Customer Reviews:
 Thought-provoking, easy read. March 5, 2008
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."
Excellent Debunker of Pop Psychology that Runs Rampant in Business February 17, 2008
2 out of 2 found this review helpful
As one whose career is in business operations with a financial slant, I am always skeptical or of contrarian opinion to books authored by "management gurus" like Tom Peters.
Therefore, it was refreshing to read THE HALO EFFECT. I could relate, via career experience, to the eight delusions discussed and how they cloud decision making. Business is too complex for the "connect the dot pop psychology mentality" espoused by Tom Peters and other management gurus.
Not even The Halo Effect can offer the solutions to complex problems many people seek when confronted by business' complexities, but it does arm one with questions to ask and avenues to investigate when the latest management theory gimic crosses one's desk.
It's not about angels. It's about reviewing your assumptions. February 17, 2008
3 out of 4 found this review helpful
A BRIEF BACKGROUND
CONSULTING FIRMS HAVE THEIR PLACE IN THE BUSINESS WORLD. These organizations abound with brainpower armed with advanced academic degrees. That's wonderful. Most of the time, these firms do a great job of providing insightful answers to problems that bedevil management. When management is too close to the trees to be able to objectively evaluate the challenges confronting them, consultants can be a big help.
WHAT'S THE CONNECTION? "Good to Great" and its companion follow-up best-seller, "Built to Last," were written by consultants. Mr. Jim Collins, a former McKinsey consultant, authored this singlehandedly and, for the second, co-authored it with Mr. Porras.
NOW THAT YOU KNOW...
IN "The Halo Effect," it's author, Professor Phil Rosenzweig held "Good to Great" and "Built to Last" as the primary subjects of his argument about the "halo effect."
THE GOOD PROFESSOR points out that both tomes used hindsight to unearth the success factors that made the companies in their respective lists such standouts. The problem with that approach, Rosenzweig points out, is that hindsight--as the saying goes--is 20/20.
TAKE TWO BOYS who grow up in the same village. One becomes the company president while the other never rises beyond the rank of a junior manager. From the vantage point of the villagers, could they have foreseen who was going to become what? Maybe but probably not. On the other hand, if that question was tackled by starting from the present and then having their careers retraced back to their youth, the factors that made them into what they are can be easily discovered.
THAT'S THE FALLACY inherent in basing analysis on hindsight. You'll always come up with the answers.
ARE THEY THE CORRECT ANSWERS? Not necessarily. Assume, for example, that the president rose through the financial ranks of the company. Does the fact that he graduated with an accounting degree constitute a valid success factor? Of course not. If that accounting degree was present in the biographies of 99 other company presidents, does that now make it a valid success factor? I still think not. And yet that's how the authors of both books presented their case. They used an expanded sample population and retraced the path of each company that made it to each book's list. They then isolated the factors that appeared in every company's path. Aha!, they said. These are the common factors that propelled these companies into our list. Now, they stated, we know what works. From that, the authors proceeded to make broad extrapolations about how the reader might use these factors to make their own companies successful.
I DID WHAT THE PROFESSOR DID. I checked the standing of most of the companies in the first book, "Good to Great." I came up with a review of mixed results. Using the same measure that the book used, some companies were doing well, most had become average, and a few were lagging.
TAKE CIRCUIT CITY, FOR INSTANCE. Back in March 2007, less than five and a half years after it became "great," Circuit City was in doo-doo. Here's a quote from The Motley Fool:
1. Nice going, Circuit City (NYSE: CC). You may have just axed some of your top store associates -- and deflated the aspirations of the rest.
2. The consumer-electronics superstore's move to fire some of its pricier employees makes sense on the surface. The company announced that it was letting go 3,400 unit-level associates who were earning salaries well above the market average. They will be replaced by more nominally salaried hires.
3. So make a note to call your slacker nephew and let him know that Circuit City is hiring. But am I the only one worried about the implications here? Nobody gets their pay bumped higher because they're incompetent. Whether they're seasoned associates who know the stores inside out, or employees whose hard work has helped them get aggressively promoted, they're paid well for a reason. How many high-def DVD players will you be able to sell with that green associate who doesn't know the difference between Blu-ray and HD-DVD?
4. If I can make the obvious joke, you're a real firedog, Circuit City. It's not just that you're letting go what may be some of your productive associates. What kind of message does this send to your remaining hires? Don't overachieve. Lay low. Do just enough to stay with the pack.
5. I'm already dreading my next trip to Circuit City, when I ask for help and everyone runs the other way, as if I just pulled the pin on a grenade.
6. To be fair, Circuit City isn't just whittling away on the front line. It's also eliminating about 130 corporate jobs by outsourcing its IT infrastructure needs to IBM (NYSE: IBM). Last month, it announced a regional-level realignment that also trimmed some fat.
