Bookshop shelves are heavy with tomes, as podcasts pack out the airwaves, all ready to explore the special combination of characteristics that make for financially successful people – their mental toughness, emotional intelligence, grit and so on. ‘Success’ is a publishing genre in its own right, what can sometimes feel like a propagandistic celebration of capitalism. But c-suite wannabes will have to look very hard for a best-seller called something akin to ‘Getting to the Top: How I Benefitted from Accidents of Birth, Inheritance, Family Connections and Other Instances of Random Chance on My Way to the Big Chair’. As the writer E.B. White once noted, “Luck is not something you can mention in the presence of self-made men.”
Of course, dial our own stories right back and we’ve all likely benefitted from good fortune – in our genes, our upbringing, in the fact that around half of the differences in income across people globally is explained by their country of residence. But few would stop to consider how, say, the name they were given might play a part in their success. And yet people with easily pronounced names are judged more positively than those without; those with names earlier in the alphabet are more likely to receive tenure at a top university. Likewise the number of CEOs born in June and July is considerably smaller than that for those born in other months. Even your height might count: the average Fortune 500 CEO is 2.5inches taller than the average American man.
Indeed, take a closer look at some of those books promising to help you hone the necessary qualities of your inner CEO. That’s what Chengwei Liu, associate professor of strategy and behavioural science at ESMT Berlin, did last year. He studied the 50 firms featured as exemplary in the three biggest business best-sellers of the last decade to reveal that – oops – 16 failed within five years of the books being published and 23 came to be rated mediocre, underperforming the S&P 500 index. His explanation? Not the usual one that the CEOs took their eye off the ball. Rather that they weren’t all that good in the first place. Their initial success had been enabled by luck.
That, at some intuitive level, makes sense: wealth may be unequally distributed – it follows a power law – but human skills generally follow normal distribution. There are outliers, but working hours, as with height and IQ, hug close to averages. Nobody can put in a billion times more hours to make a billion times more dollars. Unsurprisingly, this kind of thing isn’t something they wanted to hear.
“It always puzzled me that so many executives looked like great and important people but that, on closer analysis, the quality of their work was not so good, I think because the role of luck in business performance is under-estimated,” argues Liu. “There’s a very clear causal relationship between effort and talent and advancing at the lower levels [of business] but it’s much more ambiguous as you move up the ladder, when the relationship between decisions and outcomes is much harder to identify. Then we just see what we want to see, and what shareholders want to believe – that these leaders are just exceptional.
“These ideas tend not to be well-received [in the business world],” adds Liu with a laugh. “That’s a shame because there should be a way to unpack the role of luck constructively. It would be helpful to take that into one’s planning.”
Certainly, the role of luck – open to many definitions but, in essence, meaning random external forces you have no influence over – isn’t so easily dismissed as might be an illogical attachment to a charm. It has even been mathematically modelled. Four years ago Italian physicists Andrea Raspiscarda and Alessandro Pluchini, with economist Alessio Biondo, wrote a computer programme that simulated the evolution of careers of a large population over 40 years. The ‘agents’ in this programme were given different degrees of ‘talent’ – all those characteristics the business books speak of – and then, every six months in the simulation, exposed those agents to random lucky or unlucky events: an unlucky event reduced their success by half, while a lucky one – because talent and opportunity interact – doubled it proportional to their talent rating.
The result? The 20 most successful agents held 44% of the total success, while around half of the population advanced no further in their success at all. Or, put another way, while talent wasn’t irrelevant, it wasn’t enough alone: the most talented were rarely the most successful. Mediocre but lucky agents advanced more than talented but unlucky ones.
Yet it seems that many of those who are ‘self-made’ – a phrase which itself takes all the credit – dislike being reminded of the role luck has played in that success, that they may at least in part be ‘serendipity-made’. When the Obama 2012 US presidential campaign ad congratulated go-getter individuals for building a factory, but then pointed out that the goods move from that factory on roads built by the collective, it bombed with ‘self-made’ people, though perhaps not as entertainingly as when real estate billionaire Sam Zell told TV host Bill Maher that he was part of the one percent because he worked harder, and that people should stop whining. Maher shot back: “Do you really think you work harder than a coal miner that spends 12 hours a day underground?” Kim Kardashian likewise suffered blowback when she recently put her success down to working her butt off, overlooking the $100m leg-up left to her and her siblings by her father.
Don’t mention the research that shows less able, richer children are 35% more likely to become high earners than their brighter, poorer peers. Or that which shows how random initial advantages, no matter how small, can spiral into huge advantages later in life.
