The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers

The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers
by Phil Rosenzweig

The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers
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Book Summary Information

Author: Phil Rosenzweig
Edition: Hardcover
Audio: English (Published)
Format: Bargain Price
Published: 2007-02-06
ISBN: N/A
Number of pages: 256
Publisher: Free Press

Book Reviews of The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers

Book Review: You'll never look at business literature or any type of surveys the same way ever again.
Summary: 5 Stars

A scathing indictment on "everything business literature". Or nearly everything. At least every *popular* thing. Most of which I've read and admit to having loved when I read them and still believe to hold value for specific lessons.

Basically, Rosenzweig (with convincing references) points out that the most popular business "guru" books have been on the never-ending quest for some sort of "formula" for causing businesses to be "high performing"; none of which are actually right and all of which fail basic tests in logic and data integrity.

What's more is that besides the odd "coincidence" that many of the popular business books simultaneously contradict earlier work while coming to similar conclusions, they all attempt to codify some sort of "winning formula" while ignoring two very basic tenets of business: 1) business is dynamic in every facet, no one idea or variable (or even handful) can explain the differences between why some businesses are successful and others aren't, and, 2) every variable is inextricably linked to every other variable in often unknowable combinations.

The good news/bad news conclusion is that what really differentiates successful businesses from less successful ventures is both (a) far simpler than what these books attempt to impart, but also (b) far from easy to nail down. Nothing more than strategy and execution. Neither of which can carry the business alone; neither of which stays still; neither of which lend themselves to formulas.

Low-rating reviewers of this book seem to have stopped reading before the end (or read without actually processing -- like when you get some ways deeper into a book only to realized you don't remember a thing about it).

Let me repeat the punch-line here again: success/failure in business depends on strategy and execution. Neither of which can be reduced to some transcendental "winning formula". Both of these success factors are constantly shifting, but in ways that are dictated by current conditions to the business, internally and externally. Which means any formula will be temporary at best, and worthless under most other (and very specific) conditions.

A must read. You'll never look at business literature or surveys of any kind the same way ever again.

Summary of The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers

Much of our business thinking is shaped by delusions -- errors of logic and flawed judgments that distort our understanding of the real reasons for a company's performance. In a brilliant and unconventional book, Phil Rosenzweig unmasks the delusions that are commonly found in the corporate world. These delusions affect the business press and academic research, as well as many bestselling books that promise to reveal the secrets of success or the path to greatness. Such books claim to be based on rigorous thinking, but operate mainly at the level of storytelling. They provide comfort and inspiration, but deceive managers about the true nature of business success.

The most pervasive delusion is the Halo Effect. When a company's sales and profits are up, people often conclude that it has a brilliant strategy, a visionary leader, capable employees, and a superb corporate culture. When performance falters, they conclude that the strategy was wrong, the leader became arrogant, the people were complacent, and the culture was stagnant. In fact, little may have changed -- company performance creates a Halo that shapes the way we perceive strategy, leadership, people, culture, and more.

Drawing on examples from leading companies including Cisco Systems, IBM, Nokia, and ABB, Rosenzweig shows how the Halo Effect is widespread, undermining the usefulness of business bestsellers from In Search of Excellence to Built to Last and Good to Great.

Rosenzweig identifies nine popular business delusions. Among them:

  • The Delusion of Absolute Performance: Company performance is relative to competition, not absolute, which is why following a formula can never guarantee results. Success comes from doing things better than rivals, which means that managers have to take risks.
  • The Delusion of Rigorous Research: Many bestselling authors praise themselves for the vast amount of data they have gathered, but forget that if the data aren't valid, it doesn't matter how much was gathered or how sophisticated the research methods appear to be. They trick the reader by substituting sizzle for substance.
  • The Delusion of Single Explanations: Many studies show that a particular factor, such as corporate culture or social responsibility or customer focus, leads to improved performance. But since many of these factors are highly correlated, the effect of each one is usually less than suggested.

In what promises to be a landmark book, The Halo Effect replaces mistaken thinking with a sharper understanding of what drives business success and failure. The Halo Effect is a guide for the thinking manager, a way to detect errors in business research and to reach a clearer understanding of what drives business success and failure.

Skeptical, brilliant, iconoclastic, and mercifully free of business jargon, Rosenzweig's book is nevertheless dead serious, making his arguments about important issues in an unsparing and direct way that will appeal to a broad business audience. For managers who want to separate fact from fiction in the world of business, The Halo Effect is essential reading -- witty, often funny, and sharply argued, it's an antidote to so much of the conventional thinking that clutters business bookshelves.

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