Tuesday, January 31, 2012

The Wake of the Intangible

Last year I completed the book How to Measure Anything: Finding the Value of Intangibles in Business by Douglas Hubbard and the concepts garnered from the book are still incubating. As the subtitle indicates, the challenge businesses face is in using the "intangibles" within measurement and decision making. 

Dictionary.com defines intangible as something that is "Unable to be touched or grasped; not having physical presence." Okay, how if it does not have any physical presence, how can we measure its attributes and then gain any value from them?

In short Hubbard proposes that even intangibles provide observable effects. In my view it is as if an unseen boat just passed you quietly on the water. Because of the fog you did not see the boat and due to its distance you could not hear it, but you could still feel the waves in its wake. The question then becomes, how can I use the waves to inform me about what just passed me through the water? While not the same as having the ability to visually track the passing boat and calculate the time and distance and its dimensions, the waves do nonetheless provide some data that one could use. The challenge is, how can we get value from the waves?

Within the book Hubbard details his Applied Information Economics (AIE) to assist in this challenge. See the diagram below:
 Screen shot 2010-08-05 at 2.06.53 PM.png

See the Everything Is Measurable table below for more.

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