2Selfs Theory Analysis of the Book, The Halo Effect: . . . and the Eight Other Business Delusions That Deceive Managers by Professor Phil Rosenzweig
This article presents a standalone example of the value of 2Selfs Theory in a specific application.
Trying to “Discover” Business “Best Practices”
This is the approach taken by some consultants and university professors, most of whom have no actual experience running successful organizations. You can get an excellent overview of this business “success” approach by reading the book, The Halo Effect…and the Eight Other Business Delusions That Deceive Managers. I’ll make your job even easier by providing an overview of that analysis – I annotate below some of Rosenzweig’s observations about the four most prominent books of this genre.
You will see that Rosenzweig repeatedly points out that “best practices” books have not delivered what they promised. He says the books suffer from “delusions” in spite of their enormous popularity. I agree that all four books suffer from serious shortcomings including the “halo” effect identified by Rosenzweig, but I don’t think that is their most serious deficiency. It will become clear to you as you read the 2Selfs Revolution book that the methodologies used to “discover” processes that constitute “best practices” cannot produce the results the authors hoped for because automatic human activities (our second “self,” or auto-self) executes many of the processes that create successes, and surveys won’t “discover” those or enable people to manage them. In addition to the specific criticisms Rosenzweig provides regarding the four major books and my annotations, you should pay close attention to the way the “best practices” worldview became established and the effect it had on captivating the minds and therefore the problem-solving abilities of many business-profession leaders. Italics and Caps in Rosenzweig quotes are all from “Halo.” [My annotations are in brackets.]
Preparing for Their Great Voyages of “Discovery”
“If you select companies on the basis of outcomes – whether success or failure – and then gather data that are biased by these outcomes, you never know what drives performance. You only know how high performers or low performers are described.” (p. xvi) [This is the basis of what Rosenzweig calls the “halo” (and “horns”) effect.]
“For all of the secrets and formulas, for all of the self-proclaimed thought leadership, success in business is as elusive as ever. It’s probably more elusive than ever, with the increasingly global competition and technological change moving at faster and faster rates [not surprisingly, the same two driving forces I identify as overwhelming our natural abilities to manage them] – which might explain why we’re tempted by promises of breakthroughs and secrets of quick fixes in the first place. Desperate circumstances push us to look for miracle cures.” (p. xx) [We don’t need to look for “miracle cures.” We need to create a foundational theory – one that models the mental underpinnings of business success factors in a way that empowers us to overcome our natural inability to succeed in today’s turbulent business environment. As you will see in the 2Selfs Revolution book, 2Selfs Theory is not a “quick fix” but neither is it highly complex or traumatic.]
“Many thoughtful people work very hard to pinpoint the reasons for company success. If they have trouble finding definitive answers, we ought to ask why. Why is it so hard to determine the factors that lead to high performance? [Because we have not, until now, looked at the root mechanisms buried in the automatic mode of our mind that elude natural detection.] Why is it that even clever minds that earnestly want to uncover the secrets of success don’t find solid answers – even when they gather huge amounts of data about hundreds of companies over many years? [Partly because gathering large amounts of information and looking for patterns is not theory building – it is list creation.] Is there something about the way we ask the questions or the way we go about trying to find answers, that keeps us from getting it right?” (p. xx) [Investigators have been asking the wrong questions. The real answer lies in building theories by people who have actually experienced the business processes and observed and analyzed them carefully, not with statistics gathering. Then follow up with managing the mental processes that execute the business processes identified in their business-success theories, of which we have many excellent examples.]
“This book [Rosenzweig’s] is about [delusions] that distort our understanding of company performance, that make it difficult to know why one company succeeds and another fails. These errors of thinking pervade much of what we read about business, whether in leading magazines or scholarly journals or management bestsellers. They cloud our ability to think clearly and critically about the nature of success in business.” (p. xxi) [As you will learn, Rosenzweig has solid insights in his “delusions,” but the problems associated with succeeding in business run much deeper than he explains in Halos. These “errors in thinking” are due to a professional worldview buried deeply in shared auto-contexts, which “cloud” the thinking-self of those searching for “best practices” and subsequently those who fall under the sway of these “experts.” You will learn in many different ways in the 2Selfs Revolution book how explicitly managing our worldviews is the key to unleashing a more prosperous future and many other advantages at the individual, leader, company, country, and even whole Culture (as in the West) levels as you learn to use 2Selfs Theory and operate within 2Selfs Worldview. We must conquer managing our worldviews to make the ascent to a higher supraevolutionary level from where we can solve a large suite of increasingly destructive and currently mysterious and unsolvable problems.]
“Some of the biggest business blockbusters of recent years contain not one or two, but several delusions. For all their claims of scientific rigor, for all their lengthy descriptions of apparently solid and careful research, they operate mainly at the level of storytelling. They offer tales of inspiration that we find comforting and satisfying, but they’re all based on shaky thinking. They’re deluded.” (p. xxi) [Rosenzweig makes a penetrating observation that the most successful “best practices” books going back more than three decades are built on a fundamentally flawed foundation. Also, as you will learn in the 2Selfs Revolution book, “tales of inspiration” are often examples of (discomfort-based) seduction traps that offer simplistic solutions to complicated problems that, in addition to the business examples identified here, are currently running rampant in the West in many other areas including politics.]
