The Halo Effect - Phil Rosenzweig

[Liberty]

[amazonsearch]The Halo Effect:...and the Eight Other Business Delusions That Deceive Managers[/amazonsearch]

 

Just started, but I can already tell it has potential. Mostly debunking delusions and cognitive biases that affect business people. A lot of it I'm sure I know about, but as I always say, it's a good idea to review the obvious once in a while. No need to get too esoteric...

[enoch01]

 

Just started, but I can already tell it has potential. Mostly debunking delusions and cognitive biases that affect business people. A lot of it I'm sure I know about, but as I always say, it's a good idea to review the obvious once in a while. No need to get too esoteric...

 

I highly recommend it.  Very good to read if you are preparing for any kind of strategic planning within your organization.

[vinod1]

A fantastic book that shows why many of the popular business books "Good to Great", "Built to Last" and "In Search of Excellence" are garbage. More importantly shows investors risks in how they can become biased in assessing companies and management.

 

Key point that I skimmed off the web for my own reference on this book:

The Halo Effect of the book's title refers to the cognitive bias in which the perception of one quality is contaminated by a more readily available quality (for example good-looking people being rated as more intelligent). It is the tendency to make specific inferences on the basis of general impression. In the context of business, observers think they are making judgements of a company's customer-focus, quality of leadership or other virtues, but their judgement is contaminated by indicators of company performance such as share price or profitability. Correlations of, for example, customer-focus with business success then become meaningless, because success was the basis for the measure of customer focus.

 

How does the halo effect manifest itself in the business world? Imagine a company that is doing well, with rising sales, high profits, and a sharply increasing stock price. The tendency is to infer that the company has a sound strategy, a visionary leader, motivated employees, an excellent customer orientation, a vibrant culture, and so on. But when that same company suffers a decline—if sales fall and profits shrink—many people are quick to conclude that the company’s strategy went wrong, its people became complacent, it neglected its customers, its culture became stodgy, and more. In fact, these things may not have changed much, if at all. Rather, company performance, good or bad, creates an overall impression—a halo—that shapes how we perceive its strategy, leaders, employees, culture, and other elements.

 

The fact is that many everyday concepts in business—including leadership, corporate culture, core competencies, and customer orientation—are ambiguous and difficult to define. We often infer perceptions of them from something else, which appears to be more concrete and tangible: namely, financial performance. As a result, many of the things that we commonly believe are contributions to company performance are in fact attributions. In other words, outcomes can be mistaken for inputs.

 

 

Vinod

[Liberty]

Almost done reading this one and it's great. Highly recommended. We need more books like this that call what is too often un-challenged B.S. in the business world...

[Liberty]

http://brooklyninvestor.blogspot.ca/2014/10/the-halo-effect.html

[Jurgis]

Really great book. I haven't finished it yet, but it's already one of the best.

 

...

 

And pretty much every single CoBF thread (maybe not counting some arbitrage threads) is heavily contaminated by Halo Effect (both positive and negative and sometimes both at the same time!).

I am tempted to write "Halo Effect" every time I post on company thread... but perhaps I'll resist.  8)  ;D

[Valuebo]

Thanks Jurgis. I've had this on my book shelf for a few years. Your recommendation will prevent me from buying 5 new books before I read this one! ;)

[Jurgis]

Second part of the book (including the new extra chapters) is weaker. It seems that the author had a single "Halo Effect" idea and then just fillered to get to the book length. Some of the company analysis seems to suffer from the same Halo Effect that was the topic of the book.  ::)

[flesh]

Really liked this one. Half way through left brain right stuff as well, also very good.

 

It's like I've come full circle. I was in business for a decade, knew a bunch of stuff explicitly or implicitly because I hadn't intellectualized it although I had done it. Read a bunch of books that seemed relevant but never resonated, read his stuff and now I know why. Lol, back to where I was except now I know where I was and where the helper's led me wrong and that I can be led wrong, but shall try harder not to be in the future.

 

Bottom line is, people don't know shit and these books along with Danny's etc. have given me the evidence to know I was right all along.

 

 

[Valuebo]

Second part of the book (including the new extra chapters) is weaker. It seems that the author had a single "Halo Effect" idea and then just fillered to get to the book length. Some of the company analysis seems to suffer from the same Halo Effect that was the topic of the book.  ::)

 

Almost finished it and am agreeing with your post. I've read the same thing worded slightly differently too many times.

[John Hjorth]

I just ordered this book today, based on the mention of it today by Vinod [ @vinod1 ] in the discussion of the recent success and run-up of Fairfax Financial Holdings. [ Link to Vinods [ @vinod1s ] post.]

 

Reading the posts in this topic made me order the book.

 

Thank you and H/T to Vinod for giving the direction to me here today.

 

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The spring is here in Denmark now, we have left the dark period and the time for doing other stuff than reading and being indoor generally is gradually coming to an end - But, - as always : Never go down on unread books!