This paper summarizes progress made in a DfID-funded World Bank initiative to test and develop policy-relevant, politically acceptable, quantitative indicators of governance. There are two major components involved in the process of generating indicators that are practical means of reform. Political acceptability is key in developing neutral quantitative benchmarks of good governance that can be embraced by reformers. In addition to political acceptability, measuring governance must be comprehensive and institutionally specific so that reformers know which institutions to reform and how to do so. This paper explores some of the most promising second generation indicators of good governance and elaborates on how they are being used in World Bank operations.