Consulting to entrepreneurs have exposed me over the years to people with great confidence - how else would they take on the ogre of odds on failure? A golden thread running through many if not most of these conversations was that ” you make your own luck.” And perhaps the oft quoted quote that of Gary Player “The more i practice, the luckier I get.”
Luck gets scant notice. Perhaps they fear that if they would let luck in through a crack in their minds, they would recognise how enormously large it looms over the landscape of their business success – and it would damage their confidence – without which no entrepreneurial achievement is possible.
However, this comes at a price. We become over confident and think that we had a recipe for success, when in fact the recipe had little to do with our success, might even be a poor recipe which was cancelled out by luck and now we zoom in on this recipe for future success, with different results!
I have for a long time been suspicious of the results of books on management success, showing us companies which are successful and whose strategies are then held up to us as examples. Most notably those of Jim Collins and you can click back here to see my comments over the past four years: (http://blogs.fin24.com/bertieduplessis/?s=Jim+Collins).
Now Michael J Mauboussin (author of the brilliant “Think twice, harnessing the power of counter intuition”) has written a brilliant analysis of what is wrong with this kind of research into business success with ” The success equation, untangling skill and luck in business, sports and investing” (find it at Amazon: http://www.amazon.com/The-Success-Equation-Untangling-ebook/dp/B00A07FR4W/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1352706201&sr=1-1&keywords=the+success+equation). It is an excellent companion to Ed Smith’s “Luck, what it means and why it matters,” about which i blogged earlier (http://blogs.fin24.com/bertieduplessis/2012/08/22/lucky-fish-part-2/).
And he puts his finger bang on the sore spot in Collins’s and his likes. Says Mauboussin, performance for any company is always a mixture of success and luck, so a given strategy will succeed only part of the time. “So attributing success to any strategy may be wrong simply because you’re only sampling the winners. The more important question is: How many of the companies that tried that strategy actually succeeded?” The problem with many gurus, including Collins is that they compare companies that didn’t follow the recommended strategy with those that had success. This is the wrong scientific method, they should have looked for samples of companies that used the same strategies as the successful ones that failed – and then compared and assessed the odds! Woosh! there goes a couple of shelves in your local book store!
You cannot draw your samples from success, you should draw them from the strategy, reiterates Mauboussin.
” If I can’t do anything about luck, why bother to think about it,” some of you might retort. What becomes clear from both Mauboussin’s and Smith’s books on luck, is that while we can’t do anything about things that are out of our control, recognising the role of luck will prevent us from copying poor strategies saved by luck or alternatively not to ditch good strategies which were scuppered by bad luck.
We might not be able to do anything about luck, but recognising luck may make us smarter in business – adapting Gary Player – make us practice smarter and more efficiently!
And that’s a good thing, not?!