The Halo Effect and the Eight Other Business Delusions That Deceive Managers

The Halo Effect and the Eight Other Business Delusions That Deceive Managers

by Phil Rosenzweig

Many business books and articles have been written about what Phil Rosenzweig calls “the mother of all business questions… What leads to high performance?” This book explains why much of this analysis is “riddled with errors.”

Using the examples of Cisco, ABB, and others, the author demonstrates the phenomenon. When times were good—strong revenue growth and a soaring stock price—these companies were praised for their exemplary strategy, culture, and CEO. When financial performance fell, the same strategy, culture, and CEO were ripped apart as severely flawed.

Why does this happen? Because we love stories. “As long as Cisco was growing and profitable and setting records for its share price, managers and journalists and professors inferred that it had a wonderful ability to listen to its customers, a cohesive culture, and a brilliant strategy. And when the bubble burst, observers were quick to make the opposite attribution. It all made sense. It told a coherent story.”

“Yet there’s a bit more to it. Our desire to tell stories, to provide a coherent direction to events, may also cause us to see trends that do not exist or infer causes incorrectly. We may ignore facts because they don’t fit into our story.”

How does this happen? Introducing the Halo Effect.  Continue reading

The Excellence Dividend

The Excellence Dividend: Meeting the Tech Tide with Work That Wows and Jobs That Last

by Tom Peters

Tom Peters makes a renewed call to excellence in the context of an increasingly data-driven and dehumanized world. His “putting people first” mantra is even more on point than it was when his seminal work In Search of Excellence was published in 1982.

“The primary defenses against AI-driven job destruction are widespread, relatively unconstrained creativity and novel organizational arrangements designed to produce products and services that will stand out in an automated world. I unequivocally believe that such creativity is antithetical to algorithmic optimization of human affairs.”

“So what is this Excellence Dividend? In short, businesses that are committed to excellence in every aspect of their internal and external dealings are likely to be survivors. They are better and more spirited places to work. Their employees are engaged and growing and preparing for tomorrow. Their customers are happier and inclined to spread tales of their excellence far and wide. Their communities welcome them as good neighbors. Their vendors welcome them as reliable partners. That in turn translates directly into bottom-line results and growth. And, AI and robotics notwithstanding, it translates into jobs that last and the likely creation of new jobs as well.” Continue reading

Tom Peters Reads A LOT

I have posted a review of The Excellence Dividend with some key points, but in this post I wanted to call attention to the vast number of books that Tom Peters refers to. The guy has read A LOT of books. I’ve compiled a list of 137 books mentioned throughout the text. I’ve read a few of them. The bold listings link to my review on The Key Point; the others link to Amazon.com.

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Only the Paranoid Survive

Only the Paranoid Survive: How to Exploit the Crisis Points that Challenge Every Company

by Andrew S. Grove

“A strategic inflection point is a time in the life of a business when its fundamentals are about to change. The change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”

Andy Grove, former chairman of Intel, describes six categories of 10X changes: competition, technology, customers, suppliers, complementors, and regulation. “When a Wal-Mart moves into a small town, the environment changes for every retailer in that town. A 10X factor has arrived. When the technology for sound in movies became popular, every silent actor and actress personally experienced the 10X factor of technological change. When container shipping revolutionized sea transportation, a 10X factor reordered the major ports around the world.” Continue reading

It’s Not Complicated: The Art and Science of Complexity in Business

It’s Not Complicated: The Art and Science of Complexity in Business

by Rick Nason

This book may fundamentally change the way you think. Or it may give you a framework to understand why you intuitively know that conventional management practices are sometimes incongruent with reality.

“This book is about systems thinking, and more specifically the important distinction between simple, complicated, and complex systems as applied to common business problems… The world of business is usually complex rather than complicated. That may seem like word play, but the difference between ‘complicated thinking’ and ‘complexity thinking’ is profound. This important distinction is well accepted in the scientific community but is virtually unknown in business.” Nason explains, “The ability to manage complexity is the key to competitive advantage.”

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101 Things I Learned in Business School

101 Things I Learned in Business School

by Michael W. Preis and Matthew Frederick

The study of business spans “such diverse disciplines as accounting, communications, economics, finance, leadership, management, marketing, operations… and strategy.” This book provides a thumbnail overview of variety of such topics. Here’s a sample of ten items covered in the book.

Cash Flow vs. Profit. “Profitable, fast growing companies can be chronically short of cash. A business typically makes a sale before payment is received from the buyer, while the costs related to that sale, such as materials, labor, commissions, and overhead are borne up front. Consequently, a business that is profitable may be short of cash until payment is received. An especially fast growing company with rapidly increasing sales might be chronically short of cash. Procuring and maintaining adequate capital is crucial for businesses… Undercapitalization is among the most common causes of business failure. It can bring down an otherwise healthy organization.”

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Quality Is Still Free

quality-is-still-free

Quality Is Still Free: Making Quality Certain in Uncertain Times

by Philip B. Crosby

Philip B. Crosby (1926-2001) created the Zero Defects performance standard. I only recently became aware of him through a reader comment on a Wall Street Journal article. Crosby joined ITT in 1965 as the conglomerate’s first director of quality. In 1979 he founded Philip Crosby Associates, a firm which trained 12,000 executives and managers through its Quality College.

“I built the Quality College around the Four Absolutes of Quality Management as they had evolved for me over the years:

  1. Quality means conformance to requirements, not goodness.
  2. Quality comes from prevention, not detection.
  3. Quality performance standard is Zero Defects, not Acceptable Quality Levels.
  4. Quality is measured by the Price of Nonconformance, not by indexes.”

“Quality is free” means it is cheaper to do things right the first time. Continue reading