This article was originally published a few years ago at the RockStar Success Library. Many of the tools it contains are still part of my regular approach to uncovering the real challenges that organizations and professionals face.
I’m not sure why, but I’ve definitely found myself reading a lot of “iconoclastic”books lately. I’m not even doing it on purpose – I read The Halo Effect because it was on the clearance shelf of my local Borders. I’m so glad that it was. I think it appealed to my focus on how to create clarity in how we view life and the things that happen in it. Since I work with people as a coach to help them develop tools to really dig into what they want out of their lives and businesses, it makes sense that I continually look for more tools – and The Halo Effect has some good ones!
Phil’s premise in the book is that most thinking, and by extension, writing on business and business success is inherently flawed. Business books often have the veneer of rigorous logic and research, but contain some important flaws that detract from their ability to accurately assess what causes success, and more importantly, their ability to prescribe actions that will result in future success. He’s not against learning from the past and trying to use the insights of experience, he’s just saying you have to be pretty rigorous to ensure you are actually learning what experience would like you to learn.
Here are the 9 delusions that Phil lists and his definitions:
- The Halo Effect – The tendency to look at a company’s overall 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.
- The Delusion of Correlation and Causality – Two things may be correlated, but we may not know which one causes which. Does employee satisfaction lead to high performance? The evidence suggests that it is the other way around – company success has a stronger impact on employee satisfaction.
- The Delusion of Single Explanations – Many studies show that a particular factor – strong company culture or customer focus or great leadership – leads to improved performance. But since many of these factors are highly correlated, the effect of each one is usually less than suggested.
- The Delusion of Connecting the Winning Dots – If we pick a number of companies and search for what they have in common, we’ll never isolate the reasons for their success, because we have no way of comparing them with less successful companies.
- The Delusion of Rigorous Research – If the quality of the data isn’t good, it doesn’t matter how much we have gathered or how sophisticated our research methods appear to be.
- The Delusion of Lasting Success – Almost all high-performing companies regress over time. The promise of a blueprint for lasting success is attractive but not realistic.
- The Delusion of Absolute Performance – Company performance is relative, not absolute. A company can improve and fall behind its rivals at the same time.
- The Delusion of the Wrong End of the Stick – It may be true that successful companies often pursued a highly focused strategy, but that doesn’t mean highly focused strategies often lead to success
- The Delusion of Organizational Physics – Company performance doesn’t obey immutable laws of nature and can’t be predicted with the accuracy of science – despite our desire for certainty and order.
Implications, Ideas, And Questions:
- The Halo Effect provides a strong framework for reading other business books and really for reading any type of non-fiction book. It gives me some guidance on what questions to “ask” of a book when I read it. I don’t
- Being in a sales environment for over 10 years, I’ve noticed the strong impulse to make everything “scientific”. I don’t think my sales managers would have called it that, but there is a drive to make everything in sales quantifiable and measurable, so that, for example, you can break down the exact number of calls that will create this or that amount of business. It never quite sat right with me, because there are too many facets in interacting with people that can’t be quantified. The Delusion of Organization Physics coalesced my thinking on this. Just because we want everything to be an easy equation, doesn’t mean it works.
- This has a lot of implications for the sales training that I do. If I’m working with a client to help them build the number of referrals they get for their business, I have to stay away from making absolute statements of results. I can’t really say, “if you do this you will get 15% more referrals”, because I can’t judge things by completely scientific standards. Also, the Delusion of Single Explanations shows that there are many things that affect the number of referrals a client will get in addition to the skills and processes that I’m teaching.
- The Halo Effect reinforces the idea that in business (and life) there is inherent uncertainty. As a business person, and as someone who coaches business people, I have to make my peace with that uncertainty and help others do the same. Even though we want to have complete control over everything in our lives, and we try to minimize our risks, there is always a random element to business (and life).
- The Halo Effect also reinforces the need to think critically constantly. There are no shortcuts and there are no recipes for guaranteed success. The appeal of business (and even personal self-help) books that claim they have the “4 Ways to Business Mastery” or the “7 Principals Of Winning” or the “32 to Methods for Happiness” is that they promise guaranteed success. We are often suckers for the easy, quick-fix answer. This gives me more confidence in myself and the work that I do in helping individuals think about their lives and their businesses. This critical thinking can be challenging when you have to approach it on your own.
Should you read this:
Yep. You’ll especially appreciate The Halo Effect if you read a lot of other business books as it gives you additional tools with which to interpret what you read. You can find more information at Phil Rosenzweig’s site and blog.