Winners Work Hard and Create Their Own Luck
It’s clear that most of the biggest winners in the marketplace are both extremely talented and hardworking.
A prerequisite of success is a strong refusal to believe in luck. The idea of “making your own luck” is great motivation, while nothing can kill your drive more than suspecting the game is rigged against you, and for many it is.
But, the truth is that luck does matter, it is like running with a tailwind, instead of a headwind.
Check these statistics
In professional hockey leagues, researchers note that 40% of players are born in Q-1 of the year, while just 10% were born in October, November and December. The reason must be that 1 January is the birth date cut-off for youth hockey teams, and older kids end up getting a lifelong advantage over their peers.
A similar phenomenon has been found among CEO’s. There are 33% fewer CEOs born in June and July than you would expect by chance. Kids born in the Summer tend to be the youngest in their classes starting school.
The influence of your birthday may be small in the grand scheme of subsequent wealth and success. But even the most talented people in the world can point to coincidences that gave them a crucial edge.
Bill Gates, 60 anni (born in late October), co-founder of Microsoft (NASDAQ:MSFT) despite growing up in the 1960’s, attended the rare school that offered students unlimited access to computers.
Or consider the actor Bryan Cranston, 60 anni, after decades as a well-respected performer on television and film, the series “Breaking Bad” made Mr. Cranston a star. Both John Cusack and Matthew Broderick turned down the role before producers agreed to offer it to the less famous Bryan Cranston. “You can have talent, perseverance, patience, but without luck you will not have a successful career,” the actor has said.
The Big Q: Could Bryan Cranston or Bill Gates have achieved wealth and fame without those breaks?
The Big A: Of course.
In Cornell University economist’s study of winner-take-all markets, fields of fierce economic competition, he found that only a few top participants take home the bulk of the rewards.
More and more of our current economy is look like sports, film making and music, where millions of people compete and the winners are paid 1000X’s more than the also rans.
Technology has enabled people who are best at what they do to extend their reach geographically. thousands of people can be replaced by one or two companies operating globally
Example: TurboTax now dominates online tax preparation, and thousands of local accountants were replaced by one company.
In winner-take-all markets, luck can play a significant role.
Here is a simulation conducted by Cornell economist Robert Frank, as follows:
Imagine a tournament in which every contestant is randomly assigned a score representing their skill. In this simple scenario, the most skilled person wins. The more competitors there are, the higher the score the winner will likely have.
Now, introduce chance by randomly assigning each participant a “luck” score.
And, that score can only play a tiny role in the ultimate outcome, just 2% compared with 98% allotted to skill. This minor role for chance is enough to tilt the contest away from the top-skilled people. In a simulation with 1,000 participants, the person with the top skill score only prevailed 22% of the time. The more competition there is, the hardest it is for skill alone to win out. With 100,000 participants, the most skilled person wins just 6% of the time.
Mr. Frank writes, “Winning a competition with a large number of contestants requires that almost everything go right. And that, in turn, means that even when luck counts for only a trivial part of overall performance, there’s rarely a winner who wasn’t also very lucky.”
Hence, winner-take-all markets can end up creating vast wealth differences between the lucky Vs the unlucky.
One person; smart, persistent, but unlucky struggles, while an equally talented and hard-working person gets a lucky break that can reap millions, or billions, of dollars.
People cannot control luck or as some put it fate or karma.
So what can they do?
Robert Frank, the economist, says the only solution is to invest more in education and infrastructure and all the other things we know help everyone succeed.
The more people spend on these public goods, the more people have a chance to get lucky, he says. Provided the “public good” is really good and not loaded with featherbedding government hacks that were created in the 60’s by the New Frontier and Great Society.
Mr. Frank argues that everyone benefits if we invest more in the general public welfare. That is opposed to our tax dollars being spent on pork barrel special interests projects that benefit the few, and leave many behind, like they have been for the past 50+ years,
The increasing concentration of wealth at the top of economic spectrum has created competition for the finer things.
That means if you have the taste, ambition, and understand those finer things, and want to have them, then you have to work extra hard, never give up or in, create your own luck and be lucky to boot.
For all of that you must be grateful when you get them.
Never give up, Never give in, Nose down, Tail up and Head into the Wind.
Have a terrific Labor Day weekend.
Latest posts by Paul Ebeling (see all)
- The Week Ahead on Wall Street - December 5, 2016
- Italy’s PM Resigned After Voters Rejected His Constitutional Reforms - December 4, 2016
- America Can Become The Global Energy Powerhouse - December 4, 2016