Halo effect is deceptive

Businesses are not what they seem

Tall people are more successful than short people. It is because of the ‘halo effect’. A ‘halo effect’, in essence, is judging someone based on their appearance. Once we have, confirmation biases kick in. Past performance is the ‘halo effect’ of businesses.

JP Hanson is CEO of Rouser, a marketing services firm. He tweeted that there are nine types of ‘halo effects’, which affect businesses:

1. Halo effect itself such as past performance
2. Confusing temporary fortune with lasting success
3. Correlation vs. causation errors
4. Pervasive sample bias
5. Favoring for single explanations instead of multiple factors
6. Inadequate business comparisons
7. Poor data quality
8. Comparing results on absolute instead of relative term
9. Searching for the “formula” for perpetual success

Author of Halo Effect Phil Rosinzweig writes:Companies cannot achieve superior and lasting business performance simply by following a specific set of steps.

Aspiring founders and emerging entrepreneurs are vulnerable. They should avoid blindly following the successes of businesses, which have the halo effect such as Oyo and Paytm.

Dig deeper:

• Book: The Halo Effect: … and the eight other business delusions that deceive managers. Buy
• Video: Halo effect in graphs Link