Great by Choice (Jim Collins and Morten T. Hansen): Chapter 07: Return on Luck

Or maybe let's broaden the question a little, what role does luck play in your success or failure?

Jim tells the story of a climber who fell from a snowy mountain, blanketed by freezing ice. He shattered both his legs, and injured his partner in his descent, luckily he didn't die. Through another series of good luck events, he was rescued before a massive snow storm descended upon the mountain, which would have made the rescue impossible. Before we clap for good luck, let's also acknowledge the role of bad luck. Can you imagine a more scary situation then falling off a mountain, and then being left alone while you partner climbs down to find help?

What does it take to survive in that kind of situation, both your legs are shattered - you can't climb down, you're hungry, it's cold, for a full 44 hours? Are you getting the picture?

Malcolm Daly had trained and prepared for this kind of eventuality throughout his career, both physically and mentally.  

Worrying doesn't help, so don't spend too much time on that. 

Make a plan... make a decision... and put the plan to work. Take disciplined action. 

Luck played a role, definitely. But not in isolation. His relationships, his skills, his stamina, discipline and tenacity all played a role. Luck was out of his control, but many of the most important things were in his control. So it is with you. There may be some things that impact your success efforts, but ultimately, the vast majority of it is within your control. So stop complaining, start preparing, start practicing the disciplines.

As the authors studied the role of luck ,they asked three important questions: 

1. Is luck a common or rare element in the histories of the 10X and comparison cases?

2. What role, if any, does luck in explaining the divergent trajectories of the 10X and comparison cases?

3. What can leaders do about luck to help them build great companies on a 10X journey?

1. Some significant aspect of the event occurs largely or entirely independent of the actions of the key actors in the enterprise. 

2. The event has a potentially significant consequence (good or bad).

3. The event has some element of unpredictability. 

The study showed no evidence that the 10X companies had more good luck than their comparisons, nor that the comparisons had more bad luck than the 10X companies. Nor does the evidence suggest that 10X companies had their early, or that the comparisons had their bad luck early and struggled to climb their way out. Not even the idea that there was one significant/massive spike of good luck for the 10x companies or a single catastrophic stroke of bad luck for the comparisons. 

Luck was distributed evenly for both sets of companies. 

The question is not whether you're lucky or not. The question is, do you get a good return on luck? Can you turn bad luck into positive outcomes, or can you capitalize on the good luck events you experience?

The authors' conclusion? The environment doesn't determine why some companies thrive in chaos and why others don't. People do. People are disciplined, empirical, creative, productive, etc.

The comparison companies didn't fail for lack of good luck, they failed for lack of superb execution. "Resilience, not luck, is the signature of greatness."

"Success lives on the other side of obstacles and challenges. Along the way, make no excuses and place no blame."

They make several comparisons of companies who had a mixture of good luck and bad luck, and the comparison companies squandered all this luck. 

The trick to success is to have the resilience to endure bad luck long enough to eventually get good luck. 

"If you stay in the game long enough, good luck tends to return. But if you get knocked out, you'll never have the chance to be lucky again."

Here's the formula for managing luck, according to the authors:

1. Cultivate the ability to zoom out to recognize when luck happens.

2. Develop the habit to see when, and when not, to let luck disrupt your plans. 

3. Be sufficiently prepared to endure an inevitable spate of bad luck .

4. Create a positive return on luck - with good luck and bad - when it comes. 

In a nutshell, to get the best return on luck you must: 

20 Mile March 

Fire bullets, then cannonballs

Sjillfully Manage risk - Have lots of safety buffers

Have a clear SMaC recipe 

Never complain, never explain. Just get the job done.

Don't blame bad luck when you fail. Take full accountability for the actions you took that you shouldn't have, or those you didn't take that you should have. 

Download the associated workbook—your step-by-step guide

to applying the best business lessons, building confidence through results, and creating a business that works for you.

Download Your Free Workbook Here