“Most management books ask the first-order question: What leads to high performance? This book sets out to answer a different question: Why is it so hard to understand high performance?” (p. xxiii) [I can answer the second question specifically – because observers have failed to address the mental underpinnings of success. The general answer to the first question, and the one not addressed by any of the books discussed by Rosenzweig or by Rosenzweig is that high performance results from a combination of detailed technical and management knowledge processed by the thinking-self (done well now) and auto-self characteristics that align with success needs (not previously understood or managed explicitly). You already likely have sufficient knowledge for your thinking-self to process to enable you to succeed. In the 2Selfs Revolution book, you will learn how to use systematic, reliable transformation techniques to align auto-self characteristics with rapidly changing success needs to empower you to succeed repeatedly.]
“What leads to high performance? It’s the mother of all business questions, the Wall Street equivalent of the Holy Grail.” (p. 10) [You will learn in the 2Selfs Revolution book that many top-level success factors including execution, (instilling) innovation, motivation, intuition, and leadership depend on the auto-self, and the authors of “best practices” books reviewed here do not understand this root cause. 2Selfs Theory provides a “standard model” of the mental processes that execute the above success factors and many more. Repeated successes require that we continuously replenish our supply of professional and managerial knowledge that our thinking-self processes and periodically transform auto-self attributes to align with the success needs of our evolving positions, and in the hyper-changing environment of our company, in its industry, and in the global competitive landscape.]
The First Discovery Expedition: In Search of Excellence
“Searching for Stars, Finding Halos: The first of the business blockbusters, the megahit that changed everything, was In Search of Excellence: Lessons from America’s Best Run Companies [1982 – Not coincidently, less than a decade into the disintegration of the foundation of the Thinking-Self Age – a time period in which you will see many widespread problems in the 2Selfs Revolution book] by Tom Peters and Bob Waterman, both at McKinsey and Company… Peters and Waterman started out with a broad question: Why are some companies more successful than others?… An initial sample of sixty-two strong companies was reduced to a very select group of forty-three excellent American companies. The very best of them, the cream of American business…‘When we finished our interviews and research, we began to sift and codify our results. It was roughly six months after we started, that we reached the conclusions which are the backbone of this book.’ The process was careful, systematic, logical, and objective.” (p. 83) They created “Eight practices of America’s best companies” that people were to follow if they wanted to emulate Excellent companies. [This first major attempt at “discovering best practices” started out with a straightforward agenda – figure out what the most successful companies do well so others can copy it. Unfortunately, because the auto-self plays a large and increasingly decisive role in company successes, interviewing the participants and reading the business press will not uncover success factors that are, by their nature, hidden from normal observation and independent of intentions (Auto-Self Properties #1 and #2).]
“In 1984, Business Week ran a follow-up story under the title ‘Who’s Excellent Now?’ By their reckoning, at least 14 of the  companies highlighted by Peters and Waterman just two years earlier had ‘lost their luster.’ Many companies had ‘suffered significant earnings declines that stem from serious business problems, management problems, or both.’ Other companies were clinging tenuously to their status as Excellent companies but had been ‘humbled by blunders.’ What had gone wrong? Business Week criticized some companies for changing their winning formula: ‘The transgressors ran amok by walking away from the principle that had been key to the earlier success.’ They didn’t stick to their knitting. Others were rebuked for their inability to change.” (p. 88) [There you have it – the magical secret to success – either don’t change or change. Actually, “sticking to your knitting,” which is a celebration of the status quo, reinforces what is already a natural barrier to repeated successes – the inability to instill disruptive innovations into a company’s culture, which results in the innovation deathtrap that buries so many companies with solid histories of success.]
Rosenzweig assessed the 35 companies in Excellence for which data were available five years after the book was published. Only 12 of these companies did better than the overall market (S&P 500). “You would have been better off investing in a market index than putting your money on those Excellent companies.” (p. 89) [It is a sign of how little many business leaders, business consultants, and business-school faculty understood about the root sources of success that they gravitated wholesale to this and subsequent “best practices” books searching for silver-bullet answers. This is the point where the professional “best practices” worldview began to take hold that set the stage for the wide acceptance and wild popularity of this and subsequent efforts to “discover” the elixir of success through retrospective interviews and literature searches.]
“How should we interpret the flagging performance? When asked in 1984 to comment, Peters remarked: ‘There’s no real reason to have ever expected that all these companies would have done well forever and ever.’… But you would think that Excellence would last more than a few years! In fact, if you make the claim that you’ve discovered the elements that lead to success, you’d better have an explanation for failure too.” (p. 90) [One would hope and expect that if the authors had truly discovered the Excellence formula, that the very companies they based it on, which apparently wouldn’t need to read their book since they already had the magical formula, would have remained successful beyond a couple of years. When Excellent companies faltered, the industry did not question the “best practices” approach. Instead, others tried to identify specific issues with the first grand attempt and apply the same methodology with slightly different criteria.]
