Tuesday, November 20, 2007

Halo Effect: Delusions and Critical Thinking

After a very long time I completed a book end to end. The book title was ‘The Halo Effect’. Many of you may already observed that on my IM personal message few days ago. I was intrigued by the book only because it started with assertion which closely lined with my personal thinking. The very thought all books whether self help books (rich dad, poor dad), business mantras (Good to Great) make success sound a simple prescription of certain core principles. It is a good story to tell but as we have all experienced, life is not that simple and success not that easy. You can follow and apply to heart the 7 habits of effective people and still may not be effective. As an organization you can follow all the tenets of Great companies and still be struggling to sustain your business. The reason lies in our attempt to simplify things in a framework model. We as human beings cannot handle continued chaos around us and need to develop a plausible hypothesis for every event. However we forgot our unique context (environment, people social interactions and culture since every organization is unique in its setup) and apply these so called seduced theories (like applying ‘Best Practices) as instant cures to the problems. I always believed that books should only be read to simulate one’s thinking. One should use them to invigorate new ideas, invoke new thoughts, assess and evaluate situations critically. I guess the very fact that we need to respect that life is uncertain, business is influenced by variables and forces beyond an organization and /or an indivuals control, recognition that decision making is all about trade-offs and nothing in life and business is absolute is highly unnerving. Today outcomes drive the assessment of the execution and our decisions. Decision making and execution is excellent and the management team phenomenal if you meet the desired metrics (Wall Street quarterly earnings at one end to meeting your deliverable on a simple software project at the other end). On the contrary the decision is flawed and management team are a bunch of losers if the output is not in line with the expectations. This mindset is the root cause of those fleeting Wall Street darling companies and is at the heart of the flip flop stories covered by the various business journals and magazines. Outcomes driving the assessment of the situation is by its very nature flawed (surprising to many). This applies to personal frame of reference as well. We like to create a semblance of order within the chaos  that surrounds us. We create simple decision models that help us evaluate and assess a given situation or a problem. However our individual decision making framework models is influenced negatively by flawed facts collection (skewed by our predispositions and/or existing haloed data)and simple but inaccurate cause and effect theories. As the author of the book outlined, we need to respect the uncertainty and account for inherent risk of failure in every decision whether it is personal or otherwise. The failure does not necessary imply that we need to change our decision making model but makes us recognize that luck,chance and probability of bad events exists and is fundamental to our sane and continued existence in the world.

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