Getting a Better Return on Luck
For 25 years, Jim Collins has been showing business owners how to attain superior performance and move their companies from good to great. In an interview, Collins discussed his latest research into the role of luck and timing in a business leader’s success.
“We were able to define luck, to quantify it and then to systematically analyze the role of luck," said Collins. "What we find is, there is a lot of luck, both good and bad.” Collins' most recent book, Great by Choice: Uncertainty, Chaos, and Luck—Why Some Thrive Despite Them All is co-authored by Morten Hansen.
So, do the winners who build great companies have more luck, or at least less bad luck? Collins found that these leaders were not luckier. "What they really got was what I would describe as a better return on luck.”
Collins cites Microsoft as a perfect example.
“On one hand, Bill Gates was lucky," said Collins. "He was lucky to be in the right place at the right time, he knew how to program just as the first personal computer came into existence. But thousands of other people had access to computers and knew how to program in BASIC.
"Yet, the difference between Bill Gates and others is not that he was lucky, it’s that he did more with his luck. He moved to Albuquerque. He dropped out of college. He got BASIC ready in time for the first personal computer and for the Altair. He launched Microsoft and he didn’t stop. He [put in] another 25 years of hard work.”
Get a better return on luck
Collins offers three ways to do more with whatever luck comes your way.
"Look, I need to get up every morning and do what we call a 20-mile march," says Collins. "I need to basically put my business on a set of very specific metrics.
"Whether it’s being profitable every year or a certain growth rate or a certain technology advancement, you get up every day and you march 20 miles. It doesn’t matter whether it’s good conditions or bad."
In other words, the harder we work, the luckier we get.
“The question is, how do you decide where to place your big bets?" asks Collins. "How do you decide how to move forward in an uncertain world?
"What we find is that you get in trouble if you put all your resources into a big cannonball shot before you’ve proven that that cannonball will actually hit something. So instead, take the little bits of gunpowder that you have and fire bullets. Fire small shots until you get closer and closer.
"If I’m a small-business person, I need to ask what empirical experiments can I 'fire' until I have proven something will work? And then I’m going to bet big.”
In other words, take small patient steps to success.
3. Productive paranoia
“As soon as you can—before you grow really big—your first priority is to have enough cash that you could go a whole year without revenues if you had to," says Collins. "Because someday, you might have to."
In other words, we all need to plan for zero.
What do you do to get lucky?