7. I get it, C.C. Consumer electronics isn't always a cakewalk. Best Buy (NYSE: BBY) is eating your lunch, and now companies like Wal-Mart (NYSE: WMT) and even Home Depot (NYSE: HD) are making an aggressive push in this niche. You have to keep your cost structure in line.
8. But do you really know what you're doing? You just handed over 3,401 pink slips at the store level. Yes, I said 3,401. You're canning 3,400 store associates, but you're also handing morale its walking papers.
[...]
WHAT HAPPENED? After all, Publishers Weekly mentioned Circuit City in its editorial review of "Good to Great":
To find the keys to greatness, Collins's 21-person research team (at his management research firm) read and coded 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project. That Collins is able to distill the findings into a cogent, well-argued and instructive guide is a testament to his writing skills. After establishing a definition of a good-to-great transition that involves a 10-year fallow period followed by 15 years of increased profits, Collins's crew combed through every company that has made the Fortune 500 (approximately 1,400) and found 11 that met their criteria, including Walgreens, Kimberly Clark and Circuit City. At the heart of the findings about these companies' stellar successes is what Collins calls the Hedgehog Concept, a product or service that leads a company to outshine all worldwide competitors, that drives a company's economic engine and that a company is passionate about.
[...]
AN EVEN EASIER WAY to check the validity of these so-called success factors is to compare the list in both books. Surely a company that had transitioned from good to great would stay great enough to ensure that it was built to last. Right?
WRONG.
I HAVE TO AGREE WITH THE PROFESSOR. There is no success formula embodied in the advice proffered by the book. Those nuggets of advice are misleading. The advice is misleading because their source--the research results--are flawed. The research results are flawed because the research assumption is flawed. What is that assumption? It differs slightly for these two books but it could be roughly stated as such: "Isolate the common factors behind the success of these companies--the ones that made it to our list. Extrapolate the lessons from those few common factors and write a best-seller." Or two.
AND THAT'S EXACTLY WHAT HE/THEY DID!
SO, YOU MIGHT ASK, after tearing down those two modern-day bibles of business management, what's left? What does "The Halo Effect" think of success formulas? What about everybody's objective, that elusive thing called SUCCESS? Well, you have to read that for yourself but the professor did remind me of something that's overlooked too often and that's the fact that success is relative.
I'VE READ THE TWO BS BOOKS and I'm certain the reader will learn from and enjoy each one. However, after reading "The Halo Effect" (and agreeing with it), I know now that neither "Good to Great" nor "Built to Last" reveal any good, great, or everlasting secrets of business success.
 Reader, Be Warned January 26, 2008
2 out of 2 found this review helpful
As the CEO of a mid-sized marketing firm, I found this book quite useful. I have never liked the popular business books, but could never quite place my finger on the reasons why. This volume exposes the deep flaws in many of the best-sellers and aims to promote greater skepticism among business managers.
The book is primarily a polemic against popular business writers, both of articles in such publications as Fortune and, more particularly, those who pen business best-sellers claiming to reveal the Secret Formula to business success. Like the writers of personal self-help books, the authors of many business books succeed because the stories are engaging and simple: they seduce managers into believing that anything is possible if you just do the right things and think positively.
Rosenzweig reminds us that company performance is not steady and that is not solely driven by internal mechanisms. Rather, performance is relative to the competitive environment, both at any moment and over time. Today's winner (who presumably employed the Secret Formula of success) will almost certainly do less well in the future, as market forces erode the effectiveness of their strategies and tactics.
I found two relatively minor problems. The first is that the arguments become somewhat repetitive after a time. In part, this is necessary, since Rosenzweig presents a number of cases, in which business gurus begin by stating that they are avoiding the bias in previous works, but then immediately introduce the same bias (and often add some new twist of their own). Still, one or two examples could have been omitted without diminishing the value or depth of the commentary. Yet, this is a relatively short book even with some repetition. Indeed, its length stands in contrast to the tree-killers he writes about.
The second is that the author appears to want to give some "how-to" advice toward the end of the book. Fortunately, he stops before venturing too far down that road, but for a bit I was concerned that the doctor would fall victim to the very disease he had just diagnosed in others.
I think I'll keep a a few copies of this on my bookshelf, and hand it out to those whose bookshelves seem to be populated by the likes of Porter or Collins.
What does (not) lead to high performance? January 16, 2008
Phil Rosenzweig is a Professor at IMD in Lausanne, Switzerland. He earned his PhD from University of Pennsylvania's The Wharton School and has spent six years on the faculty of Harvard Business School. This book consists of 10 chapters, plus a preface and appendix, and was published in 2007.
