What business leaders can learn from challenging the notions of luck and success

One curious finding from my research, a normative theory of luck, is more often than not, successes are random and short-lived. The underdogs, on the other hand, may do better in the long term. 

And this prompts a deeper question: could our traditional understanding of talent, merit, and success be fundamentally flawed? Does this fresh perspective make us reassess how we define and determines success? Is it more down to being in the right place at the right time than innate genius?  

We are of course, talking here about luck. This puzzling finding begins to make sense when considered alongside the role of chance and its impact upon success. For more than a decade I’ve tried to measure how luck plays its hand in the fortunes of business and individuals – and this has revealed a more nuanced – and often unpopular - view of success and failure. 

Is success misattributed to luck?

Not everyone will welcome these findings – namely that luck plays a large part in making the competent appear successful, while also masking talent. If someone is lucky, they may perform better than those who are truly gifted, because of the fortunes of circumstance. 

My most recent study delves into the academic world to explore how this dynamic unfolds. We asked nearly 950 psychology scholars and 680 management scholars to evaluate pairs of academic papers, selecting the ones they believed to have the most impact.  

We compared the votes – according to our study – with how these papers fared in real life – namely how many citations they received from other academics. In academia, citations are a sign of success and can ultimately determine academic careers. 

What we found was this: highly cited papers – the top of the crop - also performed well in our study and they were chosen by our participants. But this didn’t follow all the way through. The moderately successful papers didn’t replicate that moderate success in our tailored study, and they were judged as inferior.  

What does this reveal? 

Some individuals may be enjoying a status that doesn’t reflect their true ability. Other talented individuals may not achieve what they deserve, because chance hasn’t thrown opportunities their way. Papers without the benefit of early luck will only get so far up the rankings even if they are of better quality. 

Some academic papers start with a leg up – the dice are loaded in their favour. These authors may have a head start as they benefit from existing recognition and a pool of healthy professional networks. So then, does conformity and social influence mean their work is more likely to be recognised and cited? It’s a different take on privilege and how the rich get richer – the more you start out with the better you do.  

Academics whose work scored more highly in our experiment experienced lower career progress in the real world due to the biased citation counts. Their professional status didn’t do justice to their skill.

The luck you start out with – your network, your profile, your ‘clique’ – can lift or limit your fortunes.  

Rethinking how we define and reward success

There are dangers of failing to acknowledge the role of luck in business. There is a risk that women and people from minorities may be underestimated by their managers because they don’t conform to the norms of success. Luck doesn’t throw so many chances their way. And there’s a risk that any success they have may be dismissed as a fluke – they’re seen as a lucky outlier - rather than a reflection of their ability. 

The flipside of this is that we give disproportionate attention to the achievements of exceptionally successful companies and superstar chief executives – their strategies and behaviour are studied in order to determine a replicable formula for their achievements. They give the illusion of being in control.  

But are they really that talented – or did they get a lucky break? I’ve studied the subsequent fortunes of 50 companies featured in the aspirational business books Good to Great, In Search of Excellence, and Built to Last. Within five years of publication, 16 of these lauded companies had failed, 23 were underperforming and just five of the remainder sustained any kind of excellence. Overall, they have performed worse than the norm. Could it be they were never that good?

Often when a feted business leader underperforms, this is attributed to hubris and over confidence. But my work shows that their previous performance may have had more to do with luck than talent, and their failures are also down to chance – and the fact they may not have been that talented in the first place.    

Trying to emulate the extreme successes of others is a risky business. It’s dangerous to ignore how much a hand luck plays in the fortunes of the extremely successful – the stock market darlings and the superstar chief executives – they’re probably there because of a lucky break or two.  

My work shows that longer lasting talent often lies on the second tiers – the competent but apparently less exceptional businesses and individuals.  

And this challenges managers and institutions to rethink how they evaluate and reward talent. What if opportunities were granted more randomly within a qualified pool, allowing hidden stars to shine? What if businesses reconsidered their reliance on early success as a predictor of long-term potential? We underestimate the role of luck in success at our peril – and at the expense of fairness.