Luck - the magic pill of successful people
Ian Dyason. 19 June 2021
"Glamis though art; and Cawdor. And wilt be what thou art promised. Yet I do fear thy nature; it is too full of the milk o' th' human kindness to catch the nearest way."
For those of you who studied Macbeth, you will recall this very important soliloquy by Lady Macbeth about her husband. This was in response to a letter that she had just received from Macbeth who reported about seeing three witches that predicted that Macbeth would be the Thane of Cawdor and later the King of Scotland. The letter reported that Macbeth had indeed been rewarded the Cawdor thaneship after he defeated the incumbent in battle, and there is an expectant air that Macbeth might well become king. But rather than be happy for Macbeth, Lady Macbeth secretly chastised her husband for his "meekness", that he does not have it within himself "to catch the nearest way." And what is this nearest way? Why to kill the king, of course!
I am reminded of this when I read an old MIT Technology Review article about why we are not rich, even if we are so smart. (If you are so smart, why aren't you rich?, MIT Technology Review, March 2018) The article did cause some stir when it was first published but quickly went out of style as other people either forgot about it, or chose to forget about it. The article published the work of Italian researchers Alessandro Pluchino et al who went to answer just that question - "How come smart people are not necessarily rich?" It turns out that luck has a lot to do with it, and it comes down to how the dice of intellect and opportunity fall. Apparently, they both don't fall the same way.
Different distribution functions
As it turns out, serendipity (the "smarter" term for "luck") plays a much bigger role in someone becoming rich than smarts.
It has been known that scores of intelligence quotient (IQ) tests (which are used to predict - some say quite poorly - a person's intelligence) are normally distributed about an average score for each cohort. That average score is 100, with a standard deviation of 15. This means that 68% of any age cohort will have a score between 85 to 115. Furthermore, if one has an IQ score of 130, that person is in the top 2.1% of the cohort; and with a score of 145, that is the top 0.1% of the cohort! One needs to understand that the scores are normalised around 100. Raw scores can shift with age, but they are normed at 100 as the mean score. What this means is, within any age cohort, not everyone will be a genius.
However, when it comes to wealth distribution, it takes on a power distribution. This is in line with the Pareto rule where 80 percent of the world's wealth is held by 20% of the people. Conversely, 80% of the world's population only hold onto 20% of the wealth! This makes a huge imbalance between wealth and population, which we see right in front of us.
When Pluchino et al ran simulations to randomly distribute IQ scores and wealth, and project them over time, they saw that there was very little overlap between genius and wealth. We have seen very wealthy people who do not have a high IQ, just as we have seen people who are very smart but are not wealthy. In other words, wealth and talent are not correlated. In fact, opportunities to make one wealthy come about in a very random fashion, regardless of whether one was smart or not. As it turns out, serendipity (the "smarter" term for "luck") plays a much bigger role in someone becoming rich than smarts. True, if the opportunity were to fall onto a person who could not understand its potential, that person would not be able "to catch the nearest way", as Lady Macbeth might say; but, then again, there have also been really smart people who could not see the potential in an opportunity. Luck, as it turns out, only benefits the prepared mind, as professed by Louis Pasteur.
How can we benefit from luck?
All opportunities have risk; all opportunities require work; all opportunities have cost. If one is unable to pony up the ante, then there is no point in talking about luck.
So given that luck contributed to people becoming wealthy, and given that we cannot control luck, and given further that fortune favours the prepared mind, what can we do to benefit from the opportunities that should come our way?
1. Know what you want
Not everyone wants to be wealthy but everyone wants to achieve something. I have spoken with people who went into business not for the sake of wealth, but to provide a social service. Such enterprises help the founder meet a personal need even as they meet a social one. By knowing clearly what they want, they can be on the lookout for these opportunities. And sometimes, the universe conspires to make those opportunities happen!
2. Get ready to pounce on those opportunities
Lady Macbeth identified that her husband was too full of the milk of human kindness to catch the nearest way; to kill the current king to ascend to the throne. While I am not suggesting one bit that we kill somebody to get our way, we can metaphorically "kill" certain thinking, behaviours and attitudes that stop us from achieving what we want. Some people say they want something, but they are not willing to do the work to get it. They want everything to be lined up through some cosmic design and have that dropped onto their lap. Thing is, even if that did happen, they might still not be successful because they were not ready for it.
3. Take the risk, do the work
All opportunities have risk; all opportunities require work; all opportunities have cost. If one is unable to pony up the ante, then there is no point in talking about luck. Luck can get you to the door, but you still need to step into it and get the job done. And this separates the haves from the have-nots; the successes from the less successful. If you are too afraid to face the risk, if you are too lazy to get the job done, if you are too self-conscious to be wrong, no matter how lucky you are, you won't succeed with the opportunity. And just because the opportunity was presented to you, it does not mean that you will be an overnight success - or even at all! Sometimes it takes years to finally be a success and sometimes - many times, in fact - it requires pivoting from the original construct. In other words, luck only benefits those willing to put in the effort to see it through.
Can YOU create your own luck?
While we know that we will not be 100% successful in all the bets we make, we also know that we will be 100% unsuccessful in all the bets we do not make.
The reality of Pluchino's research is quite clear - not everyone will be lucky. Some will be more lucky than others. But luck can be managed. Just like a venture capitalist who spreads his funds to find the "lucky break", there is a need to make intelligent bets in our life. We certainly cannot wait for things to happen; we have to move the needle and start the process. While we know that we will not be 100% successful in all the bets we make, we also know that we will be 100% unsuccessful in all the bets we do not make. What we therefore need to do is adopt a "fail fast, fail cheap" mentality. Since we don't know what we don't know, we need to quickly find what we don't so we can move them into what we do. Failing fast allows us to do that. Failing is not a pronouncement of finality; on the contrary, it is a promise of continuity. But in order to ensure continuity, we must fail cheap. Never make a bet that you know will cause you financial, personal or reputational ruin. Just like you should never go "All In" in poker (even if you think it is a really fine bet!) you should also never go all in for your luck. Fail fast, fail cheap, fail often. Because the cumulative effect of all your past failures will help you build your next success.
You cannot control luck, but you can always help yourself become more lucky.