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The Halo Effect: How Managers Let Themselves Be Deceived [Paperback]

Phil Rosenzweig
4.9 out of 5 stars  See all reviews (22 customer reviews)

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Paperback, 6 Oct 2008 --  

Book Description

6 Oct 2008
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 highlights 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. Rosenzweig suggests a more accurate way to think about leading a company, a robust and clearheaded approach that can save any business from ultimate failure.

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Product details

  • Paperback: 256 pages
  • Publisher: Pocket Books (6 Oct 2008)
  • Language: English
  • ISBN-10: 1847393365
  • ISBN-13: 978-1847393364
  • Product Dimensions: 13.1 x 19.2 cm
  • Average Customer Review: 4.9 out of 5 stars  See all reviews (22 customer reviews)
  • Amazon Bestsellers Rank: 377,842 in Books (See Top 100 in Books)

More About the Author

Phil Rosenzweig is professor at IMD in Lausanne, Switzerland, one of the world's leading institutes of executive education. He is author of THE HALO EFFECT (2007) described by The Wall Street Journal as "a trenchant view of business and business advice," and lauded by Nassim Nicholas Taleb as "one of the most important management books of all time."

Phil's new book, LEFT BRAIN, RIGHT STUFF, extends our understanding of decision making. It examines decision making in complex real-world settings, where we can influence outcomes and often have to outperform rivals. Entertaining, practical, and often surprising, LEFT BRAIN, RIGHT STUFF takes a fresh look at topics like confidence and overconfidence, the winner's curse, the illusion of control, and the power of positive thinking.

Product Description


"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 --This text refers to the Hardcover edition.

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. --This text refers to the Hardcover edition.

Inside This Book (Learn More)
Browse Sample Pages
Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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Customer Reviews

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4.9 out of 5 stars
4.9 out of 5 stars
Most Helpful Customer Reviews
22 of 22 people found the following review helpful
5.0 out of 5 stars Debunking business pseudo-science 6 July 2007
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.
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12 of 12 people found the following review helpful
5.0 out of 5 stars Buy it for your own manager! 15 April 2009
This is a definitive book about critical thinking in the context of business success. A lot of people claim to understand why businesses succeed or fail, whether in journalism such as Fortune magazine, in bestselling books such as In Search of Excellence or in academia. With admirable clarity, Rosenzweig sets out the scientific failings of these, boiling down the errors to a list of nine "delusions" which infect even some of the most prestigious business research.

For instance, business writers neglect the role of external factors in performance (similar to what Taleb's Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets says about the financial sector). They mistake correlation for causality. They amass huge corpuses of data without addressing the known biases in that data. The Halo Effect of the title is an example of what is known in psychology as attribute substitution. Researchers want to measure a company's customer focus (or strategic leadership, commitment to its people, etc.) to correlate against performance (such as profitability). However, customer focus is incredibly hard to measure, so in practice the estimates are based on the company's profitability. It shouldn't be surprising that this gives a strong positive correlation, as they are in effect correlating a variable against itself.

The book considers a succession of cases where companies were described as well-led, customer focused and innovative when their share price increased, but as soon as their fortunes changed suddenly "became" complacent, reckless or outdated in the eyes of commentators, or vice versa. It looks in detail at some of the books that claim to offer the secrets of success.
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10 of 10 people found the following review helpful
5.0 out of 5 stars Straight talk about corporate results 2 Mar 2007
By Rolf Dobelli TOP 500 REVIEWER
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.
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7 of 7 people found the following review helpful
Most management literature is based on using cases or surveys to deduce the underlying behaviour that makes a company perform great or bad. The basic premise is, that we can isolate the generic factors that make a company great. This book is a much needed anti-thesis to this prevailing "wisdom".

The author first takes us through the two cases (yes, thats a bit ironic) of Cisco and ABB. Two companies who in their prime could do nothing wrong, only later to become ridiculed as badly managed companies. Convincingly, the author argues that we attribute positive and negative behaviour to a company depending on how it performs, rather than determine it's performance based on it's behaviour.

The book then takes us through a series of delusions, each hammering a nail through common 'halos'. The author reminds us, that cases are fine to learn from, as long as we take them as anecdotes and stories, and not as scientific truth. Some of the halos seems a bit overlapping, and toward the end, the book becomes a bit repetitive.

But still, this is a book that give you a clear perspective on what is wrong with most management literature (I mean 90% or more). This title ought to be required reading before reading as much as one piece of traditional business literature.

But better late, than never. A true eye-opener!
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Most Recent Customer Reviews
5.0 out of 5 stars A must read for anyone in business
A very interesting and useful read. The author dissects and exposes the myths that so abound in the so-called management research. Read more
Published 21 months ago by Ibrat
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Stories are encoded into the human DNA; it is how we make sense of the human condition and give meaning to our existence. Read more
Published on 7 Mar 2011 by A. O. P. Akemu
5.0 out of 5 stars Brilliant and convincing
One of the best business books that I have ever read. It is a great corrective to all of those books which purport to contain the secret of business success. Read more
Published on 1 Dec 2010 by The Emperor
5.0 out of 5 stars Brillliant and convincing
One of the best business books that I have ever read. It is a great corrective to all of those books which purport to contain the secret of business success. Read more
Published on 1 Dec 2010 by The Emperor
5.0 out of 5 stars Outstanding + Insightful
This book is brilliant - if you've got this far then buy it immediately. You will not be disappointed. Read more
Published on 29 April 2010 by Welvis
5.0 out of 5 stars Perfection itself!
What an immensely liberating book! I hadn't read such a good business book in ages!
I won't go into as much detail as other fellow reviewers have done so well here but I... Read more
Published on 1 Sep 2009 by Norberto Amaral
5.0 out of 5 stars A must read for anyone who wants a balanced or alternative approach
Came across this book while studying for MBA but was unable to read it at the time. I bought it and read it immediately afterwards as soon as I have the opportunity. Read more
Published on 7 Aug 2009 by FemiO
4.0 out of 5 stars An alternative perspective on Business Textbooks
I found this book interesting and the main tenet of the book compelling. Rosenzweig suggests that when organisations are doing well that the business press are keen to make the... Read more
Published on 21 Feb 2009 by S. Gale
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