The Halo Effect

  The Halo Effect: … and the Eight Other Business Delusions That Deceive Managers, Rosenzweig, Phil

Phil Rosenzweig isn’t terribly impressed with the average business book. The bigger the best seller, the more likely Rosenzweig is to be concerned. This isn’t simply sour grapes on the part of another business school professor wishing he could command the speaking fees of a Tom Peters or James Collins.

Rosenzweig’s fundamental concern is with the disconnect between what constitutes solid and defensible research and compelling, but ultimately misleading, storytelling masquerading as research. The bulk of Rosenzweig’s efforts focus on dismantling the arguments claiming to explain the successes (and failures) of high profile organizations. He makes important points about just how hard it is to make connections between actions and outcomes in competitive organizations. The “halo effect” is the problem of starting with a collection of winners and trying to ascertain what factors explain victory after the fact. While you can always construct coherent stories looking backwards, you can’t distinguish between good stories and true stories. Even if you could, it isn’t clear what action advice you can actually extract.

Somewhere about three chapters into this effort. Rosenzweig has killed the horse. Rather than turning to the question of what to do about the problem, he opts to mutilate the carcass for several more chapters. If you stick through to the end, his advice is reasonable but comes off as too little, too late. The stories he would have us attend to are of managers like Robert Rubin and Andy Grove who appreciate the inherent contingency of most business decisions. These are managers who think in terms of risks and probabilities, who attempt to shift the odds in their favor when they can, but understand that they are always compelled to act on incomplete information.

If you are interested in how organizations perform and in how their managers learn to make more effective decisions, this is certainly a book you should read. There is a website for the book and Rosenzweig also has a blog there, although it doesn’t appear to be updated frequently.

Beloit releases its annual mindset list for entering college students

Since I am hitting the road later today to take my eldest off to Drake University to begin his college experience, this year’s list is particularly relevant.

How This Year’s Frosh Will Make You Feel Older

Beloit releases annual “Mindset List” to help professors understand the worlds (real and virtual) of their newest students.

More on knowledge management as learning support

Greg Lloyd at Traction Software also picks up on the same JP Rangaswami post that I did yesterday. He offers several additional examples of the value of making knowledge work visible as a simple tool for supporting on the job learning. Here’s one of his many useful insights. Go read the rest.

Learn by watching – Then do

Learn by watching – Then do
Blog446:  August 14, 2007 7:22:00 PM EST, Posted by Greg Lloyd

Each project’s serial file was nothing fancy. Usually it was a few file drawers with incoming and outgoing correspondence, briefing slides, q&a memos, contract actions and meeting notes, all top bound in chronological order – full contracts, formal specs and other deliverables were filed separately. In pre-email days, the project serial file was a pretty accurate snapshot of our interactions with the outside world interleaved with internal notes and memos. We all kept our own date stamped lab notebooks for private jottings.
A day or so of close reading and the chance to ask a few pointed questions to the original project engineer (“You said WHAT to Captain K??”) usually got us up to speed on the pulse of each project – not just the formal status and deliverables. We learned to use the project file to refresh our memory on details before and important meeting or decision – or just to reflect and review the bidding. We learned to use each other’s project files to keep track of dependencies and learn how to handle problems. …
I know that an electronic form of serial file can replace the old paper trail, since that’s what I use every day. The TeamPage blog + wiki tool lets everyone look over my shoulder – and vice versa – as we tear off in different directions and do our work as individuals or teams.
I rarely need to read any one project in real time, but I know that I can come up to speed quickly, search across all projects, and dive in if I need to. If someone asks for help or sees an opportunity, they can post it if it’s not urgent; add a tag to anything that needs quick action; or IM a permalink if they need me to look at something now. What I can do, all of Traction’s employees can do – only the “Board of Directors” project is private. Board pages or posts – including monthly financials – are cross-tagged to make them visible to all hands when the dust settles.
There are days when I wonder whether one of the fundamental impediments to the take up of blogging and wikis within organizations is, in fact, their utter simplicity.

Knowledge management = creating environments for learning

One of the recent additions to my feed subscriptions is Confused of Calcutta by JP Rangaswami. Recently, he’s been thinking about Facebook and its potential role in Enterprise settings. Today’s installment has an interesting riff on the nature of knowledge management. It dovetails nicely with some of the things I’ve had to say about visibility and knowledge work.

Facebook and the Enterprise: Part 5: Knowledge Management

Knowledge management is not really about the content, it is about creating an environment where learning takes place. Maybe we spend too much time trying to create an environment where teaching takes place, rather than focus on the learning.

Since people want to learn by watching others, what we need to do is to improve the toolsets and the environment that allows people to watch others. It could be as simple as: What does my boss do? Whom does she talk to? What are her surfing habits like? Whom does she treat as high priority in terms of communications received? What applications does she use? Which ones does she not use? When she has a particular Ghost to deal with, which particular Ghostbuster does she call?

