“Overall success in business doesn’t mean you ‘got lucky’, it means you used luck, taking advantage of the ‘good’, identifying and canceling the ‘bad’ luck”.
‘Luck’: What is it? How is ‘luck’ defined? The Merriam-Webster online dictionary defines ‘luck’ as; (a): force that brings good fortune or adversity, or (b): events or circumstances that operate for or against an individual. Or, ‘luck’ can be defined as a positive correlation between wishes and events, that is, we say that someone has ‘good luck’ when it happens what he wished. ‘Bad luck’ can be defined as a negative correlation between wishes and events, that is, we say that someone has ‘bad luck’ when it happens the opposite that he wished.
Luck has good deal to do with success in business. Not superstitious luck, as found in baseball rituals, but luck as chance, accident and coincidence. Malcolm Gladwell’s excellent book, ‘The Tipping Point’, offers numerous examples of luck lending a helping hand. He puts a face on some of the forces that create luck, too. So does Chris Anderson’s ‘The Long Tail’, which illustrates how the internet, social networks and viral marketing have led to unexpected good fortune (luck). Luck typically favors persistence and diligence.
Those who stay in the game, pick themselves up by the bootstraps when things fail, and who keep swinging until they get it right are usually the ones whom ‘luck’ favors. When luck has been considered, it has been dealt with in generality; meaning, the authors have assumed their readers know what luck is. Some have defined luck according to their own perception or in only a limited sense. Years ago, ‘Justice William O. Douglas’ was claimed to have said; “he could not define pornography, but he knew it when he saw it”.
Luck as a behavioral or attitudinal variable may be in much the same situation; everyone has an intuitive perception of what it is, they just have a difficult time trying to define it in universally applicable terms. From a managerial perspective, there are moral and management issues very relevant to several dimensions of luck. For a sales-related example; are some salespeople just luckier than others? Or, do they manufacture their luck? Is it just luck that they are in right place at the right time talking to the right people about the right products, or is it the result of planning and preparation?
According to John Hafer and George Gresham in their article “Luck’s Role in Business Success” says: Luck is a complex concept that has received extensive exposure in the philosophical literature. Luck was a recognized, mystical, unexplainable phenomenon. Several papers have related luck to macro-business issues, such as business failures macro-economic issues and policy, management and business performance, and small business location decisions.
“The reason free markets work is because they allow people to be lucky”, says Nassim Taleb who raised awareness about the role of luck through his best-selling book, ‘Fooled by Randomness’. Then, how much success is due to luck, and how much to preparation? Luck as a general concept appears to need six things:
- Event occurs infrequently.
- Outcome happened as a result of the event.
- Outcome affects someone in someway.
- Outcome has significant value.
- Degree of significance of the outcome is subjective.
- There was some/no control over the outcome.
In the article “Why Some People Have All the Luck” by Anette Mikes and Robert Kaplan write: Some business builders just seem to have more luck than others. But luck in business isn’t entirely, well; luck. There’s a popular saying that ‘you make your own luck’. This ‘make your own luck’ principle — turns out to be a critical factor in successful business-building.
Over the course of now hundreds of interviews, collaborations and interactions with entrepreneurs, my co-authors Richard Harrington and Tsun-yan Hsieh and I found that, while there are certain types of luck which you cannot affect, there is absolutely a lot of luck that you can meaningfully influence.
Arguably, most of ‘business luck’ can be influenced — i.e. you can increase your propensity to be lucky in business if you understand how to have luck: Being ‘luckier’ in business is fundamentally about having the right ‘lucky attitude’. As it turns out, luck is as much about ‘attitude’ as it is about probability. We have found in our research that people who self-describe themselves as lucky in their personal profile tend to be luckier because they have the ‘right attitude’.
The basic equation of developing the right ‘lucky attitude’ therefore is quite simple: ‘It starts with having the humility to be self-aware, followed by the intellectual curiosity to ask the right questions, and concluding with the belief and courage that something better is always possible (optimism)’. The luckiest people in the business world are those who hold all three elements of the ‘lucky attitude’ equation; humility, intellectual curiosity, and optimism.
“For a long time now I have tried to write the best I can. Sometimes I have good luck and write better than I can” ~Ernest Hemingway
In the article “What’s Luck Got to Do With It?” by Jim Collins and Morton Hansen write: We completed a nine-year research study of some of the most extreme business successes of modern times. We examined entrepreneurs who built small enterprises into companies that outperformed their industries by a factor of ‘10’ in highly turbulent environments.
We call them ‘10Xers’ for ’10-times success’. The very nature of this study: How some people thrive in uncertainty, lead in chaos, deal with a world full of big, disruptive forces that we cannot predict or control — led us to smack into the question, ‘Just what is the role of luck?’
