Best 3 quotes of Phil Rosenzweig on MyQuotes

The Delusion of Lasting Success promises that building an enduring company is not only achievable but a worthwhile objective. Yet 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 a dream of enduring greatness may divert attention from the pressing need to win immediate battles. The Delusion of Absolute Performance diverts our attention from the fact that success and failure always take place in a competitive environment. It may be comforting to believe that our success is entirely up to us, but as the example of Kmart demonstrated, a company can improve in absolute terms and still fall further behind in relative terms. Success in business means doing things better than rivals, not just doing things well. Believing that performance is absolute can cause us to take our eye off rivals and to avoid decisions that, while risky, may be essential for survival given the particular context of our industry and its competitive dynamics. The Delusion of the Wrong End of the Stick lets us confuse causes and effects, actions and outcomes. We may look at a handful of extraordinarily successful companies and imagine that doing what they did can lead to success — when it might in fact lead mainly to higher volatility and a lower overall chance of success. Unless we start with the full population of companies and examine what they all did — and how they all fared — we have an incomplete and indeed biased set of information. The Delusion of Organizational Physics implies that the business world offers predictable results, that it conforms to precise laws. It fuels a belief that a given set of actions can work in all settings and ignores the need to adapt to different conditions: intensity of competition, rate of growth, size of competitors, market concentration, regulation, global dispersion of activities, and much more. Claiming that one approach can work everywhere, at all times, for all companies, has a simplistic appeal but doesn’t do justice to the complexities of business. These points, taken together, expose the principal fiction at the heart of so many business books — that a company can choose to be great, that following a few key steps will predictably lead to greatness, that its success is entirely of its own making and not dependent on factors outside its control.

It’s useful to make the distinction between reports and stories. A report is above all responsible for providing the facts, without manipulation or interpretation. Stories, on the other hand, are a way that people try to make sense of their lives and their experiences in the world. The test of a good story isn’t its responsibility to the facts as much as its ability to provide a satisfying explanation of events. In a few paragraphs, the reader learns of the problem (sales and profits are down), gets a plausible explanation (the company lost its direction), and learns a lesson (don’t stray, focus on the core). There’s a neat end with a clean resolution. No threads are left hanging. Readers go away satisfied. Now, there’s nothing wrong with stories, provided we understand that’s what we have before us. More insidious, however, are stories that are dressed up to look like science. They take the form of science and claim to have the authority of science, but they miss the real rigor and logic of science. They’re better described as pseudoscience. Richard Feynman had an even more memorable phrase: Cargo Cult Science. Here’s the way Feynman described it: In the South Seas there is a cult of people. During the war they saw airplanes land with lots of materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head like headphones and bars of bamboo sticking out like antennas — he’s the controller — and they wait for the airplanes to land. They’re doing everything right. The form is perfect. But it doesn’t work. No airplanes land. So I call these things Cargo Cult Science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential, because the planes don’t land. That’s not to say that Cargo Cult Science doesn’t have some benefits. The folks who wait patiently by the landing strips on their tropical island, dressed up like flight controllers and wearing a pair of coconut headsets, may derive some contentment from the whole process — they may live in hope of a better future, they may enjoy having something to believe in, and they may feel closer to supernatural powers. But it’s just that — it’s a story. It’s not a good predictor of what will happen next. The business world is full of Cargo Cult Science, books and articles that claim to be rigorous scientific research but operate mainly at the level of storytelling.

Successful companies will almost always be described in terms of a clear strategy, good organization, strong corporate culture, and customer focus. But whether these things drive company performance, or whether they’re mainly attributions based on performance, is a different matter.