NOVEL SOLUTIONS Make Informed Decisions Through Measurement Shannon Wetzel, Senior Editor M


etalcasters are familiar with measurement. They measure dimensions,


Casting Scale


temperature, scrap rates, sand and metal properties, etc. But author Douglas Hubbard contends that other, seemingly intangible, aspects of a business should be measured, as well. This can include customer satisfac- tion, quality, return on in- vestment of new technology, management effectiveness, public image and investments in advertising campaigns. In his book, How to Measure Anything, Hubbard il-


Relevance to Metalcasters Technical Diffi culty Self-Help Fluff Bottom Line


lustrates how readers can gain knowledge about a topic previously assumed to be immeasurable. The main premise behind measuring, according to Hubbard, is to reduce the uncertainty about the subject. “When you know next to nothing, you don’t need


much additional data to tell you something you didn’t know before,” he writes. Hubbard’s book provides real-world examples of busi-


nesses determining methods of measuring seemingly hard- to-measure things, including how the Cleveland Orchestra measured whether its per- formances were improving by counting the number of standing ovations it re- ceived. The methods don’t have to be sophisticated, although Hubbard does delve into more mathemati- cal and statistical models later in the book. How to Measure Anything provides hard formulas, defi nitions and methods useful to engineers and statisticians, but it is backed with com- mon sense reasoning that managers and marketers will understand. Hubbard warns his read-


ers not to avoid measuring something that could be


MODERN CASTING / July 2010


of great fi nancial loss to the company because they don’t believe a viable means of measurement exists. “If an organization uses quantitative risk analysis at all, it is usually for routine op- erational decisions,” Hubbard writes. “The largest, most risky decisions get the least amount of proper risk analysis.” He supplies the following questions to help clarify a problem:


1.What is the decision this measurement is supposed to support?


2. What is the defi nition of the thing being measured in terms of observable consequences?


3. How, exactly, does this thing matter to the decision being asked?


4. How much do you know about it now? 5. What is the value of additional information? In How to Measure Anything, Hubbard takes readers


Metalcaster’s Translation It is easy to get lost in


through his measurement steps, beginning with calibration exercises aimed at helping people narrow their uncertainty on questions to which they don’t know the specifi c answer. He offers methods for determining the value of the informa- tion and therefore how much to invest in the measurement process. Finally, Hubbard discusses actual measure- ment methods the reader can use. Throughout the book, Hubbard’s main point is that businesses can gain insight into the thing they want to measure by making observations that reduce uncertainty. By decomposing a question, one can fi nd out that the uncertainty about the answer comes primarily from one or two specifi c items. This gives a clue about where to begin measurement and narrows the extent of what needs to be measured.


how much you don’t know about a problem and forget that there are still some things you do know. Translation: You can


narrow down a problem, such as how your custom- er service rates, by identi- fying the components of that problem that you do know the answer to, such as the amount customers who return with orders for new jobs.


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