The Halo Effect


One of the more challenging books I’ve read in recent years is Phil Rosenzweig’s The Halo Effect.  I call it challenging not because it was difficult to read, but because it strongly confronted some assumptions about good business that I have rallied around for a long time.  Starting with the “mother of all business questions” (What leads to high performance?), Rosenzweig strongly criticizes the methods of several well-known business researchers, including Jim Collins (Good to Great, Built to Last).  “This book is…written to help managers think for themselves,”  he writes, “rather than listen to the parade of management experts and consultants and celebrity CEOs, each claiming to have the next new thing.”

Buttressed by his own research, Rosenzweig claims financial results drive our impression of every aspect of a company.  Thus, when a company is performing well, employees love working for the company and speak glowingly of superiors, executives are thought to have brilliant strategy, customer focus is considered top-notch, and so on.  When financial results drop, those same employees change their tune, and those same executives are criticized for their strategic mistakes.

Rosenzweig does not say that Collins and others are wrong; in fact, he concedes that they point us in the right direction.  Yet, he cautions against treating their advice as automatic cause-and-effect formulas.

As much as The Halo Effect challenged me to rethink some things, it also reinforced the importance of disciplined strategy execution.  Writing about Logitech CEO Guerrino de Luca:

De Luca emphasized the importance of execution.  Once strategic choices were made, the focus shifted to getting things done.  “We learned many times,” he said, “modestly defined strategies have given dramatic success through great execution.” …Did Logitech’s CEO think he was following a blueprint for enduring success?  No.  But he made thoughtful decisions about strategic choices – deciding what not to do as much as what to do – followed up with disciplined execution based on clear priorities and explicit measures.  (p. 171-2)

Clear priorities.  Explicit measures.  They may not guarantee success, but they will greatly increase its likelihood.


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