Do You Feel Lucky?

Do You Feel Lucky?

Can you compete? Silly question, isn’t it? Of course you can. Every executive rose through the ranks, every entrepreneur broke through the noise by being more competent competitor than others. In a merit-based free society, that’s a given.

And yet if you are an executive, like me, you must be asking yourself occasionally: how much of it was luck?

The role of luck

The essence of being an entrepreneur or a leader in corporate is to deny luck. When we succeed, we tend to think it is because of what we did, not some random event. In psychology it is called internal locus of control. I know about it because I wrote a whole Ph.D dissertation on it for my degree in behavioral economics (at the time it was just called Economics. Today they know better).

Twenty years after my dissertation I decided to leave my comfortable tenured academic position as a strategy professor at Rutgers University and plunge into an entrepreneurial venture. This venture turned into the globally leading educational institution in the new field of competitive intelligence.

Was it all me and my superior skill in competing?

As I look back at that decision, I realize with much greater appreciation how much luck played a role in my success. At the time, competitive intelligence was an unknown concept. Companies were collecting information haphazardly and my systematic model for monitoring their competitive environment hit a cord. My model was the first and it caught fire.

Now the truth..

Did I develop the CI model because I correctly identified a dire need among corporate? Not at all. I was an academic. I didn’t network with “corporate” at all. Did I use one of the faddish tools (Blue Ocean canvas, Six Hats, or any other “creative” tool)? Not for a second. All I wanted was to supplement my university wage. Given my background as an Israeli police detective, I knew how to run intelligence networks. I figured: why not teach companies how to do the same?

How much is luck, how much is skill?

In my dissertation, I advanced the hypothesis that an internal locus of control allows would be entrepreneurs to spot opportunities earlier than others. It is called “alertness” and it plays an important role in the Kirznerian economic theory of markets. Pasteur said it years ago: Luck favors the prepared mind.

The secret to success seems to be in staying prepared, and this is a tough job.

Success as the enemy

The “winner curse” is a well know behavioral economic bias. In essence success creates a sense of confidence, a belief that we can do anything we put our minds to. The popular business press cultivars this myth with verve. It plays well with ambitious people.

The down side is that to be alert to opportunities, one needs to leave room for luck.

Many executives we work with forget this simple, basic lesson. With it, they lose their competitive edge. They forget how to compete.

What you need to do to stay competitive?

There are four simple steps to take to ensure you don’t fall into the comfortable trap of believing you’d always win no matter how bad your moves are, how complacent your company has become, how uncompetitive you have grown.

  1. Internalize the need for reality check

As a student of business strategy I have studied hundreds of companies as they rose and as they fell. The enduring successes, immortalized in books such as From Good to Great, proved as elusive as corporate intrapreneurship (a “hot” concept in the 90s you no longer hear about..). A little book called The Halo Effect by an IMD professor Phil Rosenzweig should be a mandatory reading for every executive. It teaches in less than 200 pages the humility of comprehending that not everything is under your control. Ever.

  1. Exercise you strategy muscle

Thirty percent of the CEOs of the Fortune 500 have MBAs. Which means that seventy percent don’t, and yet they are wildly successful. Business education doesn’t teach the one critical skill of running a business- the skill of competing; Perhaps because we don’t know how to teach it. They say that an average person can think ahead 1-2 steps. A chess master can go as far as 5-6. Watson can go much further but of course only within a framework of known rules. Business is much more difficult than winning a world chess championship because anticipating moves and countermoves of players who can greatly affect your success is an art with endless possibilities; But, a little used technique known as “war gaming” can help. Try it.

  1. Listen to those who typically you don’t

Top executives tend to form a closed and small circle of trusted advisors. They have significant issues with trust, and I don’t blame them: everyone wants something form them. However, the ability to stay alert to opportunities requires the executive to listen to perspectives he or she don’t typically receive: those within their organizations. Analysts down the ranks, especially competition analysts, report that close to 50% of the companies act contrary to their recommendations. While the outcome may at times be OK (due to luck?), they also report instances of retrospective, “I told you so.” Listening to perspectives from within one’s organization is as useful as listening to your trusted investment banker. Maybe even more so.

  1. Take hype with two grains of salt

Consultants and pundits talk about growing competitive pressures, faster pace of innovation, hyper competition and other terms connoting the need to move fast with the times. The reality – documented by an Economist’s recent cover piece – is that competition has always been fierce (or not, depending on your industry) , “disruptors” mostly fail (we only hear about the success stories), and good strategy should last decades (with refinements, but not fundamental turnarounds). The real question to ask is: do we have a strategy? And the answer is far from obvious.

And above all, thank your good luck.

Benjamin Gilad
About the author: 

Ben Gilad is President of the Academy of Competitive Intelligence, a South Florida-based boutique consulting firm dedicated to running business war games based on competitive intelligence. Prior to his current role, Ben was an Associate Professor of Strategy at Rutgers Business School for 16 years.  Mr. Gilad earned a PhD in Economics from New York University.  Follow him on LinkedIn.