A Nobel Prize winner takes on Jim Collins and the business book industry

Over the holiday break, I finished up Daniel Kahneman’s new and much-praised book Thinking, Fast and Slow. I consider it quite an achievement, and by that I mean both the book itself (a deep, personal, and introspective look back at the career of one of the most important psychologists of our time) and my actually reading it (the book weighs in at almost 500 very dense pages).

One of the many interesting things about Dr. Kahneman is that, as a psychologist, he actually won his Nobel prize in economics. If you are interested in learning more about how that happened, go here.

Over the last few months, Kahneman’s book has been sitting near the new Jim Collins book Great by Choice in the rarefied air of Amazon.com’s top 100 books list (I reviewed Great by Choice a few months back here). So I thought it was interesting that Kahneman challenged Jim Collins and his book Built to Last in Chapter 19. It was a pointed attack not just on Collins but the entire genre of success story-inspired business books.

Since I spend quite a bit of time reading these sorts of books, I was really interested in his viewpoint. I mean, have I been wasting time reading that I could just as usefully spent watching reruns of Tosh.O or Arrested Development on TV? Is there real value in studying successful businesses and leaders or is it just an illusion?

Here’s what Kahneman says:

“The basic message of Built to Last and other similar books is that good managerial practices can be identified and that good practices will be rewarded by good results. Both messages are overstated. The comparison of firms that have been more or less successful is to a significant extent a comparison between firms that have been more or less lucky. Knowing the importance of luck, you should be particularly suspicious when highly consistent patterns emerge from the comparison of successful and less successful firms. In the presence of randomness, regular patterns can only be mirages.”

Ouch.

Kahneman cites Philip Rosenzweig’s book The Halo Effect (which is now on my reading list) and quickly jumps to the punchline of that book:

“[Rosenzweig] concludes that stories of success and failure consistently exaggerate the impact of leadership style and management practices on firm outcomes, and thus their message is rarely useful.”

So are we to believe Kahneman and Rosenzweig? Is there really no value in studying the leadership and management practices of great companies?

Even after reading the whole book Thinking, Fast and Slow and understanding the psychological principles that trick my brain into applying great importance to these sorts of success stories, I still find the conclusion a hard one to accept. And then Kahneman throws the knockout punch:

“Stories of how businesses rise and fall strike a chord with readers by offering what the human mind needs: a simple message of triumph and failure that identifies clear causes and ignores the determinative power of luck and the inevitability of regression. These stories induce and maintain an illusion of understanding, imparting lessons of little enduring value to readers who are all too eager to believe them.”

Okay, I get it. Kahneman views me as a sucker. And who am I to argue with a Nobel Prize-winning psychologist?

But I just can’t help it. I think there is plenty that we can learn from the lessons of innovative businesses like those that Collins profiles in Built to Last. Kahneman may be right that these books suffer from an illusion of academic rigor that breaks down under close study. And yes, they probably need a disclaimer (“The author makes no promise or guarantee that if you follow the principles outlined in this book you will become Google overnight. Individual results may vary.”).

But what these books lack in academic rigor they make up for in one simple area: they inspire people. To not settle for what they see today. To try something new. To learn. To grow. To believe.

They create the possibility of hope. “Others have done it. I could too!”

So in that sense, Kahneman’s critique is somewhat akin to an adult telling a three-year old child that there is no Santa Claus. My view? The analysis is technically correct, but emotionally bankrupt.

Where success story business books fail the analytical brain, they often are just what the emotional brain needs.

So I don’t know about you, but I’m going to keep on reading business books. By constantly refueling my head with new ideas, I’ll always have something to learn and try. I’ll continue to be inspired by authors like Jim Collins, by companies and leaders who have seen great success, and I’ll suspend my academic doubts in the hope of learning new lessons that might just work.

I’d love to hear what you think. If you believe Kahneman’s critique of Collins and the genre is on the money, or if you believe instead that there is still value in sharing and learning from business success stories, let me know in the comments section below.