News / Book reviews / The Halo Effect

The Halo Effect

This is a book about understanding business performance and attempting to answer the age old question of why some businesses succeed and others fail. Its blurb states 'as Rosenzweig clearly illustrates, the experts are not just wrong, but deluded.' We like a book that challenges convention, so dived right in.

Despite the many 'learn the secrets and apply them yourself' books out there (and we have reviewed many of them ourselves), defining success in business is as elusive as ever, perhaps more so with the ever increasing pace and degree of change. The theme of 'The Halo Effect' is that business is shaped by a number of delusions. Too strong a word? The author doesn't think so. The point isn't about creating smarter (and smarter) managers; the world is full of them. It's about being wiser i.e: discerning, reflective, with good judgement, appropriately sceptical and less vulnerable to believing that quick fix remedies and simplistic models and formulas will work. Rosenzweig asserts that in his (considerable) experience, managers are all too quick to adopt others' theories rather than thinking for themselves. And this book sets out to challenge the status quo and help managers to learn to think; to answer the question 'Why is it so difficult to understand high performance?'

The term 'halo effect' was coined by a psychologist called Thorndike during the First World War. It's based on the tendency people have to make assumptions about specific traits on the basis of a general impression. It's a way for the mind to create and maintain a coherent and consistent picture, to reduce cognitive conflict. In Thorndike's study, when asked to rate against various criteria for success, people's assumptions were that the handsome soldier with good posture would therefore be a better soldier all round. In the same way, just because a company's financial results are looking good, it doesn't mean its success will be sustainable and or that it is well run. Rosenzweig's book cites many examples in its quest to truly understand business's performance and shatters many beliefs. A key message of the book though, is about belief. If the common belief is that something is a certain way, then often that perception becomes the reality. We enjoyed this sceptical and irreverent book - it makes a welcome change from all the theories.

10 July 2009