“It’s unlikely that so many companies, selected precisely because of their strong values and discipline and culture and focus, could all falter so quickly. Contagious complacency? An epidemic of entropy? Probably not. Rather, it’s more likely that these Excellent companies carried on doing much the same thing as before, but those things weren’t enough to ensure success – because their successes had been due to more than just these eight principles in the first place. It’s also possible that these eight principles reflect attributes made about successful companies, and in fact, the drivers of success lie somewhere else. It’s hard to know since Peters and Waterman selected companies precisely for their success and gathered data by talking to managers at those companies, collecting perceptions and testimonials that were biased by the Halo Effect.” (p. 91) [I think Rosenzweig is correct in identifying a strong “halo effect.” He is also correct that “the drivers of success lie somewhere else.” A much greater effect is that auto-self activities dramatically affect individual, leader, and company successes, and neither the people interviewed nor the articles written about the companies had a way to understand, from within the Thinking-Self Age worldview foundation, the effects of auto-self activities that are crucial to repeated successes.]
The Second Grand Discovery Expedition: Built to Last
The next big “best practices” megahit was Built to Last: Successful Habits of Visionary Companies (1994) by Jim Collins (he had gathered data at McKinsey for Peters and Waterman’s “In Search of Excellence,” then a lecturer at Stanford) and Jerry Porras (Stanford professor).
“Rather than focus on today’s successful companies – many of which might falter soon – Collins and Porras turned their attention to companies that had been successful over the long term, that stood the test of time. They hoped to find the ‘underlying timeless, fundamental principles and patterns that might apply across eras.’ The title of the book said it all: Built to Last: Successful Habits of Visionary Companies.” (p. 94) [When you learn about 2Selfs Theory, you will understand that “successful habits” reside in the auto-self. Rosenzweig keeps pointing out that their methodology does not produce the results they are looking for, but even if the authors somehow identified “practices” related to success, many of these “practices” would reside in auto-self activities including auto-behaviors and auto-contexts, so reading about them does nothing to manage them. We need theories, not a list of “practices,” and we need to place a foundation of the mental processes involved under the business-success theories so that we can transform counterproductive auto-self attributes to align with success requirements. Unfortunately, the enormous success and press about Excellence indirectly constructed the worldview that the “discovery” of “best practices” was the best way to gain access to achieving (“sustainable,” “lasting”) business success. In today’s business environment of fierce global competition and escalating technology-driven changes, any static “sustainable” success formula is doomed from the start. The key is to understand the auto-self processes involved and to become transformable (at the auto-self level) to achieve “repeated” successes.]
To avoid the Halo effect, Collins and Porras selected both outstanding companies and modestly successful companies as a comparison. “Supported by a team of researchers, Collins and Porras undertook a long and arduous process of data gathering and analysis…They read more than 100 books, including company histories and autobiographies. They consulted more than 3000 documents, ranging from articles to company publications to video footage. They read Harvard and Stanford case studies. They performed ‘extensive literature searches’ from sources including Forbes, Fortune, Business Week, the Wall Street Journal, Nation’s Business, the New York Times.” (p. 95) [They altered the parameters slightly, but they still relied on personal reports and articles in the press, all of which ignored any explicit understanding of auto-self activities, which always play a large and often the decisive role in business success.]
“Built to Last was published in 1994 and became an immediate hit. Inc. magazine gushed: ‘The In Search of Excellence for the 1990s has arrived. [This is how the press indirectly aided establishing the “best practices” professional worldview by using Excellence as an exemplar to create instant credibility for the second wave of “discovery.”] It is Built to Last.’ Managers loved the book, and why not? It was immensely readable. It was filled with memorable anecdotes. And it claimed to offer keys to lasting success. In its own words, Built to Last provided ‘a master blueprint for building organizations that will prosper long into the future.’ Collins and Porras didn’t shy away from bold promises: ‘Just about anyone can be a key protagonist in building an extraordinary business institution. The lessons of these companies can be learned and applied by the vast majority of managers at all levels.’ They concluded: You can learn them. You can apply them. You can build a visionary company. The Chicago Tribune agreed, declaring that Built to Last offered ‘no less than a revolution in our understanding of what makes companies successful over the long haul.’ [This was an unfortunate, major blunder. We are not going to create a real business “revolution” by trying to “discover” lists of “best practices.” To create a real “revolution,” we must construct business-success theories based on successful experience, penetrating observation, and in-depth analysis and support those theories by describing and explaining the mental processes that underpin these business theories, as 2Selfs Theory does.] Built to Last was named the best business book for 1995 by Industry Week and by 1996 had spent more than 18 months on the Business Week bestseller list.” (p. 96) [No matter what else we say about these books, they sure aroused the imagination and hopes of managers looking for a quick and easy way to success. When we struggle to succeed and don’t understand why, we become vulnerable to simplistic solutions – to seduction traps that satisfy our desire for successes without providing a viable mechanism to create the successes we desire. As a result, the “best practices” books illustrate the chronic lack of understanding of how a flawed worldview can deeply mislead people – even business professionals who are normally quite perceptive and capable of thinking through complex issues and solving difficult problems.]
“For the five years after the study ended, only five companies improved their profitability while 11 declined, with one unchanged. [He could not find the data on the 18th, privately held company.] Most of Collins and Porras’s visionary companies, chosen precisely because they had done so well for so long, fell back to earth. The ‘master blueprint for long-term prosperity’ turns out to be largely a delusion.” (p. 98) The companies selected for so-so success actually outperformed the Visionary companies after 10 years. [In retrospect, we can see that the “best practices” processes do not provide what they advertise and what the buyers of the books and the consulting services desire, a sure-fire formula for success. The business profession should have noticed the methodological deficiencies from the start. Even without understanding the enormous effects our automatic mode has on success, careful observers should have paid better attention to the failed promises and possibly have noticed the “halo effect” that Rosenzweig so effectively describes for us.]
