Do You Feel Lucky?

Luck in Business
I haven’t posted for a while because I’ve been very busy. In the past few months I’ve added a lot of new clients because my marketing has been totally brilliant. My clients are thrilled because my work is the best in the world. Clients all love me. Work is gushing in because I’m that good. Or am I?
Confidence is important in business.
We have to be very careful that we don’t confuse our brilliance with luck. Certainly over time being better at what you do than your competitors will give you an advantage. But be careful about taking too much credit for success. Sometimes we just get lucky.
Lately I’ve been working with a few clients who have seen a degree of success. In all three cases they attribute their early success to making great decisions and “pulling it off”.  In all three cases I see as much luck in the mix as talent.
Problem is, luck isn’t constant. Luck changes over time. You can prove that. As my sister company BizPhyZ writes, you can flip a coin 100 times and you won’t see ‘heads’ every other time. Why not? Flip a coin and you should see heads 50% of the time. Do you realize that if you flip a coin 100 times you aren’t very likely to get heads exactly 50 times. That’s weird.  You’ll also see ‘lumps’ of luck as you make those 100 flips. There will be streaks of heads or tails for often as many as five consecutive heads (or tails). Steaks greater than 5 happen too.When that happens, we often believe we are good at flipping coins. People have lost a lot of money believing they have a system to win on slot machines.
So what’s the harm in getting a confidence boost even if it is based on luck?
When fooled by luck, people will make bad decisions because they believe they have figured out how things work. This is faulty reasoning and we must always remember that even a dead clock is right twice a day.
Using our slot machine example, casinos love it when people hit winning streaks. Why? Because a wining streak builds confidence. That person who hits a win 4 or 5 times in a row will soon be seen at the ATM machine. They believe they can recapture that streak of winning with just a little tuning of the system.
Most often the system needs major work and not a little tuning.
Here’s where the trouble starts. It is very hard for me to help a struggling business that has experienced a lucky streak. The owners will want to tune the old successful formula when it was merely a run of luck.
After a few trips to the ATM, many of these businesses fail. I can only prevent failure when the owner is willing to listen and act. If they believe another jackpot is right around the corner, there is little I can do.
Be careful. Luck isn’t on your side.
Chris Reich,Business Advisor