Archive forSeptember, 2010
Book club summary #21 - The Halo Effect
Phil Rosenzweig’s The Halo Effect was the 21st book covered by the book club, and was deliberately chosen to complement (and contrast with) Good to Great, read some weeks prior.
Rosenzweig’s contribution to management literature has been to illuminate the irrigourous thinking that underlies much business/management popular wisdom and their associated memes. More precisely, his contribution has been to write a popular book on the subject (no doubt many perfectly-obscure authors pointed this out before him).
In a business context, the “Halo Effect” for which the book is named is the phenomenon of observing successful businesses / business people, and concluding the common traits are what make them successful. A more perspicatious researcher would test whether these common traits are present in unsuccessful companies, and whether these traits are quantifiable or merely qualitative. Business writers also tend to succumb to a steady-state fallacy — the assumption that success can be codified into permanence — when mean reversion happens to even the best companies, given sufficient timeframes.
As always, if you enjoy the book summary, please consider supporting the author by purchasing a copy. 
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Boards of Directors and the Roman Senate
In The Responsibility Virus (volume 20 of the book club reading list) Roger Martin discusses the tendency of Boards of Directors to become powerless yes-men, when faced with a domineering CEO. This is in contrast to their intended role as wise greybeards, advisors or even coaches who keep the Chief Executive on the sraight and narrow.
This seems vaguely analogous to what happened to the Roman Senate as their Empire declined; instead of keeping the Emperor in check, they had to curry favour for fear of their personal safety (and probably family fortune, too: I imagine more than one Senator got his possessions confiscated).
It would be interesting to know whether the advisory influence of large corporations’ Boards of Directors tends to be weaker at firms where the CEO is paid more. The Wall St. Journal recently carried an article reaffirming that power corrupts; in their context, as people gain power, they act more like jerks. Transposing this lesson historically, maybe if Marc Antony had won, Caligula would’ve ended up as a very polite cobbler…