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.

The main ideas in this article

• How luck works alongside talent and effort
• Examples of the role luck plays in success
• Luck is more important in some activities than others
• How to improve in luck-based activities vs skill-based activities
• The larger a “competition” is, the more of a role luck plays
• Luck’s role is getting bigger with time in some activities
• Why we minimise the role of luck in success
• Why you should care about luck’s role in success

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.

Using the continuum above you can see just how much of a role luck plays in certain activities. For example, luck plays a larger role in baseball versus basketball and tennis where there are plenty of scoring opportunities in a game. Roulette is totally luck based while running is completely skill-based.

Entertainment-based outcomes including the success of a song or movie have a huge luck component because of the social influences we have on each other as we saw in the Music Lab experiment above. The phenomenon of cumulative advantage also plays a role in the success of entertainment-based activities or products. This is where two songs of similar quality can sell radically different to one another if one is a bit more popular than the other.

There are different ways to assign activities to different places on the continuum, and it can get complex. In The Success Equation, Mauboussin gives three steps for deciding where to place an activity on the continuum:

1. Is there a clear cause and effect relationship? This usually means an activity is more skill-based.
2. How quickly do results return to the average? If they return quickly to the average the activity is likely luck-based and vice versa.
3. Where are experts useful? If predictions among experts about the outcome of the activity are similar this usually indicates the activity is skill-based.

Different aspects of the same activity might even exist in different parts of the continuum. For example the interaction between a pitcher and hitter in a baseball game is based more on skill compared to the overall performance of the whole baseball team where there are more aspects that can influence the outcome.

In activities which are based more on skill, history and the past can be a good teacher. In luck-based activities, history doesn’t help us much.

Knowing if your activity is more skill or luck-based can give you better results

The way you improve your results in an activity depends on how much skill is involved versus how much luck is involved.

According to The Success Equation, skill-based activities require deliberate practice to improve. Deliberate practice is the difficult and time-consuming process of intentionally practicing to improve weaknesses. You can read a quick summary of it in our book review of the book Grit by Angela Duckworth.

To improve in luck based activities you should focus on the process you’re using. A good process has three ingredients:

1. Analysis – Identify the causes of success in your activity and find a competitive edge
2. Psychological – Be aware of common psychological biases that may be impacting your process. For example, we tend to give extra weight to recent activities when making a prediction.
3. Constraints and influences – Be aware of the constraints you’re working within. In your job these might be the influences of your company and industry, and in sports it might be the rules

You’ll also need to realise that even if you have a good process you still might lose in the beginning until you gain expertise.

The larger a “competition” is, the more of a role luck plays

In the book Success and Luck: Good Fortune and the Myth of Meritocracy author Robert H. Frank shows that as a “competition” (e.g business, financial, sports or employment) draws more and more “contestants”, luck plays a bigger role in success.

He gives the example of a competition where 98% of contestants’ performance is caused by talent and effort, and 2% is caused by luck. In this competition, all of the top competitors will likely be as talented and hardworking as each other, so the winner will likely be the luckiest of these.

This phenomenon is known in The Success Equation as the paradox of skill, which basically states that as the skill level of participants in a given activity rises, performance becomes more consistent and the importance of luck also rises.

Luck’s role is getting bigger in some activities

The paradox of skill also means that as more and more people take part in an activity, the average skill level is also raised, and therefore luck becomes a more important deciding factor.

Not every activity works this way. In the NBA the average height has risen, and this has the side effect of having the opposite effect because the pool of athletes tall enough to play is shrinking.

The effects of luck are also more magnified today due to technology. In Success and Luck, Frank calls these “winner takes all markets”. In a winner takes all market technology extends the reach of the lucky top performers. Examples of this include tax returns, which are now mostly dominated by one software program: TurboTax when in the past they were completed by local accountants.

We tend to minimise the role of luck in success

As humans we downplay the role of luck in success and celebrate the role of skill mostly because of our own cognitive biases.

In The Success Equation this is blamed on our desire as humans to link cause and effect. Once an event takes place we create a story to explain it which almost acts as if the outcome was a sure thing. Statistics unfortunately don’t have much of a place in these stories.

According to Frank in Success and Luck, other reasons why we downplay luck include:

• Successful people are frequently confronted with the reality of hard work every day, but only infrequently reminded of the luck and fortune they’ve had
• Removing the emphasis on luck might encourage you to put and submit the effort that is also required to be successful
• Emphasising skill over luck strengthens your claim to the results of your successes e.g money

There are also inherent issues in how we study success in the first place. The Success Equation explores how authors and experts study successful businesses to find out how other businesses can apply the same strategies.

