Product Description

Why do some companies prosper while others fail? Despite great amounts of research, many of the studies that claim to pin down the secret of success are based in pseudoscience. The Halo Effect is the outcome of that pseudoscience, a myth that Philip Rosenzweig masterfully debunks in THE HALO EFFECT. The Halo Effect describes the tendency of experts to point to the high financial performance of a successful company and then spread its golden glow to all of the company's attributes - clear strategy, strong values, and brilliant leadership. But in fact, as Rosenzweig clearly illustrates, the experts are not just wrong, but deluded. In this irreverent and witty book, the author shows readers how to truly understand business performance. Readers will learn about the Delusion of Single Explanations, the Delusion of Absolute Performance, the Delusion of the Wrong End of the Stick, and other fantasies lovingly held by managers that ultimately destroy business success. Rosenzweig also suggests a more accurate way to think about leading a company, a robust and clearheaded approach that can save any business from ultimate failure.

Product Details

• Amazon Sales Rank: #137416 in Books
• Published on: 2007-04-16
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 256 pages

Review
"In "The Halo Effect," Phil Rosenzweig has done us all a great service by speaking the unspeakable. His iconoclastic analysis is a very welcome antidote to the kind of superficial, formulaic, and dumbed-down matter that seems to be the current stock in trade of many popular business books. It's the right book at the right time."-- John R. Kimberly, Henry Bower Professor of Entrepreneurial Studies, The Wharton School, University of Pennsylvania

From the Inside Flap
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.

Customer Reviews

Debunking business pseudo-science
I just finished reading Phil Rosenzweig's book "The Halo Effect...and the Eight Other Business Delusions That Deceive Managers". This book takes aim at the general run of business books and, in particular, their tendency to dress up vivid stories as scientific study. Phil does not seem to have anything against stories per se, nor does he disagree with some of the advice given in the books. What he takes issue with is the focus on a single, definitive "scientific" set of recommendations when there is no real scientific rigor behind them.

He lays out 9 specific delusions and shows how they distort the advice in management books:
- The Halo Effect - tending of analysis of a company to reflect only the overall results
- The Delusion of Correlation and Causality - the lack of proof of causality in many situations
- The Delusion of Single Explanations - one factor is unlikely to be the reason for success or failure
- The Delusion of Connecting the Winning Dots - problems with only considering "winners"
- The Delusion of Rigorous Research - mistaking large volumes of data for good data
- The Delusion of Lasting Success - most companies trend to the mean eventually
- The Delusion of Absolute Performance - companies can do well and still fail if a competitor does better
- The Delusion of the Wrong End of the Stick - successful companies may do various things but that does not mean that doing those things will make you successful
- The Delusion of Organizational Physics - business organizations are just not that predictable

Phil uses various stories to show how the perception of companies and leaders changes when the company's performance does. He also shows how the vivid but unscientific stories that arise from this are then used as evidence by later studies. He repeatedly makes the point that the business world is not a laboratory but a messy and complex world and that this limits our ability to do analysis. He shows that rather than a specific behavior leading to strong company performance, the behavior is at least as likely to be caused by strong company performance. He likens this to Cargo Cults who hope to get planes full of goods to return by recreating the look of a jungle airstrip, mistaking cause and effect.

The overall effect is to make you take most management books with a large pinch of salt - not ignoring them, but recognizing that they are just stories, not science.

A healthy dose of cynicism and realism in "cutting down tall poppies"
Do not worry about what the Nine Delusions are that the author uses to develop his thesis - they largely overlap and interlock and as you read the book will be seen as a powerful continuum. Why you should read this book is because bottom dollar like me you will have read one of the prior highly successful tomes that is one of the key targets for his thesis.

Whether it is "In search of excellence", "Built to Last" or "Good to great", by the end of this book you will I reckon have a more questioning attitude to such works (if not 100% cycnical) because this book challenges many preconceptions and makes you think and look afresh at how one will ever achieve success in business management.

The theme is not just "cutting tall poppies" down to size, but more basically that nothing is as simple or easy as many have claimed in writing such books. His chapter on why "strategy" and "execution" are actually so hard to do well, is alone worth the price of the book for me.

The core argument of the "delusions" being based on too much retropsective story telling is bought full circle by the three examples at the end of companies and business leaders who have in the authors opinion sought to face reality and do not underestimate the uncertainty that faces everyone.

A highly recommended book since it makes its points thoroughly and cogently and as such comes over as thoughtful and provoking of fresh views - as such it is a welcome change from too many of the best selling tirade type books that have come to represent both business but also political and history bestsellers recently. Definitely a book that is long overdue and one hopes will be succesful plus lead to more realism in such future writing.

Straight talk about corporate results
This serious book will change the way many people think about the pursuit of managerial excellence and, indirectly, about the criteria they use for managing (and coincidentally) investing. Phil Rosenzweig provocatively challenges prevailing concepts about the traits that drive corporate performance. He asks revealing questions about previous research assumptions that labeled companies "excellent." It seems that earlier accolades about "the best" companies - including the claims in some blockbuster books - were based on faulty research techniques that led authors to mistakenly attribute achievements to companies that did not accomplish them or could not sustain them. Rosenzweig distills his compelling ideas clearly, and buttresses his case with specific examples and original research, adding to the book's power. As a result, we would compare this very readable, focused book to fine brandy: palatable, enjoyable, memorable, a little heavy - and imbued with the potential to change your mind. Highly recommended.