Luck can be the deciding factor in success, even if it only plays a tiny role
Luck is one of the most important ingredients in success in addition to hard work and talent. It’s had a hand in the meteoric success of Bill Gates, Al Pacino, Warren Buffett, Jay-Z and countless others.
It’s also resulted in life changing discoveries such as penicillin, and has been blamed in the spectacular failures of objectively good products like the Sony MiniDisc.
We have a complex relationship with this mysterious force that often creeps into superstition. Many of us will question other beliefs we take for granted such as religion, but research shows 70% of people crossing a street would still rather walk around a ladder rather than under it.
Luck is important for success when combined with ability and effort
Experts have varying opinions about just how important luck is for success. The consensus is that luck plays an important role in success when combined with hard work and talent. You need all three components.
As we’ll discuss below, luck isn’t equally as important for success in every activity. It’s also not static. In some activities, luck’s role in success is actually getting bigger with time.
At the base level, luck dictates what country you’re born in, the environment you grow up in, who your parents are and what their incomes are. According to various studies, these factors have significant bearings on the opportunities you’ll receive when growing up and as an adult. Research has even shown that the strength of the economy when you graduate can have an impact on your income up to 15 years in the future!
In the book The Luck Factor, author Richard Wiseman suggests a startling 95% of success is the result of luck and 5% is the result of ability.
This may sound staggeringly high, but a recent 2018 simulation backed this idea up when it suggested that a large ingredient to success was randomness. The study went on to say that according to their simulation “…almost never the most talented people reach the highest peaks of success, being overtaken by mediocre but sensibly luckier individuals.”
Luck plays a role in everything from the success of art to sports and business
As mentioned above, luck can have a huge impact on our basic opportunities. It also has an impact on a large range of specific activities from the popularity of a song to picking stocks. We’ve delved into real-life examples of luck helping some well known people to attain crazy levels of success in another article, but here are a few more.
The Music Lab experiment is one such example talked about in many books and articles about luck. The experiment allowed people to download and leave a rating for 48 indie songs from a website. Some of the participants were put into an independent group where the songs were presented randomly with no ratings, and other participants were presented with the songs along with ratings, and in some cases the download numbers for each song.
The experiment showed that in the groups where ratings and download numbers were displayed, the highest quality songs didn’t necessarily become hits. Instead, the most popular song in this group was actually the same song the other group ranked number 26. The experiment showed that luck plays a big role in the success of a song regardless of whether or not it was the highest quality song.
Luck also has a big impact on the performance of businesses. In The Success Equation by Michael J. Mauboussin, a study by Michael Raynor, Mumtaz Ahmed and Andrew Henderson is described where 288 companies regularly referenced in 13 books about high performance were analysed to see how skill and luck contributed to their success.
The researchers found only 25% of the 288 companies mentioned in these books could be confidently called high performers, and that the rest might have benefited from luck and could be “random walkers”.
Mauboussin also shows an excellent illustration of just how much of a role luck can play in investing. In 2006 TradingMarkets asked ten Playboy Playmates to choose five stocks to try and beat the market. The highest gain was 43.4% by Deanna Brooks, during a time period where the S&P 500 only rose 13.4%. This beat 90% of the money managers actively trying to do the same thing during the time.
Luck isn’t equally as important in every type of activity
Luck’s role can be bigger or smaller depending on the activity. The more skill-based an activity is, the less of a role it plays.
In The Success Equation this is illustrated using the luck-skill continuum. The continuum categorises activities from those based totally on luck on the left to those based totally on skill to the right, with many activities falling somewhere in the middle.