return on luck
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Return on Luck. Great by choice ch. 7 Kevin Langford Devin Newman Nick Capodagli Victoria Smith Caitlin McPherson. Malcolm Daly and Jim Donini. In May 1999 they climbed an unclimbed face of Thunder Mountain in Alaska. - PowerPoint PPT PresentationTRANSCRIPT
G R E AT BY C H O I C E C H . 7
KE V I N LA NG F OR DD E V I N NE W M A N
NI C K C A P OD A G LIV I C T OR I A S M I T H
C A I T LI N M C P H E R S ON
Return on Luck
Malcolm Daly and Jim Donini
In May 1999 they climbed an unclimbed face of Thunder Mountain in Alaska.
Before reaching the summit, Daly lost his stance and fell down the side of the mountain.
Luck or Skill?
Bad Luck: Daly’s stance giving way
Good Luck: Slice rope wasn’t cut all the way Daly didn’t die in the fall Daly didn’t kill Donini on the way down Donini reached the base camp just as the airplane
happened to fly by Had everything taken just five hours longer, Daly
wouldn’t have survived
Luck or Skill?
Most significant element: he had developed relationships with people who loved him and who would risk their lives for him Rescue leader Billy Shot should’ve aborted but he
didn’tLuck clearly played a role in Daly’s survival
What Role Luck?
Just what is the role of luck? And how, if at all, should luck factor into developing our strategies for survival and success?
Defined a luck event as one that meets 3 tests: Some significant aspect of the event occurs largely or
entirely independent of the actions of the key actors The event has a potentially significant consequence
(good or bad) The event has some element of unpredictability
Luck-Coding Example
14 luck events of Amgen VS Genentech (pg 156-158)
They found that: 10x companies did not generally get more good luck than the
comparisons 10x companies did not generally get less bad luck than the
comparisons 10x companies did not get their good luck earlier than the
comparisons 10x companies cannot be explained by a single giant luck
spikeThe question is not “Are you lucky?” but “Do you get
a high return on luck?”
High ROL: Return on Luck
It is not how much luck you have, BUT what you do with it that sets you apart
Squandering Luck: Poor Return on Good Luck
AMD experiences good luck federal jury cleared AMD to clone Intel’s microprocessors IBM halted shipments of computers that used Intel’s
Pentium chips Bought NexGen, a company with a clone of Intel’s
microprocessor and industry favored AMD, as personal computers became on of the fastest growing markets
AMD poor return on luck K5 microprocessor months brought to market months
behind schedule AMD failed to execute. Could not manufacture enough
microprocessors to meet demand
10Xers Shine: Great Return on Bad Luck
Hockey Players born in second half of the year had fewer
successes than those born in the first half of the yearNHL
birth rate distribution NHL “Hall of Fame”
Ray Bourque “Goals live on the other side of obstacles and
challenges.”
Bad Luck Poor Return
“The one place you really don’t want to be”
Morale of the Story
“There’s an interesting asymmetry between good luck and bad luck. A single stroke of good luck, no matter how big the break, cannot by itself make a great company. But a single stroke of extremely bad luck that slams you on the Death Line, r an extended sequence of bad-luck events that creates a catastrophic outcome can terminate the quest.”
PSA and Southwest 1970s-1980s
Smacked by an oil shock that spiked fuel pricesAir-traffic control strikesSevere recession and spiraling inflationSky rocketing interest rates increased cost of
jet leasingUnexpected change in CEOs
PSA Screws Up
Opt to raise prices rather than lower costsDestroyed its culture with layoffs and labor
battlesDowngraded its balance sheet with
increasing debtPoor returns on the bad luck led to falling
behind Southwest permanently.
Book Quote
“10Xers exercise productive paranoia, combined with empirical creativity and fanatic discipline, to create huge margins of safety. If you stay in the game long enough, good luck tends to return, but if you get knocked out, you’ll never have the chance to be lucky again. Luck favors the persistent, but you can persist only if you survive.”
Dane Miller and Biomet
Luck Is Not a Strategy
Managing luck involves four things: Cultivating the ability to "zoom out" to recognize luck
when it happens. Developing the wisdom to see when, and when not, to
let luck disrupt your plans. Being sufficiently well-prepared to endure an
inevitable spate of bad luck. Creating a positive return on luck-both good and bad-
when it comes
Questions?