Douglas W. Hubbard > Quotes

“Explanations involving conspiracy, greed, and even stupidity are easier to generate and accept than more complex explanations that may be closer to the truth.

A bit of wisdom called Hanlon's Razor advises us 'Never attribute to malice that which can be adequately explained by stupidity.' I would add a clumsier but more accurate corollary to this: 'Never attribute to malice or stupidity that which can be explained by moderately rational individuals following incentives in a complex system of interactions.' People behaving with no central coordination and acting in their own best interest can still create results that appear to some to be clear proof of conspiracy or a plague of ignorance.”
― Douglas W Hubbard, The Failure of Risk Management: Why It's Broken and How to Fix It

“If a measurement matters at all, it is because it must have some conceivable effect on decisions and behaviour. If we can't identify a decision that could be affected by a proposed measurement and how it could change those decisions, then the measurement simply has no value”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of "Intangibles" in Business

“Essentially, all models are wrong, but some are useful.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“As far as the propositions of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality. —Albert Einstein (1879–1955)”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“If you know almost nothing, almost anything will tell you something.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of "Intangibles" in Business

“It is better to be approximately right than to be precisely wrong. —Warren Buffett”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Absence of evidence is not evidence of absence”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Although this may seem a paradox, all exact science is based on the idea of approximation. If a man tells you he knows a thing exactly, then you can be safe in inferring that you are speaking to an inexact man. —Bertrand Russell”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Rule of Five There is a 93.75% chance that the median of a population is between the smallest and largest values in any random sample of five from that population.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“It is the mark of an educated mind to rest satisfied with the degree of precision which the nature of the subject admits and not to seek exactness where only an approximation is possible. —Aristotle (384 b.c.–322 b.c.)”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“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),”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“A problem well stated is a problem half solved.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Performance measure. Throughout this book, the term performance measure refers to an indicator used by management to measure, report, and improve performance. Performance measures are classed as key result indicators, result indicators, performance indicators, or key performance indicators. Critical success factors (CSFs). CSFs are the list of issues or aspects of organizational performance that determine ongoing health, vitality, and wellbeing. Normally there are between five and eight CSFs in any organization. Success factors. A list of 30 or so issues or aspects of organizational performance that management knows are important in order to perform well in any given sector/ industry. Some of these success factors are much more important; these are known as critical success factors. Balanced scorecard. A term first introduced by Kaplan and Norton describing how you need to measure performance in a more holistic way. You need to see an organization’s performance in a number of different perspectives. For the purposes of this book, there are six perspectives in a balanced scorecard (see Exhibit 1.7). Oracles and young guns. In an organization, oracles are those gray-haired individuals who have seen it all before. They are often considered to be slow, ponderous, and, quite frankly, a nuisance by the new management. Often they are retired early or made redundant only to be rehired as contractors at twice their previous salary when management realizes they have lost too much institutional knowledge. Their considered pace is often a reflection that they can see that an exercise is futile because it has failed twice before. The young guns are fearless and precocious leaders of the future who are not afraid to go where angels fear to tread. These staff members have not yet achieved management positions. The mixing of the oracles and young guns during a KPI project benefits both parties and the organization. The young guns learn much and the oracles rediscover their energy being around these live wires. Empowerment. For the purposes of this book, empowerment is an outcome of a process that matches competencies, skills, and motivations with the required level of autonomy and responsibility in the workplace. Senior management team (SMT). The team comprised of the CEO and all direct reports. Better practice. The efficient and effective way management and staff undertake business activities in all key processes: leadership, planning, customers, suppliers, community relations, production and supply of products and services, employee wellbeing, and so forth. Best practice. A commonly misused term, especially because what is best practice for one organization may not be best practice for another, albeit they are in the same sector. Best practice is where better practices, when effectively linked together, lead to sustainable world-class outcomes in quality, customer service, flexibility, timeliness, innovation, cost, and competitiveness. Best-practice organizations commonly use the latest time-saving technologies, always focus on the 80/20, are members of quality management and continuous improvement professional bodies, and utilize benchmarking. Exhibit 1.10 shows the contents of the toolkit used by best-practice organizations to achieve world-class performance. EXHIBIT 1.10 Best-Practice Toolkit Benchmarking. An ongoing, systematic process to search for international better practices, compare against them, and then introduce them, modified where necessary, into your organization. Benchmarking may be focused on products, services, business practices, and processes of recognized leading organizations.”
― Douglas W. Hubbard, Business Intelligence Sampler: Book Excerpts by Douglas Hubbard, David Parmenter, Wayne Eckerson, Dalton Cervo and Mark Allen, Ed Barrows and Andy Neely

