Anne Truitt Zelenka

Phil Rosenzweig’s The Halo Effect suggests that much reporting and analysis and expounding on what businesses are doing right or wrong is subject to the halo effect: when a company’s doing well, everything they do looks smart and visionary. When they’re not doing well, they look awkward, uncertain, and fumbling.

You might say, “that’s because good culture and smart strategy leads to success.” Except plenty of evidence indicates that the exact same corporate culture and exact same strategy sometimes leads to good outcomes and sometimes to bad — and the business press will respond with accolades during the good times and criticism during the bad.

Rosenzweig cites academic studies that show that company performance is somewhat dependent on managerial competence, but only somewhat. Many factors besides what a company’s leaders do determines how well the company succeeds. But people like to tell good stories, and the best stories are about what managers did or didn’t do right.

Pick the pale mission statement

Which mission statement do you like better of these two from two big web companies:

• “access to all the world’s information”
• “to connect people to their passions, their communities and the world’s knowledge.”

I like the second one, because it has people in it. Today’s web is nothing without people. Information’s good too… but come on, it’s the people that are important!

But what if you knew (maybe you already do) that the first one is Google’s and the second is Yahoo’s? Tim O’Reilly likes Google’s better:

I contrast that with Yahoo’s mission statement, “to connect people to their passions, their communities and the world’s knowledge.” I was talking with a senior Yahoo! exec a few months ago and he was surprised that I thought this sounded like a pale echo of Google’s “access to all the world’s information.” Now, I don’t know when Yahoo! articulated this mission statement, but I’ll bet that it’s far less a driver of Yahoo!s strategy than Google’s mission is for its employees.

I wonder if that’s the halo effect in action, because really: both these mission statements seem like they could motivate and drive employees.

Now it may be that a business mission that largely disregards people except as link-makers and searchers and targets for advertising (Google) actually succeeds better than one that seeks to connect people (Yahoo!). But I don’t see how as mission statements, Yahoo!’s is worse than Google’s or less motivational.

Yahoo has a number of popular people-oriented resources online: Flickr, del.icio.us, and their webmail with IM, for example. Yet because the big money is in search advertising (and because they’ve perhaps left some value untapped in those tools), they haven’t done as well as Google. But could there have been a world where Yahoo became the giant of the Internet forest? Probably.

Devil on the mountain

The halo effect isn’t just limited to business research and reporting. I’m seeing it in the mountaineering disaster book I’m reading right now, Forever on the Mountain. The author, James M. Tabor, seeks answers as to why seven out of twelve men died during a 1967 expedition to the top of Denali (then known as Mt. McKinley). Although he grants that the severe storm and lack of government rescue response were huge factors, he spends tons of time on the failures of the expedition leader and the dysfunctional team dynamics, apparently trying to pinpoint what may have been the main causes of the tragedy.

But as I read it, I ask myself, aren’t leaders always human and aren’t teams under duress likely to argue? If you looked at a successful attempt on Denali, wouldn’t you see episodes of poor leadership, infighting, and discord? It’s just that the story in that case would focus on everything that went right.

Telling stories

I don’t want Forever on the Mountain to be any different necessarily, because it makes a great story. But great stories don’t always correspond to what’s really happening. The truth is less compelling. The truth is that there’s great uncertainty, whether in building a business or climbing a mountain or going after any other huge goal. It’s helpful to look at efforts that have succeeded and efforts that have failed — but how much can they really tell you about what might succeed in an uncertain future?

[UPDATE 10/4 Finished the book last night and would like to clarify that Tabor’s attention to the alleged and actual failures of expedition leader Joe Wilcox was in response to severe criticism of Wilcox since the disaster. Tabor gathers and analyzes tons of evidence as to actions of team members, relative severity of the storm that hit, actions of NPS and others involved (or as it turned out, not involved) in a rescue attempt. I don’t think that his book overall shows the bias of the halo or devil effect except insofar that he tells stories of others’ interpretations of events that don’t address all the complex factors leading to the sad death of seven men. It could be argued that Tabor’s presentation of some NPS staffers was tainted by the anti-halo effect though, as some Amazon reviewers seem to believe.]