Monday, November 29, 2010

The Halo Effect

Great article outlining why fads in business strategies don't work.

The most basic problem that I identify is an example of what is known as the Halo Effect. When a company is doing well—when its revenues and profits are up, and its share price is strong—it’s natural to infer that the company has a good strategy, an effective leader, excellent customer focus, and a vibrant corporate culture. When that same company falters, it’s easy to say that the strategy was misguided, the leader became ineffective, the culture became complacent, and the customer was neglected.
In fact, very often the company did not change much at all. Rather, people made different attributions based on its changing performance. Unfortunately, so much that we read about companies—in the business press, case studies, and even large sample research studies—is based on data that are undermined by the Halo Effect. These studies appear to have described the factors that lead to high performance, but are more correctly understood as identifying the ways that high performing companies tend to be described.

Most companies and organizations understand at some level they need to change. But they go for quick fixes instead, and do not possess the courage and  will to institute the kind of change that will make the difference long term.
I would rather build a house than work with organizations and companies that do not have the courage and will to do what it takes to institute real change.

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