Could it be those leaders’ skills account for the difference between just meeting their industry’s average performance (1X success) and doubling it (2X)? But that ‘luck’ accounts for all the difference between 2X and 10X? Maybe or maybe not. But how on Earth could we go about quantifying something as elusive as ‘luck’?
The breakthrough came in seeing luck as an event, not as some indefinable aura. We defined a ‘luck event’ as one that meets three tests: ‘First, some significant aspect of the event occurs largely or entirely independent of the actions of the enterprise’s main actors. Second, the event has a potentially significant consequence — good or bad. And, third, it has some element of unpredictability.’
We systematically found 230 significant luck events across the history of our study’s subjects. We considered good luck, bad luck, the timing of luck and the size of ‘luck spikes’. Adding up the evidence, we found that 10X cases weren’t generally ‘luckier’ than comparison cases. (We compared the 10X companies with a control group of companies that failed to become great in the same extreme environments.) The 10X cases and the control group both had luck, good and bad, in comparable amounts, so the evidence leads us to conclude that luck doesn’t cause 10X success.
The crucial question is not, ‘Are you lucky?’ but ‘Do you get a high ‘return-on-luck’ (ROL)? Luck, good and bad, happens to everyone, whether we like it or not. But when we look at the 10Xers, we see people who recognize luck and seize it, leaders who grab luck events and make much more of them.
This ability to achieve a high ROL at pivotal moments has a huge multiplicative effect for 10Xers. They zoom-out to recognize when a luck event has happened and to consider whether they should let it disrupt their plans. When we examined less successful companies, we saw a generally poor overall ‘return-on-luck’ (ROL).
Some of the comparison cases had extraordinary sequences of good luck yet showed a spectacular ability to fritter that luck away. When the time came to execute on their good fortune, they stumbled. They didn’t fail for lack of good luck. They failed for lack of superb execution.
Nietzsche wrote, “What does not kill me makes me stronger.” We all get bad luck: The question is how to use it to turn it into ‘one of best things that ever happened.’ There’s an interesting asymmetry between good and bad luck. A single stroke of good luck, no matter how big, cannot by itself make a great company.
But a single stroke of extremely bad luck, or an extended sequence of bad-luck events that creates a catastrophic outcome, can terminate the quest. The 10Xers exercise productive paranoia, combined with empirical creativity and fanatic discipline, to create huge margins of safety.
If you stay in the game long enough, good luck tends to return, but if you get knocked-out, you’ll never have the chance to be lucky again. Luck favors the persistent, but you can persist only if you survive. Bill Gates didn’t just get a lucky break and cash in his chips. He kept pushing, driving, working — and sustained that effort for more than two decades. That’s not luck — that’s ‘return-on-luck’ (ROL).
There are many factors that contribute to a business being a success or failure. In some cases the major factor is ‘luck’. Of course, you can increases your chances of having good luck by doing the important work like making a solid business plan, working hard, hiring the right people, being smart with your money, etc… However, good luck can strike for some businesses even though they didn’t have the best plan or idea and bad luck can sometimes hit the ones that did their due diligence.
Luck is something that cannot be controlled. At best, you can only increase or decrease the odds of having luck on your side. Having as high a chance as possible to receive good luck is worth going through the hard work and necessary steps even though a positive result is not guaranteed. If you’re not going to give your business a 100% effort, then there is no point to do it all. Learn from the mistakes and don’t dwell on the failure.
Good luck: As we have seen, whether or not one can create good luck basically depends on an attitude towards oneself, towards others, and towards life. It is also tied to the perception that the individual is much more of a cause than an effect. And above all, to the realization that one must make oneself the creator of the conditions that foster success and the achievement of specific, visualized goals.
The problem is that we often seem to forget old principles based on common sense, which basically says; ‘we must work, be aware of our actions, and take responsibility for correcting them when the need arises’. The person who grasps that wisdom is lucky indeed. Nothing comes easy. There are few overnight successes in life. The best companies struggle – just not publicly. And the harder we work, the luckier we get. The question is always asked as a choice: ‘Would you rather be lucky or good?’
I always give the same answer: I’d rather be lucky. In the business world, luck makes you good. If I am unlucky, it’s very hard to be successful no matter what I do. Fate and luck play a big role in business. As much as working hard and slowly building financial security is part of the universal dream, another part of that dream for all of us is; ‘capture luck, cheat fate, and strike it rich by taking shortcuts to the top’: Someone has to win the lotto–Why not you?
“You know, it’s quite amazing. The more I practice, the luckier I get.” “You are vastly overestimating the importance of luck. Skill(s) counts for much more.”