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

CHAPTER 4 Clarifying the Measurement Problem

LEARNING OBJECTIVES

• Explain what needs to be addressed prior to making a measurement.
• Explain challenges and solutions for defining a decision.
• Explain the difference between “uncertainty” and “risk.”
• Identify some of the issues organizations have with some of their initial attempts to measure what seems abstract, such as IT security or agricultural resilience.
• Describe how even seemingly abstract measurements can be defined in terms of the decisions they support and how to decompose them further.

CHAPTER OVERVIEW

Chapter NaN addresses questions that must be asked prior to making a measurement. Measurements are used to support decisions, and the thing being measured must be defined in terms of observable consequences that relate to your decision in a particular way. A key challenge is often how to define the relevant decision. The concepts of “uncertainty” and “risk” are often misunderstood, so a clear definition of the two is provided.

The Applied Information Economics process is described in more detail. IT security and agricultural sustainability are given as examples of decision identification, clarification, and decomposition. A major issue in these examples, as in many measurement problems, is that they were not initially defined in terms of observable consequences and decisions they support. After framing the problem in this way, it becomes possible to decompose it into a variety of more specific, measurable components. ...