“Delusion Five: The Delusion of Rigorous Research: Built to Last made a good effort to avoid the Delusion of Connecting the Winning Dots by including Comparison companies, but it didn’t shake off the basic problem we encounter again and again: the Halo Effect… Throughout the book there were repeated references to the sheer amount of data gathered… The effect of all this was to present Built to Last as Very Serious Research, carefully designed and meticulously conducted. The message came through clearly: We were thorough. We were exhaustive. We speak with authority. It all serves to intimidate the reader, for if you haven’t done an equal amount of work, you don’t dare question the findings. No wonder the Chicago Tribune gushed about a revolution [we desperately need a revolution not just for business but for most areas of human activities, but we are not going to launch one based on simplistic solutions. We need a root-cause, theory-based mental revolution that includes understanding and managing the auto-self – the 2Selfs Revolution!] in understanding – the study was presented with all the trappings of careful science. Most readers, including reviewers at the Wall Street Journal and Harvard Business Review, as well as members of the general public, were taken in by the Delusion of Rigorous Research. But of course, the quantity of the data is entirely beside the point if the data aren’t of a good quality. If your data sources are corrupted by the Halo Effect, it doesn’t matter how much you’ve gathered. You can stack Halos all the way to heaven, but you still have only Halos.” (p. 100) [Rosenzweig makes two important points: the authors intended to and succeeded at seducing reviewers and the public by their overt assertion of rigorous research, and the type of research they did was inherently susceptible to biased interpretation. As bad as that appears, the situation is really much worse. Their process missed success factors associated with the auto-self, or if they inadvertently uncovered some, they had no way to provide guidance on how to transform errant auto-self attributes to achieve their recommendations. All of the fanfare and giddy support from the business press established the “best practices” worldview, which had the effect of diverting, or sidetracking, the thinking and problem solving of a huge, crucial segment of the business profession. Such is the nature of “simplistic solution” problem-solving worldviews in business and in other types of social systems.]
“Delusion Six: The Delusion of Lasting Success: There is another delusion at work in Built to Last, and it calls into question the very premise of the study – that of finding the keys to enduring greatness. [We must jettison the whole concept of enduring, sustainable, or lasting successes. Instead, we must focus on repeated or progressive successes. In today’s turbulent business environment, what got you here eventually and with increasing frequency will not get you there.] When two-thirds of Peters and Waterman’s Excellent companies faded within just a few years, we might have been tempted to explain it as just a hiccup, a fluke. These [Built to Last] companies were, after all, the cream of American business, surely so many couldn’t go sour so soon. But when more than half of Collins and Porras’s Visionary companies failed to match the S&P 500 over the next five years, after collectively outperforming the market by a factor of 15 over more than 60 years, that should have raised a few eyebrows. Two studies in a row? That would seem to be quite a coincidence. But in fact, it’s the norm. Lasting business success, it turns out, is largely a delusion.” (p. 101) [But repeated successes are not a delusion if we start dealing effectively with the mental underpinnings of the actual factors that drive individual, leadership, and company successes, which you will learn how to do in the 2Selfs Revolution book in sufficient detail to empower you to engage in systematic activities that produce repeated successes in business and business successes.]
“Guess how many companies on the S&P 500 in 1957 were still on the S&P 500 in 1997, 40 years later? Only 74… And of the 74 survivors, guess how many outperformed the S&P 500 over that period? Only 12 out of 74. The other 62 survived, yes, but they didn’t thrive.” (p. 102) [You can see from these statistics why the business profession has resigned itself to expect and accept the inevitability of business failures. When you look at this inability to achieve sustained success in the past, you may want to consider that trying to identify a viable success path forward based on past “practices” might not produce the best we can achieve in our increasingly tumultuous business environment. You will learn in the 2Selfs Revolution book some potent mental properties that cause this failure including the certainty illusion (an auto-context property), the unfair fight (thinking-self intentions trying to overpower auto-self drives), and the Comfort Imperative (relentless auto-self compulsion to escape discomfort, which often leads to succumbing to simplistic solutions). To overcome these auto-self barriers that have led, and will continue to lead if not addressed directly, so many companies into the innovation deathtrap, we must overcome the chasm between the needs of the current business environment and human nature.]
“Looking for those few golden companies that succeed decade after decade may be a delusion, but it’s one that managers are eager to grasp. After all, showing how companies tend to rise and fall over time does not make for a very compelling story. We prefer to read about Excellent and Visionary companies; we want to know the secrets of their success so we can try to do likewise.” (p. 103) [”Best practices” approaches attempt to help you navigate a successful path forward through rocky and previously uncharted terrain by having you steer your path while staring into a rearview mirror. We need business theories, along with a theory of the mental processes that control the business processes they describe, to move forward to achieve repeated successes in business and business successes.]
“As some companies innovate and find new ways of doing things, other companies fail – but their demise plays a role in a larger pattern of improvement and progress. The dominant pattern is not stability or endurance, but the ‘perennial gale of creative destruction’… It is entirely normal and very predictable that companies fall back after outstanding performance.” (p. 104) [Natural mental processes cause these “entirely normal and very predictable” failures, but we can now intervene to overcome these natural forces. We no longer must succumb to the natural but preventable innovation deathtrap that is due to the certainty illusion, which dumbfounds us, and the Comfort Imperative, which leads to unfair fights when trying to instill disruptive innovations in a company’s culture – both of which are dealt with at the root-cause mental level in the 2Selfs Revolution book.]
