Author's Blog

Replies from Peters and Porras, but no comment from Collins

The Reuters article by Helen Chernikoff, published on June 7, is to my knowledge the first time that a reporter contacted for comment the authors of some of these books I critique.  It’s most interesting to see the replies!

    

Here’s what Ms. Chernikoff wrote:

     “Peters, one of the authors of In Search of Excellence, said that while his book does contain a list of recommendations, ‘It is not prescriptive in the sense that it says if you do this, you alone will have a great company.’

     “Porras, who said he has read part of The Halo Effect, notes that Built to Last explicitly warns readers against drawing conclusions about cause and effect from its examples.

     “Collins declined to comment on The Halo Effect.”

As for Tom Peters’s reply, readers of my book will know that I am fairly charitable about In Search of Excellence.  For all the

So, Professor, what about Toyota?

On my recent trip to India, I presented the key ideas in The Halo Effect at a gathering of business people.  Among the points I discussed is what I call the Delusion of Lasting Success – the mistaken notion that companies can, by following a set of steps, achieve long-term high performance.  That was, of course, the main idea behind Collins and Porras’s Built to Last – where they made the claim that there exists a blueprint for lasting performance. 

In fact, such a blueprint only appears when one makes mistakes of research design (selecting companies that have been successful for many years) and then makes mistakes of data (gathering data that are tainted by the halo effect.)  The result is a mistaken claim that what has been observed led to that performance; in fact, the causality is backwards – companies selected for lasting success tend to be described according to a common set of principles.  The facts are rather different: extreme performance in one period is regularly, and almost inevitably, followed by less extreme performance in a next period, a phenomenon known as regression toward the mean.

Taking the Right Lessons from DaimlerChrysler

Now that the DaimlerChrysler saga has ended with a whimper – Daimler paying $678 million for Cerberus Capital Management to take Chrysler off its hands – the critics have had been quick to lay blame.  Analysts and journalists tell us that the $36 billion deal to buy Chrysler was a mistake from the start.  It was a blunder, a misadventure based on miscalculation and arrogance.  How could a German luxury car maker imagine it could make a success out of Chrysler, a Detroit-based company that turned out cars and trucks?  What could Daimler’s executives possibly have been thinking? 

Such post-mortems are pure Orwellian revisionism, a re-writing of history to make events appear sensible and coherent.  In fact the truth was more complex.