- By Charles Miller
In the business world, the concept of luck is often touted as a critical factor in achieving success.
However, Jim Collins’ seminal work Great by Choice debunks this myth, emphasising that while luck plays a role, it’s the response to luck that truly matters.
Collins, along with co-author Morten T. Hansen, conducted extensive research to understand why some companies thrive in uncertainty while others flounder.
The key finding? It’s not about being luckier, it’s about getting a high return on luck.
Collins defines a luck event as one that meets three criteria: It is significant, it is unpredictable, and it is largely out of the control of the recipient.
Importantly, both good and bad luck occur. The concept of “Return on Luck” (ROL) is central to Collins’ thesis.
ROL measures how effectively an organisation leverages its luck – good or bad to achieve exceptional performance.
It’s not the luck itself but how leaders and organisations respond to it that determines their success.
Consider the story of Bill Gates, often cited as an exemplar of leveraging luck.
Gates was fortunate to attend a school with a computer club, gain early access to a computer at a young age, and read an influential article about the Altair 8800.
However, many other people had similar opportunities.
What set Gates apart was his decision to drop out of Harvard, move to Albuquerque, and co-found Microsoft, working tirelessly to capitalize on his opportunities.
His return on luck was not just high – it was transformative.
Similarly, Southwest Airlines, under the leadership of Herb Kelleher, consistently turned small, calculated risks into significant advantages.
Southwest’s focus on low-cost, efficient operations and its unique corporate culture enabled it to thrive in an industry known for volatility.
Kelleher’s disciplined approach to scaling and operational efficiency allowed Southwest to make the most of the opportunities presented to it, demonstrating a high return on luck.
To achieve sustained success, organizations and leaders must adopt behaviours that maximise their return on luck. Here are five key behaviours inspired by Collins’ findings:
- Fanatic discipline: Maintain a consistent focus on long-term goals, even in the face of short-term challenges. This relentless adherence to core values and objectives ensures stability and progress.
- Empirical creativity: Base decisions on rigorous data and experimentation. This approach reduces risks and ensures that significant initiatives are well-founded.
- Productive paranoia: Always be prepared for the worst. By anticipating potential challenges and planning accordingly, organizations can mitigate the impact of negative luck events.
- 20-mile march: Set and adhere to clear, achievable performance targets. This methodical progress, regardless of external conditions, builds resilience and ensures steady growth.
- SMaC (Specific, Methodical, and Consistent): Develop and stick to a set of operating principles that provide clarity and consistency in decision-making.
In conclusion, luck alone does not determine success. As Collins’ research in Great by Choice reveals, it’s the disciplined, empirical, and proactive responses to luck that separate the great from the mediocre.
By focusing on these key behaviours, organisations can not only navigate uncertainty but also thrive in it, proving that it is never just luck.
For further insights, readers can explore Great by Choice and delve deeper into the strategies employed by some of the world’s most successful companies.
