When it comes to the factors that lead to success, there’s a tendency in folks to discount the role of luck. We like to think we’re the complete masters of our fortune — that we can control everything that happens to us and make our own luck. But by not giving luck its due, we actually prevent ourselves from effectively managing this force so we can experience success in the long run.
My guest today has written a book on the math of success, skill, and luck. His name is Michael Mauboussin and he’s the author of The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing. Today Michael and I discuss the philosophy and math of luck, the activities in life that rely more on luck than skill, and what you can do to manage luck like a poker player in order to be more successful in life. Lots of great practical takeaways in this episode. You won’t want to miss it.
Show Highlights
- Why we discount luck when it comes to success or failure
- Why thoughtful, successful people acknowledge luck
- How philosophers and mathematicians define “luck”
- The difference between luck and randomness
- How the “Paradox of Skill” causes luck to become more important as your skill increases
- Why there will likely never be another baseball player who hits over .400 like Ted Williams
- How statisticians are able to determine how much luck and how much skill goes into an outcome
- Which sports rely more on skill and which ones rely more on luck
- Why a large sample size is necessary to figure out how much luck or skill is involved in an activity
- What poker players can teach us about managing luck and skill
- Why you should focus on processes and not outcomes
- Why football teams should go for it on 4th down
- Why hiring superstars almost always ends up being disappointing
- Why complexity makes luck more influential in an outcome
- Why cumulative advantage and power laws make it really hard to write the next big book or start the next big blog
- Why “Gangham Style” is the perfect example of luck, cumulative advantage, and power laws
- How the internet and social media has only compounded the influence of luck on success
- How understanding luck can buffer the sense of failure you might experience in life
- What you should do if you’re the underdog in a competition to inject more luck into the outcome
- And much more!
Resources/Studies/People Mentioned in Podcast
- The “Interpreter” part of our brain that ignores luck
- The Narrative Fallacy
- The Philosophy of Luck
- Stephen Jay Gould
- My podcast with Anders Ericsson on reaching peak performance
- Ted Williams
- The Pythagorean Theorem of Statistics
- Winning Decisions: Getting It Right the First Time
- Chasing Stars: The Myth of Talent and the Portability of Performance
- Regression toward the mean
- Power laws
- Music Lab experiment that shows how luck influences whether a song becomes a hit
- The Polya Urn model that shows how luck and cumulative advantage can make or break a book, song, movie, or website
- The Economics of Superstars
The Success Equation has provided me a lot of food for thought since I originally read it a few months ago. The mathematical insights Michael provides about the relationship between luck and skill has caused me to re-think how I approach my business and life. It will do the same for you. Pick up a copy on Amazon and be sure to check out the Success Equation website, where you can play around with some games so you can see these mathematical theories about skill and luck in action.
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