In part, it’s been argued, that emphasis on effort over fortune is down to what’s called survivorship bias – ‘I’m still here and you’re not, so I must have done something right’ – hence too a tendency to claim that bad luck is something only losers use as a comforting excuse. It’s also a product of psychological processes that see us longing for both a motivationally important sense of control over our own destiny – if it’s all luck, why bother? – and for ego-boosting patterns in any retrospective assessment of our lives – ‘how smart was I, how decisive!’. We’re primed to recall our efforts over our breaks.
“Luck is in the background – what takes our attention is what we’re directed to achieving, the striving, all the conscious stuff that we deliberate on,“ says Thomas Gilovich, professor of psychology at Cornell University, who’s studied the pervasiveness of ‘analogous symmetries’ in memory. “Of course some luck is so dramatic its pertinence can’t be ignored. We’re a social species so there’s also a tendency to recognise the help of other people – the kind of thing you hear in award ceremony speeches. And society will punish us if we don’t thank other people too. But thanking market timing? Thanking those acts of god? Not so.”
It’s cultural too: if once we spoke of ‘unfortunates’, in recognition of those people stuck at the bottom of the hierarchy purely for lack of good luck, now our tendency is to regard the financially successful as being superhuman. Conversely, being a recipient of good fortune is somehow something to be embarrassed by. Luck is shunned because it can diminish our belief in human agency as well, or just take the edge off a good story: it’s disappointing to discover that, among many other scientific breakthroughs, x-rays, penicillin, microwaves and the world wide web were all products of happy accidents.
And then there is the fact that meritocracy – the idea that rewards should be distributed according to skill and effort – has become a foundational social ideal for many nations, with polling suggesting populations in these nations typically do believe hard work to be more important than external factors when it comes to getting ahead. Perhaps even Joe Public doesn’t like the idea that chance can disrupt a reassuring status quo either. Certainly, as Susan Roane points out, foundational for many self-made people is also the idea – cliché as it is – that they made their own good luck, thus discounting it as a properly random external event anyway.
There may be some truth in this. According to Roane, author of several business best-sellers, including ‘How To Create Your Own Luck’, successful people do share certain attributes, among them sociability and flexibility, an ability to network, keep their ear to the ground and ask for help and, perhaps most important of all, a willingness to say yes. The influence of good and bad luck over a lifetime being hard to prove, and all lifetimes having both good and bad, these personality types are just more ready to expose themselves to the potentially good stuff, should it come their way, and are ready to take advantage of any opportunity it offers. It’s what explains instances of self-made people who make it, lose it, and make it again.
“I think it has to be acknowledged that hard work and perseverance matter when it comes to success,” says Roane, ”and then that there’s still the influence of those happy accidents in play. It’s about how each individual responds to the invitation.”
Roane isn’t alone in feeling that the role of luck is being overplayed. Rainer Zitelmann – historian, management consultant and author of ‘The Wealth Elite’ and ‘Dare to be Different and Grow Rich’, which suggests where he might be coming from – speaks bluntly and says that he remains unconvinced by any of the arguments made by those seeking “to prove that luck is the most important factor for success”.
“Of course, someone who is only 5’3” cannot become a successful basketball player. But even in sports, genetic predispositions are only the very first prerequisite for success, and by no means the decisive factor. There are probably hundreds of thousands of people out there with the same genetic predispositions as Cristiano Ronaldo or Max Verstappen, but other factors are decisive,” Zitelmann argues. “The studies consistently conclude that it is not talent, but ‘deliberate practice’ over many years and decades and pursued with relentless discipline that is the main reason for people’s success. I think people who claim that others are successful mainly because they have been ‘luckier’ are just looking for excuses for their own lack of success. I have one recommendation for everyone: whether you are successful or not – accept that your situation is largely up to you.”
And yet some highly successful people will concede the role of luck. Even those who might blanche at what can seem like the accusation of being lucky will, if gently, calmly reminded to, happily recall times when, in fact, they were.
In 2015 Bill Gross, the investor and serial start-up incubator, carried out his own data analysis of 200 companies, including his own, and readily concluded that the number one factor in business success isn’t mental toughness, emotional intelligence, or grit, not people, business model or funding. It was the luck of good timing: the right product in the right market at the right time. He should know: if it wasn’t for low broadband penetration, and early browser issues, his Z.com online entertainment company was on its way to becoming YouTube, which launched just three years after Z.com folded.
“My good economic track record as an investor isn’t necessarily down to great skills, so much as [it’s down to] a great deal flow,” admits Marc Randolph, the co-founder of Netflix: which of his bets work out and which don’t are at least in part down to luck. “I have no clue which [start-ups] will make money, but I do know which people I like.”
Business administration academics Benjamin Lough and Alyssa McFadden at the University of Illinois conducted an analysis of 183 interviews on an NPR business podcast called ‘How I Built This’ in order to unpick to what the subjects attributed their success. While many stuck with the ‘you make your own luck’ mantra, others recognised luck’s role either as help from divine intervention or as the privilege they were born into. Intriguingly, women were more likely than men to attribute their success to their own efforts, probably because they believe luck is against them to start with.
