There’s something you ought to know about your achievement. There’s a good chance that they do not stem from your motivation and hard work. But if you’re like most professionals, you believe that your efforts are why you achieve positive results. (As for negative outcomes, well, that’s always someone else’s fault, isn’t it?)
Here’s the uncomfortable gospel about your successes — or the somewhat comforting explanation for your failures: They are not the result of anything you are doing, at least not entirely.
Your ability to attract candidates, fill reqs, you name it is often greatly determined by luck.
An Inconvenient Truth
“Bestselling business books promise to teach you the winning formula and reveal the secrets of success,” writes Chengwei Liu, associate professor of strategy and behavioral science at Warwick Business School. “But the inconvenient truth is that exceptional successes in business are largely based on luck.”
Unfortunately, only 2% of articles from leading management journals ever mention the word. Perhaps that’s because while we understand the meaning of luck, no one can really explain its impact on business. So as with many things in life, what we can’t explain, we downplay or ignore.
Not long ago, Liu conducted research that looked at Fortune’s 100 Fastest Growing Companies list. His findings showed that while businesses on the list get the most media attention as organizations that we should all be learning from, the reality is that their consecutive-year growth rates are almost random.
Liu explained that “businesses with the top current growth rate (more than 34% per annum) have a significantly lower expected growth rate next year than firms with a high but less extreme current growth rate (between 32% and 34% per annum). This suggests that top performers are not only luckier than the rest, but also become predictably worse.”
What often gets overlooked, Liu pointed out, is that exceptional performances by “best-practice” companies rarely last. He goes on to suggest that we should focus on helping business practitioners move from “incompetent to OK” — as opposed to the usual approach of shifting from “good to great.” Being great in business, he argues, is a matter of luck.
Now, none of this is to say that good fortune alone drives results. But it does have a more powerful influence over your work than you probably think. As Virgin’s Richard Branson once said, “To be successful, you have to be out there; you have to hit the ground running. And if you have a good team around you — and more than a fair share of luck — you might make something happen.”
The Impossibility of Causation
In Drive: The Surprising Truth About What Motivates Us, author Dan Pink writes about algorithmic and heuristic tasks. Algorithmic work generally occurs lower down in companies and consists primarily of highly repetitive labor. As such, it’s often entirely feasible to create cause-and-effect relationships between input and output. For instance, you can evaluate a factory worker by whether the individual created enough widgets within a given amount of time.
Heuristic work, on the other hand, is not so clear-cut. Most knowledge and white-collar work, including that of recruiting professionals, falls into this category. Essentially, heuristic tasks demand problem-solving and managing a slew of variables, many of which entail limited control or influence. From candidate ghosting to legislative changes to vendor actions and beyond, these are just some examples over which recruiters have very finite power. Consequently, establishing causal relationships between one’s work and one’s results becomes tricky at best.
And yet it seems like every other LinkedIn profile or resume includes the phrase “results-oriented.” The overuse of that description has rendered it meaningless, but is anyone among us instead going to add “lucky” as a new proficiency?
Years ago, I interviewed Michael Mauboussin, then head of global financial strategies at Credit Suisee’s investment banking division and now head of consilient research at Counterpoint Global. Mauboussin, also author of The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing, explained:
“There’s a continuum of things that are pure luck on one end and pure skill on the other. When your outcomes are truly a reflection of the work that you’re doing, a results-oriented evaluation is not unreasonable, like in manufacturing, which is very skills-oriented. But things like launching a successful R&D project are inherently probabilistic, with a lot of randomness and luck to them. There are profound influences that are hard to anticipate, so you have to move the orientation away from outcome and more toward evaluating process, not because you want to dodge the outcome but because that’s the ultimate way to get it.”
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You might be thinking: How do you judge processes if not by outcomes?
It’s a fair question, the answer to which lies in an important distinction. Good processes are ones that over time and on balance yield good results. They rely on committing to certain behaviors — or input — to ensure success. So while we can judge processes by outcomes, we are better off evaluating individuals based on behaviors likely to generate successful results.
What’s more, Mauboussin pointed out that the higher up you are in an organization, the greater the role that luck plays in your work. “It turns out a lot of senior executives are getting paid for randomness instead of skill,” he said. “It’s a backward system.” Which makes sense because the more senior your position, the more heuristic your job responsibilities.
The Fear of Luck
Let’s be real. Luck will continue to remain a dirty four-letter word in the lexicon of business. To give it credence is to upend the way we manage performance, as well as evaluate candidates. For instance, sure, a job applicant during an interview might talk about a project that they successfully led, but how can you know the degree of luck involved?
Therein lies the problem. If it’s difficult to establish a causal relationship between one’s input and output (and it is), it’s just as frustrating to identify luck’s impact on results. Nonetheless, perhaps the most critical question to ask with regard to luck is: Despite one’s actions, could things just as easily have turned out differently? If the answer is yes, then you also have at least some answer regarding the role of luck.
All of which is to say that our ideas and efforts are still important, for as I pointed out some years back in a blog post about the role that luck played in my own job search, “[Y]ou can create situations that enable good fortune to play its hand.”
Ultimately, though, when evaluating our successes — and failures — we must stop ignoring the four-leaf green elephant in the room. “The business world needs to balance the accounts of exceptional performance and take a far more judgmental look at the effects of luck,” Liu writes, adding this damning remark: “Blindly rewarding successes strengthens the myth of meritocracy and invites fraud.”
Of course, recognizing the role of luck takes transparency, honesty, and especially humbleness. Good luck with that.