I mentioned Rakesh
Khurana’s book Searching
for a Corporate Savior in my last post. After I wrote it, I realized that
Rakesh may have found an instance of Lovaglia’s Law: "The more
important the outcome of a decision, the more people will resist using evidence
to make it."

Rakesh’s book is so compelling because he blends
impressive quantitative data with insights from his in-depth research on how
senior executives are selected and evaluated by corporate boards. Rakesh described how directors of huge
companies had enormous faith in the power of CEOs that went beyond anything
that could be justified by any research, how they spent vast amounts of money
and time searching for new corporate saviors, and paid out huge sums to
executive search firms and to the CEOs they ultimately hired. Following Lovaglia’s Law, perhaps because
these decisions were so important, Rakesh found that when he asked corporate
directors if CEOs are worth all that money, they reacted with anger and
surprise, as if he had raised a taboo subject. He found that they had
“virtually religious” convictions on the subject, which led them to dismiss any
evidence showing that CEO quality is not a primary and powerful cause of company performance.
My hunch is that they would have been more receptive to evidence about more
trivial decisions, such as what colors to paint the walls or what music to play
in the elevators.