This is flawed because unsuccessful companies aren’t included in these studies by definition. To truly see which companies are skilful and which are just lucky, Mauboussin says we should really be asking how many of the companies using a particular strategy were successful. This concept is known as the under sampling of failure.

Closing thoughts about luck and success

The purpose of this article isn’t to say you should stop working hard towards your goals. In fact, it should reiterate that hard work and ability are still essential in success. My hope instead is that this article simply makes you aware of the role luck and randomness could play.

There are two additional reasons why it matters if luck plays a role in success.

Firstly, if successful people acknowledge the role of luck in their success they might be more willing to give back to the institutions and people who helped create that luck. This is one of the main ideas Robert Frank talks about in Success and Luck.

Finally, if you’re better able to account for luck when forecasting or making predictions, you may be able to better plan for the outcome. This is one of the main ideas in The Success Equation.

Many of us worship competitiveness in business and sports, but according to research, we may need to rethink our love of this trait.

I’m not a very competitive person. I’ve never been one to obsess over competitive sports, video game multiplayer matches or cut-throat board games. And while I’m fascinated by challenge and high stakes performers in sports and business, I’m not the type to rush out and compete. I was comfortable with my level of competitiveness until a recent experience in a Brazilian Jiu Jitsu class.

During the class I was wrestling someone who was the same level and weight as me but much more competitive. He seemed to want to win a whole lot more than me, and it felt like this desire helped him to eventually beat me.

After the round I started wondering if my lack of competitive nature was hurting my performance. If I were more competitive would I have held on, pushed further and tried every trick in the book to win? More broadly, if I were more competitive would I have a better career or earn more money? Armed with these questions I dug into the science, and what I found was fascinating.

Sports and business is littered with stories of highly competitive individuals and companies who did great things. Michael Jordan and Tiger Woods are legendarily competitive and two of the best in basketball and golf respectively. Goldman Sachs has been known to have a highly competitive culture and has had its share of successes.

There are also the infamous stories too. Enron was a company known for its ultra-competitive company culture which was one of the ingredients behind its spectacular bankruptcy in 2001.

Table of contents

• Competition has no direct impact on performance
• Being highly competitive can be detrimental
• The difference between healthy and unhealthy competitiveness
• How to build a healthy attitude to competition
• What to do if you’re too competitive
• What to do if you’re not interested in competing or actively dislike competition
• Can you be non-competitive and still be successful?

Science finds that competition has no direct impact on performance

An interesting meta-analysis (a study merging the results of numerous individual studies on the same topic) of competition research from 2012 showed that competition had no direct impact on performance.

This finding was true regardless of whether the studies were measuring individual competitiveness, perceived environmental competition (e.g the perceived competitiveness of the classroom or office) or structural competition (e.g an actual contest or competition).

According to the meta-analysis, competition produces two substantial direct effects which actually do impact performance. But because these two effects cancel each other out competition has no direct impact on performance. The study called this the “opposing processes model”.

On the positive side, competition causes you to set performance approach goals. This is when you set a goal to outperform others. Performance approach goals are associated with behaviours positive to your performance such as eagerness, task-absorption and persistence.

On the negative side, competition causes you to set performance avoidance goals. This is when you set goals to avoid performing more poorly than others in a competition. Performance avoidance goals are associated with behaviours which can negatively affect your performance such as worry, task-distraction and self-handicapping.

Being too competitive can be detrimental

All this research points to the conclusion that being extra competitive won’t give you a performance boost, and lacking competitiveness won’t hurt performance. But what if you’re already highly competitive? The research shows that this can come with a range of detrimental effects.

A great roundup of research in this study about the ethical implications of competitiveness showed that competition is more likely than cooperation to cause conflict and damaged relationships in small groups. In team settings, highly competitive people struggle to collaborate, are liked less and also don’t contribute much. Being hypercompetitive was also shown to be associated with poor ethics.

Echoing what the meta-analysis above mentioned, the study also showed that being highly competitive also doesn’t necessarily equate to being more successful. Highly competitive people are “rarely high performers” in jobs, tasks and in school. Even highly competitive nations generally have poorer GDP and national wealth. One study of elite tennis players found that their competitiveness didn’t have a bearing on their rankings.

The difference between healthy and unhealthy competitiveness

But the above findings miss one crucial point: sometimes competition is unavoidable. Going for a promotion, playing a team sport or putting extra effort into a school or university assignment are forms of competition that many of us are expected to take part in. It makes sense to want to tackle these forms of competition in a healthy way.

