“Well, do ya, punk?” No prizes for identifying the quote – but let me quickly turn from Clint Eastwood to Warren Buffet.
Regular readers of this blog will know of my admiration for ‘The Sage of Omaha’ – and not simply because his wealth is measured in billions. Sound business principles, consistently applied over the long term – and a distinct tendency to invest in real businesses that make things. What’s not to admire?
And yet Warren Buffet attributes most of his success to luck. Anthony Tjan, in a really interesting article in the Harvard Business Review explains:
[Warren Buffet] claims he won the “ovarian lottery” by being born at the right time in a country where his skill set allowed him to amass great wealth. Buffet asks people to imagine there is a ball representing each person on the earth. If he had been one of those balls pulled out in a different era – say millions of years ago – he’d have been pretty useless and most likely would have been eaten by a dinosaur. And if he were on a desert island the value of his skill [investing and allocating capital] goes nearly to zero.
I was having more or less the same discussion with my eldest son the other day.
“What would we have been in the middle ages, Dad? Would you have been the Lord or would you have been the serf?”
The answer is, I don’t know. The qualities you needed to be a Lord of the Manor (apart from being the previous Lord of the Manor’s son) seem to me the qualities that would best fit you for a life of crime these days. The term ‘robber baron’ all too often appears to have been exactly right.
So no. Sorry to disappoint my son but I don’t think I’d have been Lord of the Manor. Hopefully I wouldn’t have been a serf, but I’m not sure my skill set would have been right for Medieval England.
I know that’s a very simplistic argument and I’m ignoring lots of factors such as education and environment – but you get my point. I happen to think my skill set is exactly right for what I do now.
So in that sense, I might not be Warren Buffet – but do I feel lucky? Yes I do. I’m in the right place at the right time. I’ve ‘lucked out’ as they say in the States.
And I’m not alone. Because when you ask a cross section of entrepreneurs what’s been the biggest factor in their success a surprisingly high proportion attribute it to one factor above all others: luck.
But clearly, luck on its own isn’t enough. The simple truth is that all of us are in the right place at the right time at some stage in our lives. In fact, I’d say we’re in the right place at the right time two or three times. The trick is to recognise it – and above all, to take action when you do recognise it.
Tjan and his team identified three key characteristic in successful entrepreneurs who admitted to being lucky:
• They were curious about new trends and developments
• They were naturally optimistic
• And they were open to new ideas
From my experience with the Alternative Board I’d absolutely endorse those three. But nothing happens without action. You can be in the right place at the right time and recognise the trend or the opportunity. But like last week’s post said, you have to press the start button. You have to take action.
So let me ask you a question. Do you feel lucky? Has luck played a significant part in your success – and how important is ‘plain, dumb luck’ in business? Or can you now look back with 20/20 hindsight and realise that you missed a golden opportunity? You were in the right place at the right time: you just didn’t recognise it.
As always I’ll be fascinated to hear your answers…
Read Ed Reid 
Whilst training for one of my first Great North Runs I came across a guy in a remote part of the forest I was in and we ran together for a bit, the chance meeting has lead us to work together on what is now our biggest client. To coin another famous film, “life is like a box of chocolates” I guess the point is though is that it is what we do with the choices or opportunities that are presented to us that makes the difference between success (luck?) and failure (unlucky moaning pessimist).
If you believe in being “lucky” then you must also believe in being “unlucky”, which, in my view, is an easy way of blaming something, or someone else when things go wrong. People equate being “lucky” with being successful, but being successful takes hard work; it takes courage; it means taking a risk and backing yourself; it means being prepared to fail, learn from the lesson and doing it again. Success always comes at a price and the reality is that most people simply don’t have those characteristics and are not prepared to pay the price, so they say they are “unlucky”. I think Warren Buffet is probably a modest man who did not want to emphasise his own talents, so fell back on describing his success as luck.
Hi – thanks for your comments, Easistreet. I completely agree that you need courage and faith to back yourself, and that you can also capitalise on opportunities when they come your way, if you have the ability to recognise them.
I have a simple view on luck; you make your own luck. The larger my network, the harder I work, the wider I spread my message and so on,- the more my luck improves. This is predicated on defining luck as, making money and being successful at work. If that is the case, I am lucky. If luck was measured on work/life balance and family relations, no doubt, unlucky would be the word of choice. Warren’s point around timing has strong merit. Ed makes a good point about recognising the opportunities; its almost the knack of learning from the future before it happens. I find myself in an industry which is commited to outsourcing more and more; which happens to be my core expertise- luck or skill? As Forest Gump put it; “its a little bit of both”.
I’m not one for remembering who said what but an expression I like (& believe) is “the harder I work, the luckier I seem to be!”
Time to roll up your sleeves and get lucky!
I’m going to challenge you Ed on the idea of “real businesses that make things” being more valuable than ones that don’t make things.
For one thing Buffett has invested heavily in insurance, and makes an awful lot of his money from treasury operations – investment banking, in other words.
But for another, that idea that making things is “real” and anything else is somehow just fools’ gold is, and always was, bunkum. It was heard a lot in the eighties when manufacturing was taking a pounding. It’s heard a lot now from people who generally add that bankers are just leaches on society who don’t generate “real” value.
That doesn’t square with reality at all. “Angry Birds” is an expression of an idea, not a product from people who “make things”. But the fortune it’s made looks pretty real to me. Does Damian Hirst generate real value because he makes things (paintings and stuff), but Carlos Acosta not because he just dances? It’s a nonsense distinction.
London is the world’s greatest financial centre, and one of the leading generators of wealth from music, publishing and the arts as well. It hosts a lot of the world’s leading insurers and leading law firms. The UK has some of the world’s top universities. It has some great R&D too, putting British products into every iPad and around half of all commercial jets. Is none of that real?
In business, value means financial return. In society, value means jobs and incomes. There’s no difference in “value” terms between making things and delivering services. Never was. Never will be.
Indeed, businesses can’t make things anyway. People and machines can make things. But businesses are entities that only exist as legal fictions, under the Companies Acts or whatever. The only thing they can do, the ONLY thing, is negotiate and exploit legal rights – because only legal rights are “real” in the virtual, parallel, universe that businesses inhabit. And accordingly, “doing business” means buying and selling, not making things.
If anyone disagrees on this, please wade in and try giving me a (virtual) punch on the nose. Bring it on!
Hi Dick – my apologies for the delayed response to your (as ever) well argued points. I’ll start slightly on the defensive back foot if you don’t mind. I wasn’t making the point that businesses which make things are any more valuable than those which don’t.
As you know, my business doesn’t make things, but I still consider what I offer as a service to be tremendously valuable to my clients, so no argument there! In fact, we’re seemingly in violent agreement that the distinction doesn’t make any sense!
So, rather than giving you a virtual punch on the nose, I’m coming back at you with an inclusive arm around your shoulders – I hope you’re OK with that.
Glad to agree! I generally agree strongly with your take on business life, so it’s good to keep it that way!
Great post Ed and as always it’s provoked some really interesting thoughts and views.
I agree with lots of the comments but definitely in the belief that you make your own luck. And I guess it also depends on your approach to life. I’ve always felt that things happen for reasons and that if you always keep an open mind and don’t judge, you’ll see the opportunities. My dad always brought us up “treat others, how you want to be treated” .. if you are kind and thoughtful to others, make time to listen, share and help others when you can, forgive and learn from mistakes, be honest and stay true to yourself, then you will meet amazing people and people will amaze you. Couple that with a sprinkling of being brave to try new things and take action – you’ll be amazing too.
Spot on Michelle