I read that quote in The Fifth Discipline, a book I’m reading now.
How true. I track my activities pretty intensely and always try to focus on how I will measure the outcome of some task. Sometimes it’s as easy as, "What will success look like for this?"
The problem is not everything is easily measured. I recall a conversation I had on a train in Florence with a school teacher and we got into a long conversation about education. My big takeaway was, "How do you measure the effectiveness of schools?" There are a million criteria you could use.
In general, I think we have a tendency to discount intangible benefits in a traditional cost/benefit analysis. For example, when a start-up tries to recruit a new CEO from a large corporation, it can be hard to articulate the intangible benefits of running a start-up: few people to manage, total flexibility on scheduling, no bureaucracy etc. Unfortunately, these intangibles are often dismissed in compensation discussions because they’re not as easy to measure as "$10k more in comp," even though I would argue these intangibles contribute more to quality of life than a few thousand extra dollars.
On a related note, Tom Peters just posted a nine minute audioblog on metrics which I found quite engaging and he notes that "metrics are essential but useless". It’s what you do that matters, not how thoroughly you track what you do.