The Halo Effect
What you see is not always what you think you see, my dears. This is particularly the case when we seek to identify cause for a particular effect.
In his book The Halo Effect, Phil Rosenweig lays out 9 specific delusions and shows how they distort the advice you find in management books. They are:
- 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 tend 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
To which you could add a tenth: The delusion that a charismatic leader at the top is necessarily the cause of the organization’s current success. they might be...or they just might be riding a wave. My own rule of thumb for identifying successful companies is that organizations that behave well and survive in downturns - that lead for the bad times during the good and vice versa - are the best led and most long-term successful companies. My old Zen and the art of Motorcycle Maintenance buddies Harley-Davidson are a perfect example.