“Competitive advantage is hard to sustain.” (105) [Competitive advantage and success are not sustainable – as you read the 2Selfs Revolution book, you will understand that you must focus on repeated successes – on a succession of new successes that rely on periodic auto-self transformations.]
The Third Discovery Expedition: What Really Works
Enter stage left for the third spectacular act to “discover” the pot of gold at the end of the “best practices” rainbow. The Evergreen Project, which led to the book What Really Works (2003), “began by repeating the most basic of all business questions: ‘Business is full of mysteries [you will learn in the 2Selfs Revolution book that 2Selfs Theory removes many current “mysteries” by digging down to the mental processes responsible for these previously inscrutable success factors], but none greater than this: What really works?’ Companies rise and fall, fads come and go, but ‘the great question remains unanswered, and not even well asked: What really works?’
“Well, the authors assure us, help is on the way: ‘It is time for the first book identifying fundamental practices that create business success – the ones that do indeed really matter.’ This book, they declared, was ‘the world’s most systematic, large-scale study of the practices that create business winners. Instead of anecdotal evidence of personal intuition, it is based on a massive research project conducted with scientific rigor and verified by measured fact.’ Strong words! And the authors went further. In Search of Excellence was inadequate because it selected its sample based on outcomes, looking only at excellent companies but not comparing them with lesser firms. Built to Last was flawed, too, because it examined a long time period in a single gulp but could not show how actions taken at one moment led to results at a later time. There was no longitudinal dimension, no ability to show temporal causality.
“This study would do better…The Evergreen project described itself as the most massive and most systematic study of company performance of all time. On the very first page, it was said to be ‘an extraordinary collaborative effort’ of academicians and consultants, and listed by name 14 professors of prominent business schools who had lent their expertise to the project. The suggestion was clear: This was serious, thorough, rigorous research. Furthermore, the methodology was said to be ‘appropriate, honest, and effective – in short, as reliable as many good minds could make it.’ But regrettably, the study was no better than its predecessors. For starters, the Evergreen team conducted interviews with managers, asking them to look back over the ten-year period and recount their experiences.
“Those sorts of retrospective interviews are likely to be full of Halos, as people take cues from performance and make attributions accordingly.” (107) [By now, you should see the flawed pattern – the root cause of the failure of the “best practices” through “discovery” methodology. Besides the Halo effect, many activities that the auto-self executes determine success, and the people they interviewed could not tell them how or why that happened. It is rather clear from this third gargantuan effort of trying to “discover” the “best practices” of long-term successful companies that the people conducting these surveys did not realize there is an automatic mode of human activities, and as a result, readers suffered unfortunate consequences. The people they interviewed not only failed to recognize the effects of the auto-self; they didn’t even know the automatic mode exists as a decisive force in individual, leadership, and business successes. They had no idea about the auto-self’s role in such auto-self success factors as execution, culture change, tacit knowledge, and intuition (auto-expertise). How did they expect to identify the root sources of these success factors? This approach to success attempts to “discover” a set of “best practices” that avoids the heavy lifting associated with how to transform to achieve those even if they did somehow trip across the great “practices” panacea they seek. This massive project was doomed from the beginning in spite of heroic efforts by many bright and dedicated people because their methodology was fundamentally defective. Why did the business community allow this deeply flawed methodology to continue and indeed to celebrate and perpetuate it? Widespread, effusive support trapped them within a fundamentally defective (mentally diverted) “discovery” worldview. This is just one example among many of how a counterproductive worldview renders the otherwise extremely effective thinking-self impotent. When an ineffective professional worldview creates a belief in a flawed thinking process, it eviscerates the power of the thinking-self by diverting thinking and problem solving onto an inherently ineffective path – in this case, into simplistic solutions to increasingly complex problems.]
“The Evergreen project had a good idea to break the ten-year time period into two blocks of five years but was undone by the reliance on data from retrospective interviews and from articles in the business press. Yet these failings didn’t prevent the authors from claiming they had broken new ground in our understanding of company success. In fact, they made a stronger claim of scientific rigor and causal impacts than in either In Search of Excellence or Built to Last. As they presented their findings, the authors declared: ‘We can now say that improving upon specific practices virtually guarantees a company’s superior performance.’ But they showed nothing of the kind. The correct title shouldn’t be What Really Works – the use of the present tense is misplaced. More accurate would be What Really Worked, or perhaps even What Was Said About Companies When They Really Worked.” (116) [This was a third big effort to try to “discover” the secrets to success using a systematic survey of past performance, and Rosenzweig found the same type of “delusions” with the “best practices” methodology used here with slightly different criteria as he found with the previous two spectacular efforts. He correctly sees that people did not (indeed could not) accurately report on the “practices” that led to prior successes or mediocre performance. And, even if they could have overcome that inherent obstacle, why didn’t people notice that “practices” that got you here normally won’t get you there in today’s turbulent business environment?]
