THE INDISPUTABLE ROLE OF LUCK

Please don’t believe Ralph Waldo Emerson that ‘shallow men believe in luck; strong men believe in cause and effect’. You’re not shallow at all for believing the inalienable truth that luck is at the core of a lot of cause and a lot of effect. And don’t be disheartened by Thomas Jefferson when you stumble across his quip: ‘I’m a greater believer in luck, and I find the harder I work the more I have of it.’ Or Samuel Goldwyn’s: ‘The harder I work, the luckier I get.’ You can work as hard as you can and still be stuck on a treadmill, or you can be lucky and be lifted off it by a saviour of some sort. And please ignore Serena Williams when you hear her attributing her success to matters other than luck (‘luck has nothing to do with it’). Luck has an enormous amount to do with it – the body she was born with, the country she was raised in, the events that shaped her life, the people she met – along with many more factors that no amount of practice and sweat could make up for.

Speaking of sweat, when you see a meme that glorifies Ray Kroc, the founder of McDonald’s, for stating that ‘luck is a dividend of sweat; the more you sweat, the luckier you get’, always remember there are millions of people in this world – millions and millions – who have immense wealth, stellar careers and thriving businesses without sweating at all. Why? Because they’re lucky. Lucky to have been in the right place at the right time. Lucky to have thought of a killer idea while they were asleep. Lucky to be smart enough, healthy enough, safe enough, funded enough and supported enough to achieve what seems like overnight success. It is definitely not true, as Douglas MacArthur attests, that ‘the best luck of all is the luck you make for yourself’.

That’s not to say that some success can’t be attributed to cause and effect, or that hard work won’t make you successful, or that sweating won’t help you achieve your goals. Any of those things can certainly play a role. But to simply rule out luck as an influential factor – often a massively and perhaps a decisively influential factor – in your accomplishments is to have an inflated view of your skills and abilities. It is utter nonsense to think that what you have in life is only because of you and your actions.

Even Tiger Woods, arguably one of the most supremely gifted sportspeople of all time, concedes that every tournament he’s won can be attributed, in part, to luck. That doesn’t discount skill. It doesn’t discount talent. But neither does it discount the logical conclusion that ‘achievements in sport usually reflect varying degrees of skill and luck’.¹ The luck might be minor, such as the arrival of weather that creates conditions under which Woods performs more skilfully, or it might be major, such as an injury to a strong opponent.

Sport is not the only industry in which luck remains unacknowledged among the praised and hero-worshipped. The world of the corporate CEO is another. Many senior executives are praised for their strategic nous, their sound judgement, their leadership skills, their timely decisions. They’re often interviewed about their tips for career success, their advice for influencing others, their insights on managing difficult stakeholders, their guidance on getting from good to great. Rarely, however, are they written about in the context of luck. The luck of having received a decent education. The luck of having an encyclopaedic mind. The luck of inheriting a booming business. The luck of being the beneficiary of lax regulation or government incentives. The schaudenfreudian luck of a competitor becoming insolvent, or a monopoly being protected.

That is, of course, unless it’s a question of bad luck. In one study, over 200 managers were asked to articulate the role of luck in their organisations’ success. In the event of poor performance, they were most likely to blame bad luck. In the event of good performance, they were more likely to attribute the success to other factors, such as cost minimisation, product differentiation or strategic planning. In other words, to factors they could personally influence. But here’s the clincher. In that same study, which was conducted anonymously, the higher up the chain of command the managers were, the more likely they were to admit that luck had played a big role in their success.² In other words, the more thoroughly a manager had understood their organisation, the more he or she realised how little influence they’d actually had. But hush – let’s not tell anyone, because that would ruin the motivational story of the wise leader who, by dint of hard work and/or genius, led the way to corporate victory.