“Myth: When you have a lot of uncertainty, you need a lot of data to tell you something useful. Fact: If you have a lot of uncertainty now, you don’t need much data to reduce uncertainty significantly. When you have a lot of certainty already, then you need a lot of data to reduce uncertainty significantly. In other words—if you know almost nothing, almost anything will tell you something.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Understanding how to measure uncertainty is key to measuring risk. Understanding risk in a quantitative sense is key to understanding how to compute the value of information. Understanding the value of information tells us what to measure and about how much effort we should put into measuring it.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Perhaps the biggest misconception some managers may run into is the belief that correlation proves causation. The fact that one variable is correlated to another does not necessarily mean that one variable causes the other. If church donations and liquor sales are correlated, it is not because of some collusion between clergy and the liquor industry. It is because both are affected by how well the economy is doing.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“A common simplifying approach to quantifying a risk is simply to multiply the likelihood of some loss by the amount of the loss. This is simple but can be misleading. This assumes the decision maker is “risk neutral.” That is, if I offered you a 10% chance to win $100,000, you would actually be willing to pay as much as $10,000 for it. And you would consider it equivalent to a 50% chance of winning $20,000 or an 80% chance of winning $12,500. But the fact is that most people are not really risk neutral.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“you should start thinking about measurements as a multistep chain of thought. Inferences can be made from highly indirect observations.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“The most important questions of life are indeed, for the most part, really only problems of probability. —Pierre Simon Laplace, Théorie Analytique des Probabilités, 1812”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Why do we care about measurements at all? There are just three reasons. The first reason—and the focus of this book—is that we should care about a measurement because it informs key decisions. Second, a measurement might also be taken because it has its own market value (e.g., results of a consumer survey) and could be sold to other parties for a profit. Third, perhaps a measurement is simply meant to entertain or satisfy a curiosity (e.g., academic research about the evolution of clay pottery). But the methods we discuss in this decision-focused approach to measurement should be useful on those occasions, too. If a measurement is not informing your decisions, it could still be informing the decisions of others who are willing to pay for the information.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Success is a function of persistence and doggedness and the willingness to work hard for twenty-two minutes to make sense of something that most people would give up on after thirty seconds.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Is a programmer who gets 99% of assignments done on time and 95% error free better than one who gets only 92% done on time but with a 99% error-free rate? Is total product quality higher if the defect rate is 15% lower but customer returns are 10% higher? Is “strategic alignment” higher if the profit went up by 10% but the “total quality index” went down by 5%?”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Instead of being overwhelmed by the apparent uncertainty in such a problem, start to ask what things about it you do know.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Two good indicators of revealed preferences are things the people tend to value a lot: time and money. If you look at how they spend their time and how they spend their money, you can infer quite a lot about their real preferences.”
― Douglas W. Hubbard

“Success is a function of persistence and doggedness and the willingness to work hard for twenty-two minutes to make sense of something that most people would give up on after thirty seconds. —Malcolm Gladwell, Outliers: The Story of Success”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“The fact is that the preference for ignorance over even marginal reductions in ignorance is never the moral high ground.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“It is not too bold a statement to say that a software development project is one of the riskiest investments a business makes. For example, the chance of a large software project being canceled increases with project duration. In the 1990s, those projects that exceeded two years of elapsed calendar time in development had a default rate that exceeded the worst rated junk bonds (something over 25%).”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Measurement: A quantitatively expressed reduction of uncertainty based on one or more observations.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“Bertrand Russell once said, “Mathematics, rightly viewed, possesses not only truth, but supreme beauty. . . .”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business

“If we incorrectly think that measurement means meeting some nearly unachievable standard of certainty, then few things will be measurable even in the physical sciences.”
― Douglas W. Hubbard, How to Measure Anything: Finding the Value of Intangibles in Business