In the preface, the author explains that this book should be seen as "a guide for the reflective manager, a way to separate the nuggets from the nonsense", whereby the aim is to "pull back the curtains and ask the questions we don't often raise, to point out some of the delusions that keep us from seeing clearly."
In the first chapter Rosenzweig uses several examples to point out clearly that most business books and articles are storytelling rather than based on rigorous scientific research as being claimed by their authors. The second chapter expands on the theme from the first chapter by describing the ups and downs in the history of technology firm Cisco. "The story of Cisco is perhaps less an example of intentional journalist hyperbole than it is of something more basis: the difficulty we have in understanding company performance, even as it unfolds before us." The third chapter expands again, this time by describing the ups and downs with industrial company ABB with a strong focus on the leadership role played by chief executive. "Our most compelling stories often place people at the center of events. When times are good, we lavish praise and create heroes. When things go bad, we lay blame and create villains."
In the fourth chapter discusses the various sorts of Halo Effect, which show up in many places. "The Halo Effect is a way for the mind to create and maintain a coherent and consistent picture, to reduce cognitive dissonance." Rosenzweig discusses halos in the business world, on people, on leaders, in surveys. But he also warns us: "The Halo Effect isn't the only delusion that distorts our thinking about business ... But in many ways the Halo Effect is the most basic delusion of them all."
The author is more positive in the fifth chapter. "If we're aware of the tendency to bestow Halos, we can take corrective measures ... we might expect that careful research conducted ... can avoid the Halo Effect. Maybe then we can find a satisfactory answer to the most fundamental of all business questions - What leads to high performance?" First, we need good data about company performance. And one has to avoid the Halo Effect. Through discussions on data gathering Rosenzweig introduces delusions two - the delusion of correlation and causality - and three - the delusion of single explanations.
In the sixth chapter Rosenzweig explains that although a blueprint for lasting success may be appealing, it is not supported by evidence. He takes the evidence from several landmark studies and business bestsellers, such as `In Search of Excellence' and `Built to Last'. "These studies ... all point to the basic nature of competition in a market economy ... there's a strong tendency for extreme performance in one time period to be followed by less extreme performance in the next." This chapter also introduces delusion four - the delusion of connecting the winning dots, five - the delusion of rigorous research, and six - the delusion of lasting success.
In the seventh chapter delusions seven - the delusion of absolute performance, eight - the delusion of the wrong end of the stick, and nine - the delusion of organizational physics are introduced, whereby Rosenzweig comes up with a very strong warning: "... since the best studies of business ... can never achieve the precision and replicability of physics, then all the claims of having isolated immutable laws of organizational performance are unfounded."
The author continues with his onslaught on the business bestsellers in chapter 8. He highlights that although some of the bestsellers provide good stories, they are often not based on good science. However, Rosenzweig does not completely want to reject stories and insist on a purely scientific approach to business and management. "... the test of a good story is whether it leads us toward valuable insights, if it inspires us toward helpful action, at least most of the time." Again, he provides a warning that the delusion of lasting success, together with the delusion of the wrong end of the stick, plus the delusion of organizational physics expose "the principal fiction at the heart of so many business books - that a company can choose to be great, that following a few key steps will predictably lead to greatness, that its success is entirely of its own making and not dependent on factors outside its control."
Rosenzweig sets out his thinking about company performance in Chapter 9, whereby he distinguishes two pillars of company performance. The first is strategic choice: "All companies face a handful of basic strategic choices. ...And choosing to be different implies risk." The author discusses various reasons for uncertain strategic choices, while he concludes that the task of leadership is to gather appropriate information, evaluate that information, and make choices that provide the best chances for success in a competitive industry setting. The second pillar is execution. Although there are fewer unknowns in comparison to strategic as execution takes place entirely within the company, he still discusses the uncertainties around execution. Main conclusion from the author is that "... there's simply no formula that can guarantee success" and one has to deal with that.
In the final chapter, the author states that the answer to "what really works?" is simple: "Nothing really works, at least not all the time." So what can one do about that? "A first step is to set aside the delusions that color so much of our thinking about business performance", understand that success is relative and that competitive advantage demands calculated risks. "It is not enough to do something well; you have to do it better than others - and that means you have to take chances." Rosenzweig finalizes this fine book with some remembers on the halos and delusions surrounding business. He also finalizes with 5 points for the wise manager to manage a company for high performance. But rest assured: "Will all of this guarantee success? Of course not."
Yes, I do like this somewhat unconventional business/management book. It breaks down some of the famous so-called facts within the business bestsellers. Rosenzweig does this through the introduction of 9 delusions. In the final two chapters, the author also discusses the two main pillars of business performance: strategic choice and execution. This book did certainly get me thinking, especially after originally reading the bestsellers from Peters & Waterman and Jim Collins. Recommended to all managers, but also management students.
|
