What About Luck?

Audio Transcript

This is a really interesting question. So, if I understand the question correctly, as we peer through the data and we peer over time in maybe both studies, in separating great companies from good ones, what role does luck play?

What role does luck play? It’s actually a topic I’ve been interested in looking at as a subject in and of itself, just luck. I think luck is a fascinating subject. But, first, as you know from Good to Great, when we interviewed the executives themselves, they placed a lot of emphasis on luck. The good-to-great leaders. If you asked them why they were successful, what made the companies great, what enabled them to go, they put a premium on the good fortune that they had had.

I mean, any number of times, you’d go through the interview transcripts, and it’s amazing to see people saying things like—I was just looking back at the Sam Siegel transcript from Nucor. I said, “Well, how did you guys make so many good decisions?”

He goes, “Well, I guess we were just really lucky in our decisions.”

“Well, okay, fine, but maybe I’d like to understand how to be lucky. Can you tell me that, a little bit more?”

Or that wonderful conversation that I had with Alan Wurtzel in which I said, “What were the factors?”

And he said, “Well, easy: 80 of 100 points, the wind was at our backs.”

I actually faxed him a copy of the Good to Great study chart, and I wrote, “Your company. Comparison company.” And in the middle I wrote, “Same wind.”

And his response was, “We must have been really lucky.”

And, of course, Joe Cullman’s autobiography. It was titled I’m a Lucky Guy.

So, as we looked at the research, the perception of luck amongst the good-to-greats was very high. We found the perception of luck amongst the comparison leaders quite low when things went well and quite high when things went badly, meaning, they would blame bad luck.

So, one thing we found about luck that’s interesting is there’s luck itself. What’s the objective reality of luck and chance? And the second, which is, what is an executive’s relationship to luck? The less great leaders seem to have a relationship such that if things went well, it was them; if things went badly, it was bad luck.

The really great executives evidenced just the inverse. If things went well, they put more premium on luck, which is actually a form of humility. Because if you’re really afraid that maybe you were just lucky, you’re not necessarily going to believe your own press. You’re going to be looking at it and saying, “You know, we ought to be really scared that we might have just been lucky three times in a row, which means we’ve just got to be that much more disciplined and worried that it’s eventually going to catch up with us.”

Again, that notion of neurosis. And, by the way, I do believe that those who build greatness are at one level or another a bit neurotic. But then, of course, when things would go badly, they would not blame bad luck. They would look in the mirror and they would say, “I guess I must be responsible because I’m the executive here.”

Now, that said, what is the objective reality of luck? As I look at paired comparisons over time in both studies, the data seems to indicate—and I can’t stand by this as firmly as some other variables because we haven’t rigorously looked at it as closely as some other variables—but the data seems to indicate that good luck and bad luck are reasonably evenly spread between the good-to-great companies and the comparison companies. That for every stroke of good luck that you find in the good-to-great companies or the visionary companies in Built to Last, you can find a stroke of good luck in the comparison company. And for every stroke of bad luck, you can find a stroke of bad luck in the comparison company.