How to Measure Anything: Finding the Value of "Intangibles" in Business, Second Edition

Chapter 1. Intangibles and the Challenge

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, British physicist and member of the House of Lords, 1824–1907

Anything can be measured. If a thing can be observed in any way at all, it lends itself to some type of measurement method. No matter how "fuzzy" the measurement is, it's still a measurement if it tells you more than you knew before. And those very things most likely to be seen as immeasurable are, virtually always, solved by relatively simple measurement methods.

As the title of this book indicates, we will discuss how to find the value of those things often called "intangibles" in business. There are two common understandings of the word "intangible." It is routinely applied to things that are literally not tangible (i.e., not touchable, solid objects) yet are widely considered to be measurable. Things like time, budget, patent ownership, and so on are good examples of things that you cannot touch but yet are measured. In fact, there is a well-established industry around measuring so-called intangibles such as copyright and trademark valuation. But the word "intangible" has also come to mean utterly immeasurable in any way at all, directly or indirectly. It ...