Phil Rosenzweig is professor of strategy and international business. He is Co-director of Transition to Business Leadership, and is also Co-Director of the Dual Executive MBA Program with CKGSB. His areas of expertise include strategy, firm performance, and complex organization design. He is also author of numerous case studies on firms including Microsoft, Daimler Benz, Matsushita, and Heineken. More recently, Phil Rosenzweig has focused his attention on critical thinking and managerial decision making. His 2007 book, The Halo Effect and the Eight Other Business Delusions that Deceive Managers, takes a critical look at the errors that pervade much business thinking. It was named Best Business Book of the Year by get Abstracts, and was favorably reviewed in Harvard Business Review, the Financial Times, The Wall Street Journal, USA Today, and dozens of other newspapers and magazines. His 2014 book, Left Brain, Right Stuff: How Leaders Make Winning Decisions, extends research about decision making into the world of strategy and management. Prior to joining IMD, Phil Rosenzweig was assistant professor at Harvard Business School from 1990 to 1996.
Phil’s book, The Halo Effect…and the Eight Other Business Delusions That Deceive Managers, published in 2007, is one of Ed’s and Ron’s all-time Best Business Books.
His most recent book is Left Brain Right Stuff, published in 2014.
You started your career at HP, how did you get into academia?
What is the halo effect and what was the brainstorm that inspired you to write the book with that title?
During World War I, an American psychologist, Edward Thorndike researched the ways of superior rated subordinates
If they were handsome, good posture, shoot straight, etc. These attributions were inferences he called the Halo Effect: The tendency to make inferences about specific traits on basis of a general impression.
In business, the Halo Effect is the tendency to look at a company’s overall performance and make attributions about its culture, leadership, value, and more.
In fact, many things we commonly claim drive company performance are simply attributions based on prior performance.
Does employee satisfaction lead to strong financial performance, or is it the other way around?
Shortly after I read your book, I was interviewed by Harvard Business Review and they quoted me: “Business ain’t science.” What are your thoughts on business benchmarking?
Often when leaders find out they are below the benchmark, they question the data. When they are above, they say, “We’re doing pretty good.”
Another guest from TSOE, Jules Goddard (Episode #27), said in his book, “Strategy is the rare and precious skill of staying one step ahead of the need to be efficient.” Thoughts on that?
Turning from the firm to the individual, do you have any thoughts on using personality profiles, especially in the hiring process?
Let’s discuss performance evaluations.
You talk about measuring customer satisfaction (such as NPS), or employee satisfaction. Financial information is looked at frequently (monthly or quarterly), should customer and employee satisfaction be looked at more than once a year?
You quote Richard Feynman: “Many fields have a tendency for pomposity.” Are most Business books overrated, or just wrong.
The best-selling business books seem to overstate their case.
You ask in the book, “Do business questions lend to scientific investigations?” And answer: “in many instances, yes.” What kind of things in business lend themselves to “scientific study?”
You write: “We have no satisfactory theory of effective leadership that is independent of performance.” I don’t know if you’ve read Jeffrey Pfeffer’s book, Leadership BS; do you think leadership is overrated?
Quick story: Shortly after your book came out, I gave a talk to a group who the next day was going to hear from the author of the best-selling book that you take to task in your book. I quoted George Anders of the Wall Street Journal who said that Good to Great offered a picture of business somewhere between Norman Rockwell and Mister Rogers. I presented a few of your critiques of the book, and recommended they read your book. I got slammed for this, so I can only imagine what you had to deal with. What was the response from the academic community to The Halo Effect?
You quote Michael Porter in the book who says that company performance is driven by two things: Strategy and execution, both fraught with uncertainty. We hear it all the time: We need to execute better; let’s all do a better job. It’s easier to blame lack of execution than a poor strategy. You write: “Whenever someone says ‘We have the right strategy, we just need to execute better,’ I make sure to take an extra-close look at the strategy.” What’s more important in your opinion, given that there’s no good way to execute a bad strategy?
You wrote a follow-up book to The Halo Effect, titled Left Brain Right Brain: How Leaders Make Winning Decisions. Would you provide us an overview of that one?