There are two ways to be competitive. On the one hand there’s hypercompetitiveness, and on the other hand there’s the personal development competitiveness attitude (PDCA), otherwise known as the self-developmental competitive orientation.

Hypercompetitive people try to compete and beat you in everything, even seemingly trivial activities. They try everything to avoid losing and to make others lose. Research suggests that for a hypercompetitive person, winning might enhance their feelings of self worth.

Those with a PDCA or a self-developmental competitive orientation don’t compete solely to win. Instead they compete because it encourages self-development and enhances mastery and enjoyment of the task being completed.

People with a PDCA tend to avoid comparing themselves with others, and they respect their competitors. In fact they see their opponents as valuable partners in their self-growth.

As you can see, being competitive can be healthy and contribute to your growth if you have the right type of mindset.

How to build a healthy attitude to competition

The first step is to recognise that the objective of competition is actually personal growth. The reason why you’re competing is to further your skills, learn something and have fun. Winning is still important but it’s not the primary aim.

If we deconstruct the ingredients of a PDCA or self-developmental competitive orientation we can see that it’s a mindset shift. Someone with a healthy attitude to competition will think the following compared to a hypercompetitive person:

What to do if you’re too competitive

Author and coach Brett Ledbetter gave a great TEDx talk in 2016 which helps answer this.

Similar to what has been mentioned above, he thinks that highly competitive people can benefit from changing their mindset. Instead of seeing competition as a rivalry between yourself and other competitors, you can instead view it as a healthy way to improve yourself.

His idea is that we should stop viewing competition as “me vs you” and instead view it as “me with you”. We need our training partners and opponents in order to push us further to reach our own achievements, so we should push each other in a healthy way as opposed to an unhealthy rivalry.

What to do if you’re not interested in competing or you actively dislike competition

Join the club! My personal interest in competition ranges from “not bothered” to sometimes actively avoiding it.

According to a recent study called The Four Faces of Competition: The Development of the Multidimensional Competitive Orientation Inventory there are actually two other categories you can fall into in addition to hypercompetitiveness and a PDCA / self-developmental competitive orientation.

These two attitudes are anxiety-driven competition avoidance, and lack of interest toward competition.

Those with anxiety-driven competition avoidance feel that winning or losing in a competition could cause rejection or dislike from their peers, so they avoid it.

If you lack interest toward competition you don’t necessarily avoid it, but you don’t seek it or put additional effort into winning any competitions.

It’s important to note that if you don’t like competition, you can still be incredibly successful. There are business strategies like the blue ocean strategy below which are built on non-competition.

If you’re not interested in competition or actively avoid it, the mindset shift table above might help. I personally feel more motivated to compete when I remove the aim to win and instead focus on the personal growth that will come out of competing.

Can you be non-competitive and still be successful?

Some of the most successful people and businesses have used non-competitive strategies. Warren Buffet was reportedly delighted to buy the Buffalo Evening News newspaper because it was the only newspaper in town. In the past he has also spoken about avoiding competition by building a protective “moat” around a business.

There are whole books devoted to the strategy of avoiding competition. Blue Ocean Strategy is one such example. It explains how businesses can unlock huge profits and more customers by creating a product which provides so much value for users that it leapfrogs competition and lands you in your own market altogether.

One successful example of the blue ocean strategy is Cirque Du Soleil, which is now an immensely popular hybrid circus-theatre show. Cirque Du Soleil avoided competition in the relatively small and crowded circus market and created a show where there were stories, acrobatics and artistic performances. It charged higher ticket prices and reduced costs by removing animal shows and “circus celebrities” which didn’t fit with the new concept.

Rather then become a circus competitor, Cirque Du Soleil became an alternative activity. It appealed not just to those who might be interested in going to the circus, but for those who might usually go to a theatre or comedy show.

Curves, iTunes and Lexus are other examples of successful products which sidestepped head-on competition to create products with immense value for consumers. Each of these products resulted in new markets being created for women’s only gyms, high quality legally downloadable music and affordable luxury cars respectively.

Do you have any thoughts or experiences with competition and competitiveness? Share them below!

Sources

• Murayama, Kou & J Elliot, Andrew. (2012). The Competition-Performance Relation: A Meta-Analytic Review and Test of the Opposing Processes Model of Competition and Performance. Psychological bulletin. 138. 1035-70. 10.1037/a0028324.
• Gábor, Orosz & Tóth-Király, István & Noémi, Büki & Ivaskevics, Krisztián & Bőthe, Beáta & Fülöp, Márta. (2018). The Four Faces of Competition: The Development of the Multidimensional Competitive Orientation Inventory. Frontiers in Psychology. 9. 10.3389/fpsyg.2018.00779.