Saturday, August 11, 2012

The Halo Effect: Delusion #9

Nassim Taleb calls it "One of the most important management books of all time." The Halo Effect tells us why much of what we believe about business is quite likely false, thanks to a number of delusions. Author Phil Rosenzweig doesn't mince words as he attacks a number of the most popular business books of all time for failing to account for simple and foreseeable errors in drawing their conclusions.

Delusion #9: Organizational Physics

The laws of physics are immutable, with the workings of the universe reduced to simple mathematical equations. But can such laws be found in business? Business books would have you believe they can, and that they have found all the answers.

It's an appealing image. Unfortunately, the business world doesn't lend itself to the predictability and replicability of physical experiments. We can't hold a number of variables constant while controlling others. Even when avoiding Halos and avoiding other delusions, Rosenzweig argues that we can never achieve the precision of physics. All claims of having isolated immutable laws of organizational performance are therefore unfounded.

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