Hubbard Decision Research
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ROI without Profit?
A couple of people have asked me questions about how you measure value when it is for a not-for-profit or government agency. At least one of them posted the question under the New Measurement Challenge section of this forum and some sent similar questions by email. I explained in the New Measurement Challenge in replay to a thread called the poster called Trending Measurements that economics is about the allocation of limited resources to meet various – usually competing – desires or needs. Whether a benefit is paid out to shareholders of a corporation as a dividend or if the benefit is for the greater public good, an ROI calculation can be done just the same. Just think of a dollar as a measure of value and don’t worry about whether an accountant would count it. See that thread for more detail.
Second Print Run Corrections
The errata and typos in the first print run that were mentioned in the first thread on this topic have all be addressed in the second print run. Fortunately, the book was selling well enough that the publisher had to go to a second print run much sooner than any of us planned. That allowed me to get those corrections in.
Thanks to everyone who posted suggestions for changes!
Doug Hubbard
Errata Statistics
Although my publisher assures me that some errors always make it through the proofing process, each one is still frustrating to the author – mostly because the author had the chance at some point to catch almost every one of the errors.
My wife teaches math at a local community college and had taught math in a high-school for many years. She tells me that every text book she ever used had an errata sheet and that some had up to three pages of errata. In the proofing, we find scores – even hundreds – of errors, so it must be likely that some will get through. Can this likelihood be computed? If you read my book, you would say “Of course!” So I started thinking that if several people each find a number of errors over a period of time, I should be able to estimate the undiscovered errors.
One method I discuss in the book talks about methods for problems like this, including the catch, release & recatch approach for estimating fish populations. If two independent error-finding methods find some of the same errors but they each find errors the other did not find, then we can estimate the number that they both missed. I mention in the book that this same method can apply to estimating the number of people the Census missed counting or the number of unauthorized intrusions in your network that go undetected.
I had another method that I considered including in the book but, in the end, decided to leave out. This method is based on the idea that if you randomly search for errors in a book (or species of insects in the rain forest, or crimes in a neighborhood) the rate at which you find new instances will follow a pattern. Generally, finding unique instances will be easy at first but as the number
Welcome
Welcome to the consolidated forum for How to Measure Anything and The Failure of Risk Management. If you would like to make comments on either book, ask questions about examples, get philosophical about the nature of measurement and risk, or challenge us with an impossible measurement, then there is a discussion for you. If you have ideas for structure of the forums including new topics, then you will find a forum just for that. Here are a few introductory comments:
1) This is a moderated forum. I’m not too concerned about behavioral rules because I reserve the right not to post. But criticism or lack of agreement with me on any topic will NOT be considered as a factor in rejecting or keeping a post. I may reject a post if it is an identical question to one I responded to in another post.
2) I will try to approve posts ASAP and usually within a week. I apologize in advance if it ever takes longer.
Other than that, please contribute your thoughts on these topics and encourage friends and coworkers to do the same.
Thanks,
Douglas W. Hubbard
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‘How to Measure Anything’ Study Guide & Reference
Newly revised to include updates from the 2nd Edition.
Direct from Hubbard Decision Research; the laminated Study Guide and Reference Card for the book How to Measure Anything is packed with key charts, tables, definitions and lists from the book. Each section of the book is outlined in colorful, easy-to-read graphics. It is a perfect summary of the main concepts as well as ready availability of detailed tables. Now available.
Does Your Risk Analysis Really Work?
The most popular risk analysis methods used in Enterprise Risk Management (ERM) are usually the least scientific. Doug Hubbard shows in his articles and books that methods that rely on “Risk Maps” or “Risk Scores” instead of quantitative analysis are merely placebos for management. His book The Failure of Risk Management describes how ineffective risk analysis methods permeate risk management. His article in Analytics explains the difference between a placebo and an analysis method that works. The OR/MS Today explains common mistakes even in quantitative risk analysis. Have some thoughts on this topic? Join the community! Visit the Hubbard Blog and put questions directly to Doug Hubbard about quantitative risk management, measuring the immeasurable, and how to tell what methods really work. Download examples and spreadsheets referred to in his books. Registration is free. Or sign up for an HDR webinar to learn about Applied Information Economics for measuring intangibles, risk, and value.
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