This is why one of the biggest analyses ever conducted on workplace luck – one that reviewed every credible study ever undertaken on the topic – reached the logical conclusion that ‘exceptional performers in these contexts should not necessarily impress us because the winners are likely to have enjoyed early luck of the draw’. But when we’re personally the winner, when we’re the ones who have sweated and toiled and sacrificed and fought, of course we attribute our success to all that gruelling work, and of course we’ll want to take the credit and the glory and the medals, all the while keeping quiet about our old friend luck, who gave us an encouraging nudge in the right direction every now and then, and occasionally a powerful shove. ‘As a result, people often overestimate the role of skill and underestimate the role of luck in their counterfactual imaginations, mistaking luck for skill,’ the study concludes. And so executives who usually have very little that differentiates them in terms of skill or talent end up being paid millions of dollars and rewarded with enduring fame in the business world, while their luckless peers, often through no fault of their own, succumb to the humiliation of an ordinary wage and the feeling they have failed. ‘This thus creates a mismatch: well-intended actions or competent managers are blamed for the failures outside of their control,’ the study notes, ‘while ill-intended actions or incompetent managers are rewarded for achievements that were outside of their control.’³

The authors of that study tell the fortunate story of Bill Gates, who admits that his success can be attributed to ‘an incredibly lucky series of events’. He was, for example, born into a wealthy family that funded his private-school education at one of the few institutions in the 1970s to have computers, while it was his mother’s useful connection to an IBM executive that enabled Gates to source funding for his start-up. Anyone who studies Gates’ success in the hope that they’ll be able to imitate and replicate what he achieved is at risk of barrelling towards a dead end: ‘even if one could imitate everything that the most successful did, one would not be able to replicate their initial fortune and path dependency’.

What does this all mean? Well, it certainly doesn’t imply that we should stop trying. Let’s try our hardest. Nor does it mean we should assume that luck is the sole cause of all great performance. Let’s still acknowledge skill and effort. We shouldn’t ignore the bestsellers and how-to guides that tell us how to become just like Tiger Woods or Bill Gates. But let’s also accept the humble, if dispiriting, truth that ‘there are no rules for becoming the richest . . . This implies that preaching how to move from good to great is likely to lead to disappointment or even encourage excessive risk taking, fraud even, because exceptional performances are unlikely to be achieved otherwise.’

You might suspect those claims are exaggerated. They’re not. In a study that compared Americans’ and Europeans’ perceptions of social welfare, it was found that the differences led to a number of consequences. When asked to explain why people live in poverty, 54 per cent of Europeans blamed it on bad luck, as opposed to only 30 per cent of Americans. In the United States, therefore, a vast majority of people fundamentally believe that destitution of the most extreme kind is the culpability of the individuals affected. Such a belief in luck’s limitations results in decreased social spending on public health benefits, unemployment programs and pensions, thereby further entrenching social inequality.⁴

Nowhere is the presence of luck more profound than in the pursuit of music superstardom. Millions of people aspire to dominate the music industry but only a handful ever do – and they manage it not because they’re the best singer or the best dancer but because they have been really, really, really lucky. This was exemplified in research that examined the albums awarded gold status by the Recording Industry Association of America over a span of decades. Some 1377 performers were represented. What the researchers found in their empirical analysis was that the success of pop stars has a lot to do with the buying behaviour of consumers. More specifically, consumers rarely have the time or inclination to conduct a thorough search of undiscovered talented singers; instead, many simply blindly purchase the records of those who are already popular, thereby making the popular even more popular and the invisible even less visible. This leads to the conclusions that ‘the superstar phenomenon could exist among individuals with equal talent’ (it’s just that some of them are blessed with luck that helps them rise above the rest), and that ‘very large incomes of superstars are driven by sheer fortune rather than by their superior (if any) talent’.⁵ And let’s say the success of a famous performer or athlete can somehow be entirely attributed to their supreme prowess – even that, surely, is down to the luck that comes from being born with a magnificent voice, or the luck of having been raised in a way that makes it easy for these fortunate souls to be disciplined and to prioritise the athleticism and focus that dance demands, or the luck of knowing how to instinctively write music that makes hearts sing, or the luck that comes with not having endured a career-killing injury.

Just once, at an awards show, it would be nice for a recipient to acknowledge the truth. How lovely, how refreshing would it be for a Hall of Fame inductee to simply admit: ‘I was lucky. Yes, I worked hard; yes, I had a supportive partner; yes, I thank God and my fans and my producer; but more than anyone, more than anything, I would like to thank Lady Luck, because there are millions of people on this planet who are more talented than me, have worked harder than me, have greater self-belief than me, have taken more risks than me, and yet I’m the one standing here receiving this prestigious award. So, Lady Luck, I thank you.’