The Fourth Grand Discovery Expedition: Good to Great
“The Grand Delusions of Good to Great  : At the same time the Evergreen Project was underway, one of the authors of Built to Last, Jim Collins, embarked on a new study of company performance. Whereas Built to Last looked at companies that had been, for the most part, always successful (well, at least until the study ended), most companies tend to muddle along, doing reasonably well but never achieving great success. What could be said to them? Collins’s next project addressed this point directly. How, he wondered, did ordinary companies make the shift to outstanding performance? Why did some companies make the leap from Good to Great while others didn’t?” (116) [Here comes the fourth Big Bang of the “best practices” universe – one more chance to “discover,” from a massive survey, the “real” “practices” that create successes.]
“To explain the transition from Good to Great, Collins and his team of researchers labored for nearly five years. They devoted more than 15,000 hours to the project. They looked at a wide range of evidence, ‘everything from acquisition to executive compensation, from business strategy to corporate culture, from layoffs to leadership style, from financial ratios to management turnover.’ They read dozens of books, reviewed more than 6000 articles, and conducted scores of interviews…Interview questions of this nature where managers are asked to look back and explain what happened rarely produce valid data since retrospective self-reporting is commonly biased by performance.” (pp. 118, 119) [The problem is much deeper than that – they did not have access to the role the auto-self played; they didn’t even understand that it might have a significant or perhaps dominant impact on successes or even that it exists. They relied on reports from people who had naïve self-awareness and no direct awareness of many success factors. It was not that some of the investigators failed to get the parameters right, which each successive project tried to correct; the base methodology was fundamentally flawed. They were looking for a systematic roadmap for success but were trapped within a counterproductive “discovery” worldview, which unfortunately was of the form that diverts people from seeking constructive solutions.]
“As with the earlier studies, the presence of Halos forces us to question these findings. Does having ‘humble leadership’ and ‘great people’ lead to success? Or is it more likely that successful companies are described as having excellent leadership, better people, more persistence, and greater courage? Given the way the data were gathered, and given the widespread tendency to make attributions based on performance, the latter seems more likely than the former…If you start by selecting companies based on outcome, and then gather data by constructing retrospective interviews and collecting articles from the business press, you’re not likely to discover what led some companies to become Great. You’ll mainly catch the glow from the Halo Effect.” (120) [Unfortunately, the “best practices” approach inherently leads to inadequate results. We need to understand how these simplistic solutions became so enormously popular and celebrated so we do not fall for such ineffective programs in the future. Why did the theory-building community and the business press not point out the methodological faults that Rosenzweig has so effectively identified for us in Halo without even relying on an explicit understanding of the auto-self? A big part of that answer comes from the establishment of a “best practices” mentally diverted worldview within the business community, which became trapped in the “discovery” thinking rut.]
“Yet no one seemed to look closely at the shortcomings, because Good to Great had such an encouraging message: You, too, can transform your good company into a Great one. Collins was explicit on this point. He wrote: ‘Greatness is not a matter of circumstance. Greatness, it turns out, is largely a matter of conscious choice.’ [You cannot “choose” to overcome auto-behaviors that block you from certain needed actions or cause you to exhibit undesirable behaviors that negatively impact those around you. You cannot “choose” to instill a disruptive innovation into your company because that requires reconstructing critical elements of the culture, which are deeply and tenaciously buried in the shared auto-contexts of the company’s power brokers. You will learn in the 2Selfs Revolution book that while we cannot “choose” to execute, instill innovations, motivate, or lead effectively, we can “choose” to engage in a challenging but achievable transformation process that aligns auto-self attributes with success needs. This is the real business “revolution” (the business part of the much broader 2Selfs Revolution) that has now arrived in the form of 2Selfs Theory operating within 2Selfs Worldview.] It is a compelling story. People want to believe their good efforts will be rewarded, that good things come to those who wait, and that’s exactly what Collins was saying: With vision and humility, by caring about people, through persistence and focus, you can become Great. As a tale of inspiration, there’s hardly a better one than Good to Great.” (121)
“Delusion Nine: The Delusion of Organizational Physics: The emphasis on certainty, on clear causal relations rather than contingency and uncertainty, illuminates one final misconception. It pervades many of the business bestsellers [of the “best practices” genre] that offer steps to guaranteed success, but it is most clearly seen in Good to Great. In the opening pages, Jim Collins describes his ambition: to discover ‘timeless universal answers that can be applied by any organization.’ He writes: [page 14 in Good to Great] ‘While the practices of engineering continually evolve and change, the laws of physics remain relatively fixed. [Actually, that is not even true for the theories of physics because they aren’t “laws” at all. Recall that Newton’s theories of physics (which many people still refer to as “laws”) were superseded by Einstein’s theories of relativity more than a century ago after two centuries of dominance as “laws.”] I like to think of our work as a search for timeless principles – the enduring physics of great organizations – that will remain true and relevant no matter how the world changes around us. Yes, the specific applications will change (the engineering), but certain immutable laws [you will learn in the 2Selfs Revolution book that “immutable laws” is an example of a pompous proclamation that we should detect and reject – if we don’t have “immutable laws” of physics, you might also expect no one is going to identify “immutable laws” of human organizations, and even worse, with trying to “discover” them through surveys] of organized human performance (the physics) will endure.’… Comparing the study of business with the study of physics flatters both the writer and the reader.” (p. 125) [The processes he used were not science at all. He was not theory building. The process was more like reverse engineering only without having access to the underlying “technology” that creates the end product, namely the detailed model of the human mind. Any engineer will tell you that you cannot reverse engineer a product without having access to the underlying technology, or at least some base “technology.”]
