Books The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers
Books and Publications Average Rating:

Rating: - Thought provoking. Full of wisdom. Valuable or not? Depends
Unless you are willing to fight against the crowd, dont open this book, coz you will read something very different from what you had learnt or read in business schools or popular management literature that Nassim Nicholas Taleb, the author of "Black Swan" and the guru in probabilities management, praised it as one of the most important management books of all time. How dare I challenge one of the brightest living mind on this planet? In short, a must read.

p.s. Below please find some of my passages may help you grasp what the author tried to preach.

To be excellent, you have to be consistent. When you're consistent, you're vulnerable to attack. Yes, it's a paradox. Now deal with it. - Tom Peters pg 156

The answer to the question What really works? is simple: Nothing really works, at least not all the time. That's not the nature of the business world. pg 158

Nothing is provably certain. One corollary of this view is probabilistic decision making. It isnt just an intellectual construct for me, but a habit and discipline deeply rooted in my psyche. Robert E. Rubin pg 160

Success is relative, never absolute. Competitors imitate and advantages erode. Even good decisions sometimes turn out badly - which doesnt mean they were mistakes or blunders. The practices that work at one company wont have quite the same effect at another. pg 170

But when the die is cast, the best managers act as if chance is irrelevant - persistence and tenacity are everything. pg 174

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Rating: - How to separate the "nuggets" from the "nonsense"

According to Phil Rosenzweig, "The central idea in this book is that our thinking about business is shaped by a number of delusions...the ones that distort our understanding of company performance, that make it difficult to know why one company succeeds and another fails. These errors of thinking pervade much that we read about business, whether in leading magazines or scholarly journals or management bestsellers. They cloud our ability to think clearly and critically about the nature of business." When our minds play tricks on is, the result is an illusion. "But if you think you can lace up a pair of Nikes, grab a basketball, and be like Mike [i.e. Michael Jordan], that's a delusion. You're kidding yourself." Rosenzweig identifies nine separate but somewhat related delusions, the first being the Halo Effect: "The tendency to look at a company's performance and make attributions about its culture, leadership, values, and more. In fact, many things we commonly claim drive company performance are simply attributions based on prior performance.

For example, he calls into question the validity research conducted for several of the most successful business books of recent years, notably In Search of Excellence co-authored by Tom Peters and Robert Waterman (1982) and Jim Collins' Good to Great (2001). "According to Peters and Waterman, America's best companies do not only a few of the eight exemplary practices, they do them all together. "In Search of Excellence was nothing less than an affirmation of basic principles of good management...How good was their research? Peters admitted in 2001 that the quantitative data analysis came after they had reached their findings...'I confess, we faked the data.'....Peters and Waterman went searching for excellence, but they found a handful of Halos."

"Collins claimed to explain why some companies made the leap [from good to great] while others didn't, but in fact he did nothing of the kind. Good to Great documented what was written and said about the companies that had made the leap versus those that had not - which is completely different." More specifically, Rosenzweig explains, "If you start by selecting companies based on outcome, and then gather data by conducting retrospective interviews and collecting articles from the business press, you're not likely to discover what led some companies to become Great. You'll mainly catch the glow from the Halo Effect."

Rosenzweig seems to have no quarrel whatsoever with any of the basic principles of good management that Peters and Waterman, Collins, and other prominent business book authors affirm. If I understand his ultimate objective (and I may not), it is to eliminate any delusions his reader may have about what leads to high performance in business. What then really works? "Nothing! At least not all the time." Rosenzweig concludes his book with observations that include these:

"Success rarely lasts as long as we like - for the most part, long-term success is a delusion based on selection after the fact."

"Company performance is relative, not absolute. A company can get better and fall further behind at the same time."

"Execution, too, is uncertain - what works in one company with one workforce may have different results elsewhere."

"Chance often plays a greater role than we think, or than successful managers usually think."

"The link between inputs and outcomes is tenuous. Bad outcomes don't always mean that managers made mistakes; and good outcomes don't always mean they acted brilliantly."

Rosenzweig's rigorous analysis of the nine delusions will help a reflective manager to challenge the assumptions and premises of conventional wisdom and thereby "separate the nuggets from the nonsense." That is precisely what Phil Rosenzweig did and then he wrote this book to share what he learned.

Those who share my high regard for this book are urged to check out Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting From Evidence-Based Management co-authored by Jeffrey Pfeffer and Robert Sutton as well as Pfeffer's more recently published What Were They Thinking?: Unconventional Wisdom About Management. Also Gary Hamel's The Future of Management with Bill Breen, Jim Champy's Outsmart!: How to Do What Your Competitors Can't, and Edward Lawler's Talent: Making People Your Competitive Advantage.

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Rating: - Excellent insight into how simplistic thinking can lead business leaders astray
The Halo Effect is one of the best business books I have read in a while. The purpose of the book, which it does very well, is to take a critical look at the prescriptions laid down in the popular business press to lead an organization to success, and then systematically debunk them under the light of scientific thinking. In the process, the book helps the reader develop some solid critical thinking skills to help them more effectively question the next snake oil salesperson who comes along claiming to cure every organization malaise while guaranteeing success.

Three things really stood out about this book for me, making it a five-star read:

First, the author neatly sidesteps the dry academic tone while still making excellent use of solid research to make his points. Two examples of how he does this: At the start of every chapter, there is usually a quote by a noteworthy person that is very germane to the point or the "delusion" being discussed. The loop is closed very nicely back to the original quote after th discussion of the delusion, when the quote and the delusion start to make a very compelling picture together - in this way, every delusion becomes very memorable. Second example - the author takes verbatim quotes or claims from famous books- 'Good to Great' being a prominent example, and then uses both post-research company performance data as well as other vivid tools to debunk those claims

Second, the book is very balanced in not bashing all business how-to books, and does a good job of highlighting examples of good research / advice. Examples - the author highlights research findings by academics, as well as prescriptions by practitioners, Bossidy's book being an example, of where the authors did not fall prey to the Halo Effect.

Last, and to me the most important, the systematic approach is so effective that half ay through the book, the reader has already gotten into the rhythm of questioning the two or three critical foundations of any research being discussed, and starts to figure it out by himself or herself. This is great because once you have put down the book, the lessons are likely to stay with you and don't require you to fundamentally getup tomorrow an start to do vastly different things or become so obtuse as to lose relevance altogether. You come away with the big takeaways

(a) Beware of anything that claims to guarantee success in business as external forces can play havoc on your company's progress, and no book or formula can predict that

(b) Success is about understanding the key drivers around both strategy and execution, and developing a thoughtful approach to increasing your company's odds of success

(c) No company can expect to be successful for ever, as there is strong evidence of mean reversion, and also a significant likelihood that the winning formula will quickly become obsolete

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Rating: - Thought-provoking, easy read.
This book questions the countless business books we've all probably read over the years and really makes you think. It is an easy and enjoyable read, that reminds everyone that using myths and compelling stories to drive strategy isn't the same as learning from facts and actual experience. Congratulations to Rosenzweig for his original take on business books. I applaud his work and willingness to challenge popular "wisdom."