“It’s nuanced. I do believe you make your own luck by putting yourself out there, by schmoozing with the right people. But that’s really another way of saying I don’t believe in luck,” says Lough.
Certainly experiments show over and over again just how human it is to be blind to chance – and how willing we are to take the credit due to it. Take one 2015 study by psychologists Mauricio Bucca and Mario Molina at Cornell University. They had a group of people play a simple card game called President, one clearly a game of chance and not skill. Yet they found that after a few hours play, winners talked about their win as though it was a consequence of their superior cardsmanship.
The scientists running the study made it explicit that the game was random. Still winners felt they had played better. Indeed, it was concluded that their sense of the fairness of the game was in part underscored by their winning it – this allowed them to find evidence, no matter how flimsy, of their skill, even when another version of the game was clearly rigged in their favour.
A similar experiment had another group of people randomly assigned the title of either ‘manager’ or ‘clerk’. They were later asked to score each other on various characteristics, the likes of leadership, assertiveness, intelligence, hardworking and so on. The clerks rated managers better at everything except hardworking. The managers rated themselves better at everything.
Robert Frank, professor of economics at Cornell University and author of ‘Success and Luck’, argues that this problem of skills bias is being exacerbated by the fact that – thanks to rapid global distribution and reproduction, and so on – more and more parts of the economy are now super competitive, winner-takes-all markets. And because there’s more money to be made by the ‘winners’, so more talented people are trying to win that reward.
“People used to serve a local market but now tech essentially allows them to serve the whole world. That means if you’re just a little bit better than the next best person, so many people value that that the reward is huge compared to what you might have expected in the earlier environment,” Frank explains. “But most talented and hard-working people face limits on those qualities and lots of people are bumping up against them close to those same limits. Of course talent and hard work matter, but if you don’t also have luck behind them [how do you stand out?]”
The important point here is that this makes random chance more, not less, the deciding factor in which of these talented people – the difference in quality between being minimal – win. The highly talented individual can lose out to the only slightly less talented but luckier one. Yet it seems that this battle for supremacy only makes people believe in their skills all the more, if only, Frank says – cynically, he admits – because the weaker their rightful claim to success, the more governments have are likely to tax them. Frank’s analogy is cycling into the wind – when you really notice the extra effort required – versus cycling with a tailwind – when you soon stop noticing its assistance. That tailwind is luck.
Our own awareness of the role of luck in assessing other’s performance doesn’t help either. The success or failure of a football team, for example, may be down to chance – as the German manager Roger Schmidt once perplexed the pundits by saying, “the extraordinary thing about football is, even if you do almost everything right, you can still lose” – but fans ascribe success or failure to the manager either way. The manager may as well claim the success, even if it was a product of luck, because he’ll be blamed for the failures, even if those were down to bad luck. Politicians do the same. And there’s the flip side too, of course: when quick success is dismissed as beginner’s luck rather than ascribed to talent and effort.
Crucially, this incoherence in our attitude to luck isn’t good for our state of mind, even as individuals or as a society. Those at the top, the elites, are already more inclined to believe in meritocracy. But studies suggest that the more we believe in it, the less willing we are to do anything for society at large. That’s a problem in these times of vast income inequalities and for policymakers especially. Ironically, in the mistaken belief that lightning strikes twice, we typically reward luck by distributing resources the likes of government grants to those who already have a history of success, even though a spread betting-style scattergun distribution – because luck is scattergun – has been shown to give a much better return on that investment.
It’s undeniably a problem when studies by the Harvard economist Yuezhou Huo, and others, have demonstrated that those who are asked to recall the impact of external causes in something good happening to them are far more likely to then express compassion and generosity to strangers than those asked to recall personal traits that contributed to that something good. And it’s perhaps especially a problem for societies that are built on a national narrative of equality of opportunity leading to equality of outcome, the likes of the American Dream that ‘anyone can make it’.
“If you live in a society of high arousal from positive emotion – as in the US – then it’s perhaps no surprise that we celebrate the go-getting CEO character, unlike the calmer, more collaborative type celebrated in the east,” says Thomas Gilovich.
“But the fact is that acknowledging luck would encourage us to express gratitude and there’s a lot of research suggesting doing so brings out our best selves – conversely, just look at how toxic resentment can be,” he adds. “The thing is that there’s a paradox in the business world in that generally the people in it are over-optimistic about everything, even as they recognise how hard it would all be for other people. That over-confidence comes at a cost to them but it also means we have people who take a chance and help give us vibrant economies. Maybe we just need a disbelief in luck to move things forward.”