Review: The Halo Effect…and the Eight Other Business Delusions That Deceive Managers by Phil Rosenzweig
By: James Chee
Tags: Business Management, Business Books, Book Review, Delusions, Critical Thinking

If people are constantly told that they are unique, why isn’t the same being done with businesses? Whilst we all appreciate the passion and ambition of entrepreneurs and business people being brought to different markets, the challenge that appears to underpin this entire situation is being able to withstand the incessant criticism from the observers. This doesn’t mean people who enter this space should be ignorant or negligent, but there is definitely no test that anyone can take that determines if they have what it takes to weather the storm. And for the most part, past success or experience (business or personal) is indicative of predicting these outcomes…so why are ‘business’ students (encompassing finance, economics, commerce, etc) being brainwashed with historic lessons and market commentary that are being disproved on a regular basis?

For those of us who have limited business experience (in the real world), The Halo Effect by Phil Rosenzweig, provides a great insight into the character traits that lead to ‘successful’ and ‘unsuccessful’ companies. The Halo Effect is not intended to serve as a ‘manual’ that should be followed, but instead holds the form of an essay where the thesis (in summary) states that both managers and academics are “deluded” by common fallacies which suggest success can be attained in a particular way. And for the most part, I do find the Author’s position very logical.

The book is structured in twelve parts/chapters which each deal with theoretical and practical aspects of business and research that readers are taught to accept throughout their education. However, what is particularly interesting about The Halo Effect is that it takes an international and intergenerational approach to explain how and why businesses can withstand the test of time and market conditions. But, as it is soon revealed, there is no ‘secret sauce’. The reason why some businesses have been more successful than others is because they didn’t subscribe to the intimidating tactics of business analysts, the media, or ‘competition’. This is ironic because people like to hear of the stories of high performance told in an ideal manner, and as a consequence, very few people are going to associate anything bad to do with the organisation…and this position is argued very convincingly throughout.

Unfortunately for most of you, the Author’s level critical research will be too sobering to accept. In his skeptical eyes, business managers are very hypocritical of their position and ‘talk’, and to back this up he relies on a plethora of case studies. Whether it be Cisco, Lego, General Electric, or ABB, the lesson to take away from history is that something will always go wrong, and that short term losses are necessary for long term success. Amongst these highly detailed business examinations, the Author intertwines some common myths/delusions that executive management world continue to hold onto such as correlation and causality (Delusion 2), single explanations (Delusion 3), and lasting success (Delusion 6).

For those that are looking to be challenged, I highly recommend reading The Halo Effect. The Author’s ability to string together his arguments and empirical evidence is a refreshing format that makes the reader stumble upon a few lines that makes him/her think — ‘Yeah, that makes sense’ or ‘How come no one ever talks about this?’. As a teacher himself, the Author is very much hopeful that the next generation of executive leaders and managers can see past the Delusions and decades-old teachings that have been ingrained into their business beliefs. This is definitely a book that has earned my acknowledgement as thought provoking, and against the backdrop of the Author’s 25 years of experience in the corporate and academic spaces lends serious credibility to his discussion.