misLeading Indicators: How to Reliably Measure Your Business

by Philip Green, George Gabor

This book reveals the hidden and potentially misleading nature of measurements, empowering readers to avoid making critical business decisions that are harmful, unreasonable, unwarranted, or plain wrong.

Decision makers in business and government are more reliant than ever on measurements, such as business performance indicators, bond ratings, Six-Sigma indicators, stock ratings, opinion polls, and market research. Yet many popular statistical and business books and courses relating to measurement are based on flawed principles, leading managers to the wrong conclusions―and ultimately, the wrong decisions. misLeading How to Reliably Measure Your Business provides something unique and trustworthy tools for judging measurements.

Each chapter illustrates the four key principles for reliable sufficient background information, accuracy and precision, reasonable inferences, and reality checks in different situations. After the three fundamental methods of measuring are defined, the authors expand to the application and interpretation of measurements in specific areas, including business performance, risk management, process, control, finance, and economics. This book supplies essential information for managers in business and government who depend on accurate information to run their organizations, as well as the consultants who advise them.

286 pages, Hardcover

First published February 22, 2012

Reviews

[Jenna Micelson · Rating 5 out of 5]

This book does a great job of explaining why most businesses don't measure things correctly, and don't draw the right conclusions from what they measure, and don't understand how measuring changes the thing being measured. One of the most insightful points it makes is how when you start keeping tabs on people to measure their productivity, their productivity tends to go up because they know they're being measured. (Or maybe it goes down, if they resent being measured!) Another is the distinction it makes between measurements and ratings - for example, what does it really mean to say that 88% of such and such an insurance company's customers are satisfied? Is that a fact, or a subjective outcome of the way the questions were asked, who was approached for answers, and who agreed to provide an answer? And it covers some of the misunderstandings people have about public opinion polls. For example, if voter intention polls are done by telephone calls to people listed in telephone directories, how does that skew the results by filtering out people with (A) call display who don't pick up calls from unknown callers, or (B) a cell phone that is not a listed number?

[Alvaro Berrios · Rating 3 out of 5]

This is a good, practical book for any manager. There are excellent example on how commonly accepted metrics and KPIs do not only not add the kind of value that is expected but are also detrimental in some cases. The reason I'm giving it three stars though as opposed to four is because I wasn't a fan of the author's style of writing. I found it to be very bland and boring. Overall though this isn't a bad book to keep on your shelf to refer to from time to time.