#68 Phil Rosenzweig: The Halo Effect
Investing by the Books
The Halo Effect in Management Literature
This chapter critically examines popular management books and the biases that can distort claims about organizational success. It emphasizes the need for objective evaluation and a nuanced understanding of relative performance in competitive strategies.
Phil Rosenzweig has been a professor at IMD Business School in Lausanne, Switzerland, for about 30 years. We discuss Phil’s legendary book “The Halo Effect”, which debunks much of the classic management literature and explains how we tend to think that when a company performs well, the CEO is fantastic, the company has operational excellence, and the employees love to work there. We set a halo on the good performers.
For more info about the podcast, go to the episode page and make sure to follow us on X/Twitter. We love to hear your thoughts on what you like and what we can improve, so please give us your rating and a review. You’re also very welcome to tell us about great authors, books, and investors you want to hear on the show. Thank you! /Eddie & Niklas with team
This episode was recorded on February 3, 2025.
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Episode Chapters
(00:00) Introduction by Eddie & Niklas
(01:46) Welcoming Phil
(02:51) The Halo Effect
(06:55) ABB
(12:17) Why Phil chose the companies he did
(14:11) The halo effect today
(19:11) The halo effect in other areas of life
(23:39) Criticism against management literature
(26:39) Other common errors in thinking
(30:45) Has Phil been influenced by Warren Buffett?
(33:45) Discussion on strategy versus execution
(46:52) Connecting the momentum/value dichotomy to Phil’s writing
(50:14) How Phil invests his own money
(52:33) An incredible Microsoft anecdote
(54:06) Phil’s time at Hewlett Packard and his pivot to academia
(58:37) Book discussions
(01:09:45) Concluding remarks
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Books Mentioned
- The Halo Effect - Phil Rosenzweig
- Moneyball - Michael Lewis
- What is strategy? - Michael Porter (article)
- Left Brain, Right Stuff - Phil Rosenzweig
- A Random Walk Down Wall Street - Burton Malkiel
- Influence - Robert Cialdini
- The Signal and the Noise - Nate Silver
- Only the Paranoid Survive - Andy Grove
- Lights Out - Thomas Gryta
- Power Failure - William D. Cohan
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Companies Mentioned
- ABB
- Lego
- General Electric
- Cisco
- British Petroleum
- Apple
- Marks & Spencer
- Nvidia
- Intel
- Logitech
- Microsoft
- Hewlett Packard
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More on Phil
- IMD: https://www.imd.org/faculty/professors/phil-rosenzweig/
- Email: phil.rosenzweig@imd.org
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About the Podcast
Intro episode: https://www.redeye.se/podcast/investing-by-the-books/817383/0-intro-to-investing-by-the-books
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What is Investing by the Books?
Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis.
Visit the website: http://www.investingbythebooks.com/
Follow on Twitter/X: https://twitter.com/Investbythebook
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What is Redeye?
Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality.
Visit the website: https://www.redeye.se/
Follow on Twitter/X: https://twitter.com/Redeye_
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Disclaimer
Notice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se
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