MIS40910 - Misunderstanding the Nature of Company Performance: The halo effect and other business delusions

Readings

Module - Skills for Business Enquiry

Class or Article - Article

Lesson or Name - “Misunderstanding the Nature of Company Performance: The Halo Effect and Other Business Delusions” (2007)

Additional Info - Page 6-20

Phil Rosenzweig’s article, “Misunderstanding the Nature of Company Performance: The Halo Effect and Other Business Delusions” (2007), presents that companies performance and the lens they are viewed under can be biased based on their perceived performance. Rozenweig supports his claim by analysing studies of successful companies attributes, presenting the flaws in the underpinning research and data that drove the findings. Rosenzweig purpose is to present the issue with flawed research and present the benefits of valid and unbiased data. Rosenzweig states “The studies reviewed above are not only ones to be based on questionable data but they are worthy of attention because they are amongst the most prominent and most widely quoted business books of recent years.”

My Learnings

Considering everything that Rosenzweig presented it is ironic his own findings are biased. He only used 3 examples to compare his argument, the selected retrospective books he uses, he now knows are not correct or flawed and he also uses one author twice. While he alludes to the flaws of the data used he never really goes in to this in too much detail which I feel is an oversight that could have supported his argument.

Some other interesting learnings I found, while simple make compelling arguments in their own right. "It is east to make positive attributes when things are going well" and the same thing can be said for when things are going poorly defines the halo effect. 

Oddly a paradox is discussed in this document that even though a company may improve they may actually fall further behind their competitors, case in point it dell while all things were going well and the signs looked great they were outstripped by HP and Lenovo who using dells excellence pursue excellence beyond Dells vision leaving them behind.

My Reflection

You need to be understandably careful of the data you used to substantiate what you are researching or presenting. Using data that in turn is actually written or scripted arguing the same point as your own is not in effect supportive, but rather biased.

My feeling is no data, research, argument or book is biased. There is will always be a natural sub conscious bias that we are unaware of and we are effected by our own emotions and the enviroment and data we consume from the environments around us.

While companies can be doing things right they need to differentiate themselves from their competitors, understand the attributes that differentiate them and also the attribute that differentiate their competitors from them. Pretty simple one might say but no something that we always carry out. Keeping an eye on this can a inform you of where a company is going and inform some key decisions you need to make.

Companies need to develop strategies to help inform their vision but strategy is about choice and where there is choice there is risk where there is risk we have potential for failure aswel as success. What might help such planning is scenario planning helping to look at potential outcomes or market movements/changes and have drawn up and game played a plan for the future. 

I like the potential of scenario planning and I will look in to this more.