It’s not about creativity, it’s about curiosity

The critical leverage point for an organization seeking more effective innovation is establishing new attitudes toward curiosity. Industrial organizations were optimized to extract value from tiny doses of curiosity and cannot tolerate larger doses. Today’s organizations require more frequent and intensive invention and innovation, which depends in turn on learning to foster and effectively channel curiosity in greater doses.

The industrial economy was driven off of very small doses of curiosity, carefully controlled and administered. New ideas were the province of either the senior-most leaders in an organization or their specifically designated deputies (industrial engineers, product designers, strategy consultants). Outside of this small cadre, the rest of the organization was charged with pulling on the oars and carrying out the execution of the designs created by this cadre. Industrial organizations are optimized to extract the maximum output from the least curiosity. Moreover, our schools and other social systems are built around throttling curiosity and channeling it into acceptable settings; isolating the most curious from the rest of the system. For those immersed in the industrial mindset, unfettered curiosity is a serious threat that operates at an emotional rather than rational level.

In the knowledge economy invention and innovation take a more central role. Success based on the ability to out-execute the competition is increasingly short-lived. The changing economics of information and communications technologies continue to drive down the costs of execution. They shorten the distance, in both time and money, between idea and execution. They also shorten the distance between innovation and duplication. The need for more systematic and effective invention and innovation is generally acknowledged. Curiosity is the necessary prerequisite and fuel for this invention and innovation.

Alan Kay tells a story of his days at Xerox PARC. The suits from headquarters in Stamford Connecticut had come to Palo Alto to inspect their investment in open-ended research. Alan carefully explained the nature and risks of research; that PARC was conducting experiments, that most experiments failed, but that even failures moved the research forward. The suits nodded politely, allowed as how they understood what Alan had said, and insisted that these experiments be designed to succeed.

Given the degree to which curiosity in most organizations is discouraged and often suppressed, the first task is to carefully reawaken it. Carefully, because too much curiosity will trigger corporate immune responses. Fortunately, despite all the best efforts of our school systems and organizational watch guards, the human animal remains fundamentally curious. We need to give permission for this curiosity to be engaged and protect its first cautious glimmerings.

Here is one place where RSS and blogging have an important, low threat level place inside the organization. Seth Godin captured this succinctly as quoted in Naked Conversations last year:

Not only are bloggers suckers for the remarkable, so are the people who read blogs,” said Godin. “This is the most curious segment of the population, the people who are seeking out the new and the useful. This is the audience that doesn’t need to be interrupted because they are already listening. They are alert, on the lookout for the next big thing. No need to yell. If you’ve invested the time and the energy and the guts to make something remarkable, this audience can’t wait to hear about it.

(Naked Conversations, Chapter 3, Word of Mouth on Steroids, p.40)

Find and encourage those in your organization who are already paying attention to do so a little more systematically. Encourage them to begin to pass along what they are finding to others who might also be interested.

The second task is to start channeling this nascent curiosity toward potentially useful deliverables that can be judged and evaluated. Incorporate an interesting discovery into the next presentation to a customer. Adapt a lesson learned to an improvement process about to launch. Craft a proposal to target a new customer or begin a joint effort with an adjacent department.

Understand that channeling curiosity is a leadership challenge not a management task. Like a parent with an inquisitive toddler, leaders need to allow room for exploration, risk bumps and scrapes (and possibly worse), and intervene only to avert real danger. If they opt to guide exploration into familiar paths, they will get familiar results.

If you are still unsure about the importance of curiosity, recall what Albert Einstein said toward the end of his life:

I have no special talent. I am only passionately curious.


Learning to balance theory and evidence

I finally got around to taking a peek at this video of Clay Shirky’s presentation at the Supernova 2007 conference in June. It’s relatively short and Shirky is a good speaker. Like Jimmy Guterman, I was particularly taken with Shirky’s observation on AT&T’s reaction to a particular proposal: “They didn’t care that they’d seen it work in practice because they already knew it wouldn’t work in theory.”

How often do you see a theory blind believers to facts? Do you sense that the problem is becoming worse? The relationship between theory and evidence can be quite complex and failing to appreciate those complexities usually spells trouble. My own bias is toward the underlying methods and philosophy of modern science. You always have to be prepared for the ugly facts to kill your beautiful theories (thank you Thomas Huxley).

Clay Shirky, a Shinto Shrine, and the Sentence of the Year

By Jimmy Guterman

If, like me, you were unable to attend Supernova this year and you’re still kicking yourself, you can stop now. Conference organizer (and former Release 1.0 editor) Kevin Werbach has begun posting videos of the proceedings. I’ve only seen one so far, a dizzying presentation by Clay Shirky in which he likens the guardians of a Shinto shrine to the perl community…