MT Business Classic: The Halo Effect

Stefan Stern reminds us why The Halo Effect - and the eight other business delusions that deceive managers, is a must-read for managers.

by Stefan Stern
Last Updated: 30 Aug 2013

The Halo Effect - and the eight other business delusions that deceive managers
Phil Rosenzweig
Free Press, 2007

Arguably the first (if not the only) business book any manager should read is this little classic by Phil Rosenzweig, from the IMD business school in Lausanne. As an antidote to the hype and nonsense that gets written about business success, it is perfect.

Why do some businesses succeed while others fail? The truth, says Rosenzweig, is that we can't always know. In a competitive market success is relative: the least crap company wins. That doesn't make you a genius. It might just make you lucky.

So how do the myths of corporate success build up? It's simple, Rosenzweig says: 'We like stories.' We look back at a successful business and claim it was strong leadership or a vigorous culture that made it happen. But business is complicated, and success has many causes. Which came first - employee engagement or bigger profits? It's hard to say, not that this stops people from claiming to know.

Rosenzweig is the Henry Fonda of the business world - juror number eight, constantly prodding us and asking: 'Are you sure? How do you know?' You may or may not find his conclusion comforting: 'The promise of a blueprint for lasting success is attractive but not realistic.' Back to work.

- Stefan Stern is visiting professor at Cass Business School.

Follow him on Twitter: @StefanStern

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