The Babe Ruth Effect

Don't let the magnitude of improvement successes mask the frequency of project failures

By Satya S. Chakravorty

An overwhelming number of improvement programs fail because executives consider the magnitude of improvement successes more important than the frequency of improvement failures. Call it the “Babe Ruth effect.” Ruth, who struck out a lot, still is considered one of baseball’s greatest hitters because of 714 career home runs. Putting it differently, if three stocks in a portfolio of four slightly lose value, but the fourth one substantially gains value, the total portfolio is considered to have performed well, even when the majority of the stocks did not. Executives often approach improvement programs the same way; they highlight successes of a few improvement projects but overlook many failed improvement projects.