When I was a kid, drag racing was king and The Beach Boys were on top with “Shut Down” and “409“. Ronnie & The Daytonas with weren’t far behind in the rankings with “Little GTO“. My friends Yewell, Eliezer, Cazel and I drag raced American Muscle cars around NY and NJ matching GTO’s with Chevy 409’s, ‘Vettes and Mustangs.
While we never thought about it, we were also dealing with “Black Swans“. Nicholas Taleb wrote about the consequences of improbable events – both positive and negative – that occur in the long tail of random events. While frequent, our small teen-age racing triumphs (and we ourselves) could have been wiped out by an improbable but catastrophic event like a crash. It’s not dissimilar to the havoc and damage that MF Global, Enron, and Lehman wreaked on the American and world economies.
In his recent book “The Success Equation“, Michael Mauboussin expands Taleb’s ideas, analyzing outcomes of our actions within surrounding conditions. He termed random events over which we have no control but which influence the results of our efforts as “luck”. His insights pair the role of luck with skill. His book is significant for business owners, providing perspective on the environments in which decision-making occurs.
Environments vary. Some, like engineering, are dominated by high skill. Others are influenced more by luck, as in business acquisitions or new product launches. Critical to decision-making is understanding the intersecting impact of luck and skill. High achievement over time comes with correctly perceiving which environment we face and strategically dealing with how much it is that luck may influence the outcomes. Warning: reading the book is greatly aided by an understanding of statistical analysis; if you can deal with a narrative on statistics, then “The Success Equation” is a must read.
We – you and I – are American Muscle, owners and presidents of middle-market companies comparable to the GTO’s, Chevy 409’s, and Mustangs of my youth. But unlike those days, we now also face Porsches, BMW’s and even Acuras that run fast and hard. We compete in complex markets, now called asymmetrical markets, driven by global competition, vast arrays of regulation, big data, cloud computing and virtual relationships.
My advisors tell me not to “sell” in my posts but I will anyway. I’m the go-fast guy at Oak & Apple, Ken the partner charged with optimizing financial management and Bill the one who picks up the pieces (when luck runs out) and turns things around. We and our associates operate in the high-stress environments of very rapid growth or decline. Because we have all operated and/or led substantial private businesses or divisions of large enterprises, we understand the influence of stress on performance.
Let us know how you think luck benefited or penalized your company. Do you believe luck helped build your business? What do you see as the future of “American Muscle”?