Management Books Shelf

“The Delusion of Lasting Success promises that building an enduring company is not only achievable but a worthwhile objective. Yet companies that have outperformed the market for long periods of time are not just rare, they are statistical artifacts that are observable only in retrospect. Companies that achieved lasting success may be best understood as having strung together many short-term successes. Pursuing a dream of enduring greatness may divert attention from the pressing need to win immediate battles.

The Delusion of Absolute Performance diverts our attention from the fact that success and failure always take place in a competitive environment. It may be comforting to believe that our success is entirely up to us, but as the example of Kmart demonstrated, a company can improve in absolute terms and still fall further behind in relative terms. Success in business means doing things better than rivals, not just doing things well. Believing that performance is absolute can cause us to take our eye off rivals and to avoid decisions that, while risky, may be essential for survival given the particular context of our industry and its competitive dynamics.

The Delusion of the Wrong End of the Stick lets us confuse causes and effects, actions and outcomes. We may look at a handful of extraordinarily successful companies and imagine that doing what they did can lead to success — when it might in fact lead mainly to higher volatility and a lower overall chance of success. Unless we start with the full population of companies and examine what they all did — and how they all fared — we have an incomplete and indeed biased set of information.

The Delusion of Organizational Physics implies that the business world offers predictable results, that it conforms to precise laws. It fuels a belief that a given set of actions can work in all settings and ignores the need to adapt to different conditions: intensity of competition, rate of growth, size of competitors, market concentration, regulation, global dispersion of activities, and much more. Claiming that one approach can work everywhere, at all times, for all companies, has a simplistic appeal but doesn’t do justice to the complexities of business.

These points, taken together, expose the principal fiction at the heart of so many business books — that a company can choose to be great, that following a few key steps will predictably lead to greatness, that its success is entirely of its own making and not dependent on factors outside its control.”
― Phil Rosenzweig, The Halo Effect: How Managers let Themselves be Deceived