So What Did They Discover?
“Stories, Science, and the Schizophrenic Tour De Force: Start with In Search of Excellence, draw a line to Built to Last, link it to What Really Works, and then extend it all the way to Good to Great. What pattern do we see when we connect these dots? Each successive study made a bolder set of claims – to have gathered more data, to have consulted more experts, to have been more exhaustive in its research and more thorough in its analysis than the previous studies. Each claimed to boldly go where no research had gone before, to do what had never been done, and to have a greater claim to the truth. By the time we get to the last two, there are grandiose claims about virtual guarantees of success and immutable laws of physics. [Most business consultants and professors are not scientists, so we can forgive them if they thought they were actually practicing science. But we may wonder why others did not point out this disconnect that Rosenzweig now describes with his “halos.”] The one that started it all, Peters and Waterman’s In Search of Excellence, seems almost modest by contrast, a quaint throwback to a less pretentious age. [But, they captivated the business community and ushered in a new (implicit, hidden) business-success “discovery” worldview that paved the way for the subsequent increasingly grandiose efforts.] But for all their claims of rigor and science, not one of the studies crack the nut at the center of the puzzle. Not one of them recognize the central problem that robs them of validity – namely, that relying on articles from the popular press, on business school case studies, and on retrospective interviews, their data were compromised by the Halo Effect.” (p.127) [Rosenzweig provided us a great service by pointing out fundamental methodological flaws in the “best practices” genre of trying to “discover” some “practices” that would enable companies to achieve “lasting success.” However, he was operating within the enabling and constraining boundaries of the Thinking-Self Age worldview foundation, so he didn’t help us understand where to go next. 2Selfs Theory provides a revolutionary new path forward because it not only models the mental underpinnings of success drivers for clear understanding, it also provides pragmatic theory-anchored processes to transform inadequate or even dysfunctional auto-self attributes to align with success needs.]
“Yet for all their similarities, these books fared rather differently in the marketplace. In Search of Excellence was a huge success, as was Built to Last, while What Really Works was only moderately successful. Why the difference? I suspect it’s not because of analytical rigor, because none of those studies is likely to win a blue ribbon at your local high school science fair. Rather, In Search of Excellence and Built to Last were better stories. Their imagery was more compelling. Peters and Waterman gave us memorable phrases like a bias for action, sticking to the knitting, managing by wandering around, and loose-tight coupling. Built to Last talked about big hairy audacious goals, clock building, the genius of the “and,” and cult-like cultures. These were memorable phrases that sparked curiosity and stimulated discussion. By contrast, What Really Works relied on conventional terms like strategy, execution, culture, and structure. There was little original or engaging here, no surprising metaphors or captivating images. As for Good to Great, it was the best story of them all. Jim Collins’s book was released with great fanfare in late 2001 and went straight to the top of the charts. Since then it has been a phenomenal success, spending years on the New York Times Bestseller List. (p. 128) [Great marketing, the appearance of rigorous data collection, the association with business-school luminaries (another example of Rosenzweig’s Halo effect) and you captivate the business community and entrap it within a fundamentally ineffective, indeed counterproductive, professional worldview for more than a generation. The “best practices” emperor had no clothes, but the now-established “best practices” worldview made it appear to many that it wore the finest-dressed success proposals in the world. That is how professional worldviews and organizational cultures operate because they consist of shared auto-contexts, which can deceive us due to the debilitating, inscrutable certainty illusion.]
“While most reviewers took Collins’s work at face value – accepting its claims to be rigorous, scientific, and exhaustive – a few saw it for what it is: a trip to feel-good fantasyland. George Anders of the Wall Street Journal wrote that Good to Great offered a picture of the business world somewhere between Norman Rockwell and Mr. Rogers – a simple and reassuring place of homespun values and old-fashioned virtues where everyone feels safe and secure.” (p. 129) [Some observers started to see the marketing aspects of the escalating “best practices” juggernaut, but the professional worldview had been established and had to play out until deficiencies and failed promises (anomalies) became overwhelming. Because of fundamental flaws in the basic methodology, trying to “discover” “best practices” by interviewing people and reading articles, Collins was not able to elevate the “best practices” reverse-engineering process from poor to great or even good. The 2Selfs Revolution book is not a feel-good easy read because it provides an agenda to conquer the mental processes that drive success. However, I have devoted enormous effort to simplifying and sequencing the material, and after you work your way through it, you should feel tremendous because you will have the means to overcome the natural mental barriers to repeated successes in the current business-environment maelstrom that will only increase in turbulence. 2Selfs Theory is definitely not a simplistic solution; it provides penetrating insights and potent processes for achieving repeated successes systematically and reliably.]
“Stories about company performance appear to be all the more persuasive when they’re dressed up to look like science, when they’re said to be based on exhaustive research, backed up by cartons of documents and gigabytes of data, blessed by a roster of experts from well-known universities, and claiming to reveal underlying principles with the accuracy of science. We’re back to the Delusion of Rigorous Research. The bestsellers we’ve reviewed spent considerable time discussing their methodology and data analysis, and reviewers and readers alike were hugely impressed by how extensive and exhaustive the research appeared to be. By now, of course, we know that the data were flawed and that explanations of improved performance were highly questionable. Yet the rewards for an appealing story made all the more impressive by claiming to be science, are considerable. According to The Economist, Tom Peters can charge corporate clients up to $85,000 for a single appearance, and Jim Collins commands a fee of $150,000. There is a lucrative market for spinning stories of corporate success.” (136) [The “discovery” of “best practices” may not have produced anywhere remotely near the values the authors advertised due to fundamental methodology flaws, but their simplistic solutions certainly produced enormous value for the authors themselves.]
