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There is a saying that it is better to be lucky than good, but is this true for entrepreneurs? I am interested in a related question: why do some entrepreneurs have only one big success and many failures while others succeed again and again?
Over my career I have worked for and admired various entrepreneurs. Some have enjoyed a significant success but have never really been able to repeat it, while others have demonstrated an apparent “magic touch”: if they were made penniless tomorrow they would amass another million within a year.
In some ways, of course, there is no substitute for luck, whether in business or any other walk of life. But business schools sometimes seem strangely reluctant to recognise luck for what it is. There is nothing wrong with celebrating luck, but when it is mistaken for something else – or, worse still, when it is presented as something else – the message can be a damaging one.
I like to use the analogy of a lottery player who scoops a multi-million-pound jackpot and then writes a book about how he came up with the winning numbers. We might think of him as spectacularly clever, a tremendous success, but the fact of the matter is that lottery wins are down to chance – pure and simple – and involve no element of talent whatsoever.
The harsh truth is that there are similar cases in the business world. There is an unhealthy tendency to idolise “rock star” chief executives and worship their success, ignoring the macro picture and not accepting that quite often they were merely in the right place at the right time.
It is by being in the right place at the right time that some entrepreneurs get lucky once. Naturally, it could be argued that you have to be in the game to get lucky in the first place; but it could also be argued that over the long term you make your own luck.
This brings us to those entrepreneurs who create wealth time and time again, often in different industries? If we acknowledge that anyone in the game can be lucky once then there must be something else that explains the track records of these serial achievers. What is their secret – and is it really a secret at all?
It is obvious that an entrepreneur with a big and visible success story to his or her credit will find it easier to attract capital, both financial and human, second time around. But this is the case for the one-hit wonders as well, so that cannot be the answer.
What about the grand vision and the great idea? These too are overrated. Vision is wonderful for motivation and for inspiring others, but it changes as a business evolves and learns. Every single day I hear business ideas, many of them interesting, but the ideas themselves are of little value: it is the execution that counts.
And surely that is the answer. Those who succeed again and again do so because of the skills and experience they bring to bear and the processes they apply. Consistent success is built on a particular ability to solve problems, frame prospects, articulate propositions, minimise risk and maximise opportunities.
Bizarrely, it is these skills that are frequently the least recognised and most misunderstood of all. In some quarters they are regarded as akin to “gifts” – something a fortunate few are born with and which, by extension, others can only dream of developing.
This view is not just misguided: it is self-defeating. It might just be conceivable that some entrepreneurs innately possess such abilities, but it does not automatically follow that those who are not blessed with them from birth cannot possibly learn them in later life.
To reiterate: these are skills – and skills can be taught. Research in this field strongly evidences as much. At Nottingham University Business School we have been involved in numerous studies and collaborations that suggest would-be entrepreneurs of all kinds, from students, to flower shop owners, to NHS managers, can be trained to develop the sort of innovative problem-solving skills that lend themselves to serial successes.
“Ah,” a cynic might say, “but sometimes it just boils down to a willingness to take risks. Sometimes it is about putting all your money on red. Surely you cannot teach that.” Maybe not; but you can teach someone to recognise and exploit those occasions when “all on red” represents something better than a 50-50 bet.
As Nassim Nicholas Taleb, the author and risk analyst, has pointed out: “To understand successes, the study of traits in failure needs to be present. Some traits that seem to explain millionaires, like appetite for risk, only appear because one does not study bankruptcies.” In other words, to appreciate the true value of luck we need to look at the bigger picture – the one that extends beyond a select array of good-luck stories and “rock star” chief executives and incorporates the many more bad-luck stories of misjudgments, mishaps and failures.
That is when you see that it is actually much better to be good than lucky. That is when you see that “good” is something that is reliable and repeatable and “lucky”, sure enough, is best suited to the realms of a lottery win. Ultimately, it is a question of “nurture” versus “nature”; and if business schools honestly do not believe in the former then what are they really teaching?
The author is a visiting professor of sustainable wealth creation at Nottingham University Business School.