Management bibles are not gospel

Twenty five years after it was published, "In Search of Excellence" is one of the most widely read business books ever, but its value and the value of its successors may lie purely in its anecdotes.

That is the conclusion of Phil Rosenzweig, a professor at the IMD business school in Lausanne, Switzerland, in his book "The Halo Effect ... and Eight Other Business Delusions That Deceive Managers" (Free Press, $25).

"Some of the biggest business blockbusters of recent years contain not one or two, but several delusions. They operate mainly at the level of storytelling," he writes.

While other books ask what leads to high performance, Rosenzweig asks why high performance is so hard to understand. The "halo effect" -- a tendency to base specific conclusions on general impressions -- is the main culprit, he says.

In the late 1990s, Cisco Systems Inc.'s (Nasdaq:CSCO - news) strong financial performance cast a glow over the whole company, even its leadership and culture. Then, when Cisco tanked, its leaders and culture took a drubbing, although nobody claimed they had changed, he writes.

BAD NEWS

According to Rosenzweig, this halo effect undermines "In Search of Excellence" by Thomas Peters and Robert Waterman, and other business blockbusters that followed, like "Built to Last" by James Collins and Jerry Porras, and "Good to Great," also by Collins.

These books identify attributes of high-performing companies such as being "close to the customer," and make recommendations on how to emulate them, such as "your company must have a set of core values."

But do these qualities drive performance, or do observers merely infer them based on strong performance? Collins and company would seem to argue for the former, but the latter is at least as likely, Rosenzweig says.

That's bad news for the manager fired up by the idea that success will follow diligent application of a formula. A halo makes for a good story, according to Rosenzweig, but as a how-to it is less than helpful.

Peters, one of the authors of "In Search of Excellence," said that while his book does contain a list of recommendations, "It is not prescriptive in the sense that it says if you do this, you alone will have a great company."

Porras, who said he has read part of "The Halo Effect," notes that "Built to Last" explicitly warns readers against drawing conclusions about cause and effect from its examples.

Collins declined to comment on "The Halo Effect."

source : /news.yahoo.com