Knowing if it’s closer to 25% or 75% makes a big difference. The key to determining value is how much new information will help the decision-maker improve his or her choice.įor example, your cost model for a business may have the cost of materials as anywhere from 25-75% of your budget. The value of information is determined by how much answering a question allows a decision-maker to improve its decision. However, in reality resources and information are scarce and asymmetric therefore we need to measure things that are likely to create the most value. In an ideal world you could measure all of these with high fidelity. Once you have clear goals you can build a model of the things that would help to measure.
#YOU DOING IT WRONG HOW TO#
“Knowing the goals of your measurements will help you to decide which measurements to make and how to make good measurements.”
How do we decide what measurements to make? Start with our goalsĪs is often the case, it helps to start from the beginning. Whether it is deciding between medical treatments or where to invest our resources, good measurements can help us determine what we know, with how much certaintainty, and what actions to take.
The good news is it doesn’t have to be this way. Drawing the wrong conclusions from their measurements.Avoiding measuring things that are hard to measure.Misunderstanding what makes for a good measurement.Not thinking about their goals and why they measure.Thinking about measurement as a certain ‘true fact’ about the world.While measurement is incredibly valuable, it can also seem very hard.