Monthly Archives: June 2007

Must read: The Halo Effect

In the normal course of events, I would never have up Phil Rosenzweig’s The Halo Effect. I’m slightly allergic to anything that poses as a management book, particularly those with subtitles that promise five lessons, or ten rules, or six mantras. The Halo Effect‘s subtitle fits that bill: “…and the Eight Other Business Delusions That Deceive Managers”. I also have an aversion for blurbs that sound ridiculously overstated. Sure enough: “One of the most important management books of all time.”

Two things gave me pause. First, and most important, John Kay raved about the book in the Financial Times. Kay is congenitally anti-hype and deeply suspicious of management twaddle. I don’t always agree with him, but I find his judgments invariably interesting and worth thinking about. Second, that absurdly over-the-top blurb came from Nassim Nicholas Taleb, the author of the non pareil Fooled by Randomness (and the more recent, and less compelling, The Black Swan).

The Halo Effect is essential reading for anyone involved in management or (as in my case) writing or speaking about management. It eviscerates a host of landmark management books, from In Search of Excellence to Built to Last to Good to Great, by showing that all of these books merely tell stories, they don’t prove anything about the so-called science of management. Business magazines (mea culpa) are also put to the sword. Rosenzweig does deliver on his nine delusions, but the eponymous halo effect is the core.

You can see the halo effect in just about any edition of a business magazine. Here’s high-riding company X. Its CEO has a great sense of strategy, workers are happy, decisions are arrived at through an intelligent, well-organized process. Failing company Y, on the other hand, has a bumbling CEO, discontented workers and confused processes. Rosenzweig shows that the reason X’s CEO seems so skilled is because the company is succeeding, not the other way round. And vice versa for company Y. In the warm glow of achievement, everything looks rosy. You can interview thousands of workers and the picture will be consistent. Similarly when everything is going to hell in a handbasket, nothing seems right.

As often as not, a few years down the road, company Y will be in the ascendent, X on the decline. Now Y’s CEO showed the fortitude to weather tough times. X’s once-hailed CEO strayed or became over-confident. All nonsense, Rosenzweig shows. I really wish I had read this book when I was editing a business magazine. I would have done my job much, much better.