It is for that simple reason – that even the best aren’t really, seriously the actual best – that the scholars can conclude that ‘one should not imitate the highest performers nor dismiss the worst performers’ – because the worst may not be the worst because they’re crappy, but rather because they’re unlucky. The aforementioned scholars demonstrated that particular effect in a simulation they designed, which included the computational analysis of 5 million players competing for the highest number of manufactured successes in a game. They compared the players who were able to win 40 rounds with those who could win 50. It’s true that skill played a vital role among those who got to 40. But the difference among those who made it to 50 had nothing at all to do with skill. In fact, those who got to 50 actually had a lower level of skill than those who got to 40. ‘Stated differently, the most successful players are not the most impressive,’ the study concluded. They were just the luckiest. More elaborately, ‘an extreme performance indicates that it was achieved in a context in which chance events can substantially influence outcomes, and performance is then an unreliable indicator of skill’.⁶

One final example, this time in relation to wealth; more specifically, to stock market wealth. ‘Modern western mythology is filled with success stories, in which the poor but ambitious and talented hero becomes a millionaire,’ writes scholar S.M. Levy. He goes on to say that ‘there are two competing explanations for the uneven distribution of wealth in society’: one is talent; the other is luck. We already know it’s a mixture of both, but which of the two is dominant? Levy analysed the wealthiest people in the United States, focusing on how they made their investment decisions (since investment income is the source from which they derived most of their wealth). What he discovered was that they each held similar return distributions, which means they didn’t differ much in talent, because if talent were the sole predictor of their success, there’d be significantly greater variance in their returns. Therefore, ‘the main factor responsible for the uneven distribution of wealth at the high wealth range is pure chance’. Investment knowhow is important, but only up to a certain point. Beyond that, ‘it is only luck that differentiates’ the haves from the also-haves-but-not-to-the-same-obscene-extent. ‘Those who are most successful owe it primarily to their luck, and not to abnormal investment abilities,’ Levy concludes.⁷

So let’s modify, then, the quotations that began this chapter so that they more accurately reflect reality:

Ralph Waldo Emerson:

‘Grateful people believe in luck. Conceited people believe only in cause and effect.’

Thomas Jefferson:

‘I’m a greater believer in luck, and I find the harder I work the more I can leverage it, should I be fortunate enough for it to come my way.’

Samuel Goldwyn:

‘The harder I work, the luckier I get – and that is almost certainly correlation, not causation.’

Serena Williams:

‘Luck has almost everything to do with it.’

Ray Kroc:

‘The more you eat McDonald’s, the unluckier you get.’⁸

Douglas MacArthur:

‘The best luck of all is the lottery.’

 

1R. Simon, 2007, ‘Deserving to be lucky: Reflections on the role of luck and desert in sports’, Journal of the Philosophy of Sport, vol. 34, no. 1, pp. 13–25.

2J.A. Parnell & E.B. Dent, 2009, ‘The role of luck in the strategy-performance relationship’, Management Decision, vol. 47, no. 6, pp. 1000–1021.

3C. Liu & M. de Rond, 2016, ‘Good night, and good luck: Perspectives on luck in management scholarship’, Academy of Management Annals, vol. 10, no. 1, pp. 409–451.

4A. Alesina, E, Glaeser & B. Sacerdote, 2001, ‘Why doesn’t the US have a European-style welfare system?’, Brookings Papers on Economic Activity, vol. 3, no. 1, pp. 1–66.

5K.H. Chung & R.A.K. Cox, 1994, ‘A stochastic model of superstardom: An application of the Yule distribution’, The Review of Economics and Statistics, vol. 76, no. 4, pp. 771–775.

6J. Denrell & C. Liu, 2012, ‘Top performers are not the most impressive when extreme performance indicates unreliability’, Proceedings of the National Academy of Sciences, vol. 109, no. 24, pp. 9331–9336.

7S.M. Levy, 2003, ‘Are rich people smarter?’, Journal of Economic Theory, vol. 110, no. 1, pp. 42–64.

8As evidenced by M. Spurlock, 2004, Super Size Me, Roadside Attractions, Samuel Goldwyn Films, Showtime Independent Films.