions
   3. Business planning
   4. All of the above
3. Which of the following is true of intangibles?
   1. They defy measurement entirely.
   2. The term is essentially a misnomer because anything is measurable.
   3. They have little direct impact on decisions.
   4. They are rarely measurable and relatively unpredictable.
4. Which of the following statements is true of “intangible” variables?
   1. One can measure the tangible effects of seemingly “intangible” variables; if a variable literally had no detectable effect, then it would not be relevant to any decision.
   2. The low-cost measurement of “intangible” variables usually requires the application of state-of-the-art statistical techniques.
   3. Immeasurable variables can only be assessed intuitively.
   4. The routine treatment of “intangible” variables as unimportant in prevalent decision models suggests the effect of allegedly “immeasurable” factors is, in most cases, negligible.
   5. None of the above
5. If you are trying to figure out how a specific measurement process should work, how should you use this book?
   1. Check for your specific problem in the index. If you find it, skip to that chapter. If you don’t find it, that issue is not addressed.
   2. The book is purely theoretical and doesn’t address specific measurement problems.
   3. The steps described in the book apply to any measurement problem and are presented sequentially by chapter. Read the whole book and apply the steps within.
   4. None of the above
6. Which purpose of measurement is emphasized the most in this book?
   1. Measurements for resale
   2. Measurements for curiosity or entertainment
   3. Measurements that support decisions
   4. None of the above
7. Why do managers need to have a method to analyze options for reducing uncertainty about decisions?
   1. There are so many possible things to measure.
   2. Only some measurements impact the outcome.
   3. Measurements can be costly and time-consuming.
   4. All of the above
8. Which of the following statements is true?
   1. The value of a measurement is a direct function of the cost to obtain it.
   2. Measurements can be done only on things with no uncertainty.
   3. If a thing is difficult to measure, it’s probably not as important to a decision.
   4. The value of a measurement is partly a function of the uncertainty associated with that variable.
9. Why are decision makers in organizations often less informed than they could be?
   1. They presume that some things are totally immeasurable.
   2. They use traditional statistical methods to describe an intangible quantity.
   3. They don’t rely enough on experience and expert opinion.
   4. They don’t isolate and eliminate all uncertainty.
10. What is/are example(s) of a “micro-decision” to which the author refers?
    1. Small, inconsequential investments
    2. Small corrections to projects
    3. The choice about what to measure about a decision and how much to measure it
    4. All of the above
11. Which of the following statements about quantitative models is false?
    1. They don’t have uncertainty.
    2. They tend to be more reliable than intuition.
    3. Studies indicate that they perform better than human judgment alone.
    4. They help to optimize the reduction of uncertainty.
12. Which is a valid reason for wanting to measure something?
    1. Upper management has suggested that it’s a good idea.
    2. It’s easy to do.
    3. It ultimately informs a decision of some kind.
    4. Any uncertainty in a decision process can lead to catastrophic consequences.
13. While the author stresses that “anything can be measured,” why does he not also say that everything should be measured?
    1. The second statement is practical only when applied to micro-decisions.
    2. The second statement is contrary to basic economic measurement principles.
    3. The second statement applies only to cheap measurements.
    4. The second statement applies only to an organization’s “core values.”
14. True or False: Those who work in business tend to employ careful measurement methods m...

Table of contents

• Cover
• Titlepage
• Copyright
• Contents
• Preface
• About the Author
• PART I Questions
• PART II Answers