Luck & Success

I am someone who believes that we can all learn from the lessons of others. I believe that we can read books, listen to podcasts, watch documentaries, and receive guidance from good managers and mentors that will help us learn, grow, and become better versions of ourselves. I read Good to Great and Built to Last from Jim Collins, and I have seen value in books that look at successful companies and individuals. I haveĀ  believed that these books offer insights and lessons that can help me and others improve and adopt strategies and approaches that will help us become more efficient and productive overtime to reach large, sustainable goals.

 

But I might be wrong. In Thinking Fast and Slow, Daniel Kahneman directly calls into question whether books form authors like Jim Collins are useful for us at all. The problem, as Kahneman sees it, is that such books fail to account for randomness and chance. They fail to recognize the halo effect and see patterns where none truly exist. They ascribe causal mechanisms to randomness, and as a result, we derive a lesson that doesn’t really fit the actual world.

 

Kahneman writes, “because luck plays a large role, the quality of leadership and management practices cannot be inferred reliably from observations of success.” Taking a group of 20 successful companies and looking for shared operations, management styles, leadership traits, and corporate cultures will inevitably end up with us identifying commonalities. The mistake is taking those commonalities and then ascribing a causal link between these shared practices or traits and the success of companies or individuals. Without randomized controlled trials, and without natural experiments, we really cannot identify a strong causal link, and we might just be picking up on random chance within our sample selection, at least as Kahneman would argue.

 

I read Good to Great and I think there is a good chance that Kahneman is correct to a large extent. Circuit City was one of the success stories that Collins touted in the book, but the company barely survived another 10 years after the book’s initial publication. Clearly there are commonalities identified in books like Good to Great that are no more than chance, or that might themselves be artifacts of good luck. Perhaps randomness from good timing, fortunate economic conditions, or inexplicably poor decisions by the competition contribute to any given company or individual success just as much as the factors we identify by studying a group of success stories.

 

If this is the case, then there is not much to learn from case studies of several successful companies. Looking for commonalities among successful individuals and successful companies might just be an exercise in random pattern recognition, not anything specific that we can learn from. This doesn’t fit the reality that I want, but it may be the reality of the world we inhabit. Personally, I will still look to authors like Jim Collins and try to learn lessons that I can apply in my own life and career to help me improve the work I do. Perhaps I don’t have to fully implement everything mentioned in business books, but surely I can learn strategies that will fit my particular situation and needs, even if they are not broad panaceas to solve all productivity hang-ups in all times and places.

Leave a Reply