Are _great_ companies just Lucky_

Are _great_ companies just Lucky_ - 18 Harvard Business...

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Unformatted text preview: 18 Harvard Business Review | April 2009 | hbr.org Brucie Rosch GRIST Are “Great” Companies Just Lucky? by Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson Studies that examine high-performing companies to uncover the reasons for their success are both popular and infl u- ential. They’re the basis of the insights behind best sellers like In Search of Excellence and Good to Great. But there’s a problem: The “great” companies from which these studies draw their conclu- sions are mostly just lucky. We’re not the fi rst to challenge success studies, but so far the criticism has fo- cused on data collection and analysis. Our concerns go much deeper. Many of the “great” companies cited are, in fact, noth- ing special; consequently, the researchers are simply imposing patterns on random data. That’s not science – it’s astrology. Professor Rebecca Henderson at MIT’s Sloan School shows how easily we succumb to the temptation to “explain” seemingly signifi cant outcomes that are entirely random. “I begin my course in strategic management by asking all the students in the room to stand up,” she says. “I then ask each of them to toss a coin. If the toss comes up tails, they are to sit down, but if it comes up heads, they are to remain standing. Since there are around 70 students in the class, after six or seven rounds there is only one student left standing. With the appropriate theat- rics, I approach the student and say, ‘How did you do that? Seven heads in a row! Can I interview you in Fortune? Is it the T-shirt? Is it the fl ick of the wrist? Can I write a case study about you?’” Henderson’s charade reveals the folly of attributing outcomes arising from systemic variation (the random nature of...
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This note was uploaded on 09/21/2011 for the course ECON 101 taught by Professor Flah during the Spring '10 term at Punjab Engineering College.

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Are _great_ companies just Lucky_ - 18 Harvard Business...

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