“The Delusion of Lasting Success promises that building an enduring company is not only achievable but a worthwhile objective. 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 the dream of enduring greatness may divert attention from the pressing need to win immediate battles.” (138) [All attempts to “discover” formulas for lasting success or enduring greatness are doomed to failure. These “super-duper” books, and three other genres of “duper” simplistic solutions I identify in the 2Selfs Revolution book, diverted attention (and are unfortunately still diverting many) due to the mentally diverted worldview that made them possible. You will learn that the goal should be repeated successes by becoming transformable individuals and companies. One of the breakthroughs of 2Selfs Theory is that it empowers you to transform formulas (practices) when they no longer align with success needs rather than to celebrate them and hug them. The status quo, embedded in shared auto-contexts, already leads naturally to the innovation deathtrap. Why in the world would we want to take a natural barrier to repeated successes and make it worse by deliberately celebrating the status quo?]
“Jim Collins expressed surprise that 11 Great companies came from ordinary, unspectacular industries like consumer retailing, consumer products, financial services, and steel. He offered a powerful implication: You don’t have to be a glossy high-tech or biotech company to become Great. If these run-of-the-mill companies can become Great, well then, so can you! But I suspect a different interpretation is more accurate. Those industries can be described as dowdy, but a better word might be stable. They were less subject to radical changes in technology, were less susceptible to shifts in customer demand, and they may have had less intense competition. All of which meant that companies in these industries had a better chance of racking up consistent performance, year after year, than did companies in more turbulent industries. High-tech companies, by contrast, were much less likely to string together 15 years of high performance.” (p. 147) [That Collins was “surprised” the companies that were least affected by the technology whirlwinds succeeded and those embroiled in the technological turbulence failed to “sustain” success indicates a deep lack of understanding of the mental processes that cause the innovation deathtrap. The problem has been that accelerating changes were experienced mostly by companies impacted by advances in technology because that requires periodically inculcating disruptive innovations within a company’s culture, which is a tedious and uncomfortable auto-context reconstruction process, once you know what you are doing. Most company facing this need succumb to the innovation deathtrap. 2Selfs Theory provides theory-anchored processes to overcome this problem buried deeply in human nature that has destroyed or at least crippled so many once-great companies. In the 2Selfs Revolution book, you will learn specific processes to counteract the normally overpowering effects of the certainty illusion, the Comfort Imperative, and the unfair fight to enable periodically transforming your company’s culture to instill revolutionary innovations at a rate commensurate with their creation.]
“Managers can’t tell exactly how their company – with its particular people and skills and experience – will respond to a new course of action. (148) [That’s why we need to understand the auto-self so that we can transform auto-behaviors and deeply embedded assumptions (auto-contexts) to make sure people in the organization can “respond” (transform) effectively when needed.]
Learning from Our Grave Mistakes
Phil Rosenzweig showed us how the business community got sidetracked into wildly embracing a whole genre of simplistic-solutions books that diverted attention for decades. You have now seen how 2Selfs Theory reveals the root cause of why this happened. You should see the “best practices” craze as exposing clear signs that the whole West has arrived at a historic greatness juncture were even our best and brightest fall for simplistic solutions to increasingly complex problems. While the inspiring tales of this genre of books may have motivated a few people to modestly higher performance, they were inherently a dead end because they did nothing to move the needle on solving the growing number auto-self success-factor problems we encounter in our increasingly global and wildly changing business environment. Another genre of books emerged, the empirical-theory books, that did address auto-self (“soft”) success factors such as execution, tacit knowledge, culture change, leadership, and intuition (auto-expertise, Jack Welch’s “gut”). These empirical theories were important steps forward in managing auto-self success factors, but they did it indirectly without explicitly noticing they were working on the automatic part of the human mind. These books contributed to solving important real problems, but they lacked a root-cause theoretical basis, so they eventually started falling behind the rising wave of intense global competition and persistently escalating technology-driven complexity and rates of change. The good news is that we can now take these empirical theories and put a more powerful worldview foundation under them (2Selfs Worldview). This will enable them to become even more effective and have the ability to match our escalating needs by finally managing the auto-self success factors directly.
The analysis you have seen at this webpage generalized Rosenzweig’s analysis to point out the underlying mental processes involved in the best-practices simplistic solutions and in the empirical theories approaches to business success. Now we need to zoom back to see a much broader perspective of what is going on in the West. If extremely bright and pragmatic business people including high-level business executives, business school faculty, and the business press can succumb to simplistic solutions, how much more might we expect the general population to do it? The fundamental inadequacies of the best practices craze were just dramatic examples of a greater problem in Western societies. Our technologies are creating social environments that we can no longer manage effectively, with the most dramatic current examples being in the Western political realm, where various forms of “populism” (that correspond to discomfort-based auto-self manipulations) are running rampant as simplistic solutions. We will not and indeed cannot reverse the West’s downward spiral of many greatness aspects of the West until we learn to manage the auto-self explicitly and directly, which 2Selfs Theory now does for us.