How to Reliably Measure Your Business
During the 2007–2009 Credit Crunch, as banks crashed or lost billions of dollars, their primary measure of risk was found to be fatally flawed. This fundamental error set off a monumental landslide of negative consequences around the globe. Misleading indicators are not limited to the financial world; they permeate any field that requires measurement, estimation, and prediction.
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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 Indicators: How to Reliably Measure Your Business provides something unique and invaluable: trustworthy tools for judging measurements.
Each chapter illustrates the four key principles for reliable measurements: 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.
- Examines why common performance indicators and measurements such as stock and bond ratings, Six Sigma indicators and charts, risk metrics, corporate performance dashboards, inflation, climate change indicators, customer satisfaction surveys, opinion polls, and safety statistics can be so misleading
- Explains why indicators that appear to be performance "drivers" can actually drive you out of business
- Provides a "tool box" with each chapter for finding and fixing misleading indicators in your business
- Numerous figures, including graphs, illustrations, and tables
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"Lively, well-written, and full of fascinating examples. All managers, in all functions and areas of responsibility, will benefit from these wise insights. Green and Gabor have done a superb job of bringing common measurement errors into their focus. I found misLeading Indicators a joy to read!"
"After reading the first chapter, I already had a full page of notes and ideas to take with me to the office tomorrow! In the extremely busy life of executives, I fear we simply take the accuracy, relevance, and meaningfulness of reports and measurements for granted. misLeading Indicators effectively exposes the shortcomings and implications of not questioning them."
"Don't think for a minute that this book will only enlighten those in business. After reading misLeading Indicators, no one will look at any measurement or statistic without a healthy dose of skepticism."
"Measurement is central not only to management but to much of life. However, only with an understanding of an idea’s limitations can we hope to realize its full power. Green and Gabor, in a thoughtful synthesis of validated theory and tested practical applications, provide a much-needed perspective on what we can and cannot measure. The result is valuable insight into how we can achieve our most cherished goals."
"You think you know performance measurement? Think again! I've been in the investment business for 50 years—this book will make you reexamine many investment decisions you have made."
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