People are often surprised that I do not read popular business magazines, the latest management books, or eagerly attend speeches by top executives and successful entrepreneurs. I am certainly not knowledge averse; I read a great deal and love information. I am very interested in business and know a lot about it. Clients know that there is seldom an aspect of their enterprise I can not comment upon usefully. I just do not get my data from the usual sources.
I just came across an article in the California Management Review that explains one reason that reading most business journalism and executive memoirs is worse than useless. Phil Rosenzweig’s article, Misunderstanding the Nature of Company Performance: The Halo Effect and Other Business Delusions and his book show that bad science and poor logic permeate the business press. Rosenzweig’s demolition of the over-praised Good to Great books is especially satisfying.
…it’s easy for pundits and professors to claim that someone blundered. Decisions that turned out badly are castigated as bad decisions. However, these sorts of judgments are erroneous, made retrospectively in light of what we know to have happened subsequently. These errors are surprisingly widespread in the business world. They affect not only journalistic accounts about specific companies, but also undermine the data used for large-scale studies about company performance. They lead to a broad misunderstanding of the forces that drive company success and failure. As we will see below, some of the most popular business studies in recent years are undermined by fundamental problems of data integrity.
strategy is about choice, and choice involves risk. There are no easy formulas to apply, no tidy plug-and-play solutions that offer a blueprint for success.