One of the factors that you will find hardly ever present in high performance organizations research is ‘luck.’ I can remember only two studies I encountered during my research into HPOs that explicitly addressed luck. This is probably because luck is difficult to measure and evaluate. But the main reason is because it is very, very difficult for organizations, or individual persons, to acknowledge that they were lucky. No, it is down to their talent, hard work, smart strategy, cleverness etc. etc. that they have achieved excellent results and so it is therefore logical that:
- they deserve everything that is coming to them, and
- it is their own fault when organizations and people do not achieve the same level of success.
People really don’t like to hear their success explained as luck. In fact, through time they start to feel that their success somehow was inevitable, they ignore the role played by accidents in their lives, and they are often oblivious to other people’s disadvantages.
However, as Robert Frank describes in his excellent book Success and Luck, this thinking is based on a big misunderstanding and is in fact even hurtful not only for individual persons but for the economy at large. He makes clear that societies which celebrate meritocratic individualism – i.e. the belief that people create their own success based on their own capabilities and skills – no longer see the extent to which success and failure hinges decisively on events completely beyond anyone’s control. His main question is: ‘It is extremely difficult to achieve success without talent and hard work, but why is it then that there are so many highly talented and hardworking people who never achieve any significant material success?’
One of the main determining factors is if you were born in the right place at the right time, a factor which is not under your control. Research has shown that roughly half of the variance in incomes across people worldwide is explained by only two factors: country of residence and the income distribution within that country. So being born and growing up in a rich country gives a person an incredible head-start on people who are born in developing countries. Another factor is the combination of genes your parents passed on to you and the environment they provided for you to grow up in. So if you want to be smart and energetic the best you can do is to choose the right parents, which alas is also not under your control. Finally it is being in the right place at the right time. Frank recalls the career of the actor Bryan Cranston which was to say the less unremarkable until he was casted in the lead role of the hit series Breaking Bad and thus became a superstar. Cranston was to all accounts a good actor but he had not had his lucky break until then. The producer of the show suggested Cranston as he thought him to be cut out for the part, but the studio executives were reluctant to invest heavily in an actor who had never been cast in a major dramatic lead role, so they offered the part to John Cusack. When Cusack turned it down the part was offered to Matthew Broderick who also declined. Then, because the producer offered Cranston once again the studio executives obliged, and the rest is history. It seems safe to say that if either Cusack or Broderick had taken the part, Cranston would have never been able to show his talent and would have not become famous.
Suppose that 98 percent of each contestant’s performance is accounted for by talent and effort, and 2 percent by luck.
Thus, luck will always play an essential part in the story and this has only intensified in recent decades. This because of the spread of the so-called winner-take-all-markets. These markets arise when technology enable the most gifted people and organizations in a market to extend their reach multiple fold. Imagine a contest that is completely meritocratic as the winner will be chosen only on objective performance. Suppose that 98 percent of each contestant’s performance is accounted for by talent and effort, and 2 percent by luck. Than it is obvious that no one could win without being highly talented and hardworking and lucky! So even when luck plays a small role, the most talented and hardworking of the contestants will still be outdone by a rival who is at least almost as talented and hardworking but considerably luckier. And this winner will then attract all the attention and will get more and more rewards while the equally able competitors will all drift out of the picture. Thus the winner takes all!
There is an obvious reason, according to Frank, why so many people downplay the role luck plays in their lives. Denying the importance of luck may actually help them surmount the many obstacles on the way to success. Stressing the role of luck emphasizes the fact that not even one’s best efforts will guarantee success and this may cause some people to sit back and not even try. So downplaying or even denying the role of luck can actually help people to get up and make the effort. Another reason is that many people believe they are in the top half of any given talent distribution: the well-known story of 80 percent of people that think they are in the top 50 percent of best drivers. This false feeling may help people to muster the effort needed for achieving success, as they have an exaggerated sense of how talented they are and therefore believe that they will make it while others will not.
So in itself it doesn’t seem so bad to believe you are entitled to your success and that luck does not play a role in this. However, there are two main disadvantages. One disadvantage has to do with the fact that people who do acknowledge the role of luck in their lives and see how good fortune contributed to their success, are much more likely than others to support public investments that create and maintain the environments that made their own success possible. In this way they pave the way for others to also be successful. In contrast, people ignoring or denying the role of luck are less willing to contribute to the greater good which would make both their own and other peoples’ lives better. One stark example Frank gives is about taxes. People who earn a lot of money in general do not want to pay more taxes as they want to use their money to buy a $333K Ferrari. However, with less taxes it is difficult to maintain the roads which means these Ferrari owners have to drive over bad roads, taking away a lot of the pleasure of driving such an expensive car. If, however, they would pay more taxes and as a result can ‘only’ buy a $150K Porsche they would be driving very smoothly over nice roads, thus optimizing their driving pleasure. And what’s more: all the other people (also those in less expensive cars) will also enjoy smooth driving. A clear case of a win-win situation! Frank has many examples like this in his book which are very enlightening.
I will add another, second disadvantage. This comes from my own HPO research where I found that high performance organizations do not only rely on their hard work and the talent of their people to become high performing. They are actually very aware that they also need luck to become and stay high performing and they actively create the circumstances that foster luck. This is done by relentlessly looking for new and innovative ways to do things and to create new products and services, all the while experimenting and making mistakes. This promotes an environment which creates the circumstances that things fall in their place once in a while, that everything goes well, that the organization actually hits the jackpot. You might thus say that these organizations create their own luck, which is not technically really true (as Robert Frank would undoubtedly argue) but they sure are ready when luck ‘hits’ them!