How to Measure Anything: Finding the Value of Intangibles in Business, 3rd Edition

CHAPTER 1 The Challenge of Intangibles

When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the state of science.

—Lord Kelvin (1824–1907), British physicist and member of the House of Lords

Anything can be measured. If something 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 tells 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. As the title of this book indicates, we will discuss how to find the value of those things often called “intangibles” in business. The reader will also find that the same methods apply outside of business. In fact, my analysts and I have had the opportunity to apply quantitative measurements to problems as diverse as military logistics, government policy, and interventions in Africa for reducing poverty and hunger.

Like many hard problems in business or life in general, seemingly impossible measurements start with asking the right questions. Then, even once questions are framed the right way, managers and analysts may need a practical way to use tools to solve problems that might be perceived ...