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We mostly put too much emphasis on skill and talent (or lack thereof) when we attempt to interpret past performances that involve extreme success or failure. Recent studies show that extreme success is mostly driven by luck.
Here is an important example from a recent Business Insider article for why we should all understand the concept of Regression To The Mean [1].
How Apple went from a $1 trillion company to losing over 20% of its share price
The author makes the classic mistake and finds causative reasons for Apple’s recent stock decline.
However, the real reason is that Apple and Tim Cook won more coin-toss decisions over the past few years than is normal, and became a $1 trillion company. Their luck now drying up, they regress back to performance levels of their competitors, or average. This happens all the time when you see exceptional performance.
Great success = average ability + above average luck.
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But the most fun is reading all the imaginary reasons in the article to explain this – China trade war, battery repair, negative sentiment in China.
This is similar to the “Sports Illustrated Cover Jinx.” Here, the athlete that makes it on the cover due to great performance in the current year, will typically have average performance in the subsequent year.
It is very difficult for us to accept this concept because we succumb to this ourselves for the success that we experience. It is natural for us to feel any major success being caused by skill on our part. It is humbling and difficult to admit that it was random.
But this regression back to average performance is real, and contributes to a big part of success, for us and others.
If you want to improve your influencing skills (and your luck), a list of books to help you do that can be found here:
Best books to improve your influencing and persuasion skills
References
- Thinking, Fast and Slow By Daniel Kahneman, Published by Farrar, Straus, and Giroux, New York, NY 2011.
Shaun Mendonsa, PhD is an influencing expert and pharmaceutical development leader. He writes on the topics of influence and persuasion, and develops next generation drugs in human pharma by advising international pharmaceutical CROs and CMOs. He can be reached at smendonsa@master-influencer.com.
KEYWORDS
Career Advice, Randomness, Behavioral Sciences, Apple, Tim Cook
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