Forcing myself to find SOMETHING to read in the generic selection my local library offers, I picked up the most insightful looking book I could find: The Halo Effect
It’s funny, how simple an idea it exposes. Simple and wonderful. The other “Business Delusions” really just support the Halo Effect. The Halo effect is simple: Generalizing a company based on their profits. It also impedes our learning, which is the real purpose behind the book. Once you understand the Halo Effect ( you will in a moment ), you begin to see that it is proliferated in most business writing and research.
I will give you an example of the Halo effect. Which internet company is best known for:
- great technological advances
- being the best place to work
- new strategies/processes that are different but great
- a true focus on what customers what
Google! Your right. In fact, you would have to live in a box not to have ready an articles praising how Larry and Sergey tie their shoes in the morning. Here is the problem: Research and journalism at large will not call ANYTHING Google Inc. is doing wrong. They are making a generalizing, based on how much money they net. So now, we are left with a distorted model on how to run our companies.
The halo effect infects most every level of journalism and research. So if we take an employee survey, and ask Googlians if they are treated well, or if their company has an unusually strong focus on customers, the results are predictably positive. Phil systematically shows how companies that are making a lot money have these generalizations made about every part of the company, and the same thing happens in the negative when the company does poorly. One Forbes reporter was questioned why he was negative about the very same company he once praised, while really nothing had changed besides their cash flow. The tactics of that specific company didn’t change, and when Google stops preforming as well ( thousands of years of market history say it will have a downturn ) , the very same tactics/focus/work environment will be castigated as “too loose”, “lazy”, “over the top” etc..
Nowhere does a halo currently shine as brightly as upon Google. Reporters marvel at Google’s wonderful “anything-goes spirit” where the absence of supervision is said to stimulate creativity and where no one needs to worry about whether projects will be profitable. Co-founder Larry Page is said to praise managers who made million-dollar errors, thanking them for their willingness to take risks. In fact, what’s said about Google is eerily similar to what was said about another New Economy wonder, Cisco Systems, a decade ago. That company, too, was admired for its wild ways—until a sharp downturn led critics to castigate it for those same qualities. From Halo to Hell
I have know acknowledged the existence of Halos, which will aid me from this point on evaluate research with much more discernment. In fact, just the other day I heard a author interviewed on PBS state that Starbucks is loosing profit because they have lost their once great focus on the customer. Really? My usual iced green tea tastes great, and is delivered by smiling, competent employees. I would like to hear the proof that they have lost their “customer focus”.
