Saturday, August 9, 2014

What if LUCK runs out? (Part 2)

Before I dwell deeper in to factors that could determine outcome, I read more about what others say or think about instincts. Daniel Kahneman, a Nobel Prize winning psychologist, co-wrote a research paper with Amos Tversky, which Daniel termed as his favourite; “On the Psychology of Prediction”. Contrary to Richard Wiseman’s view of relying on your instincts, Daniel argues that intuitive judgments are often unreliable because people base predictions on how well an action or event fits their story. Paper argues; successful outcome depends on three key factors (a) Prior or background information, (b) specific evidence concerning the individual case, (c) and the expected accuracy of prediction.

Let me elaborate it with an example. Let’s say it’s about my chances of winning a lottery. Statement 1: Only 2% of people, who play lottery, win. This is our background information. Statement 2: Lottery agent claims that last five people, who bought the tickets from him, won the lottery. This is our specific information. Key to accurate prediction is to give correct weightage to each factor. In my case, despite of last three people winning the lottery, my chances of winning will largely be based on prior or background information, i.e. only 2% of people eventually win the lottery. Fact that last three people won the lottery doesn't increases or changes my chance of winning the prize.

Both Richard & Daniel are experts on psychology. Both suggested their own ways to achieve successful outcome. Difference to me lies in the scope. While Daniel’s recommendation focuses on successful predictions, Richard’s research shows how to be successful person. However, their contradictory view on intuition confused me further.

Let me now shift focus on to Luck. What is Luck? According to the classic Noah Webster's dictionary, Luck is "a purposeless, unpredictable and uncontrollable force that shapes events favourably or unfavourably for an individual, group or cause". Author Max Gunther defines it as "events that influence one's life and are seemingly beyond one's control". Alright, so luck is beyond control and luck is unpredictable. So why do they say; Harder you work, Luckier you get? It’s true in the sense that it improves the success rate but working harder doesn’t really change your luck. So what does it really do? It adds to your effort rate, resulting in greater push to reach the finish line.

Without digressing much, let me get to what I summarized as the factors impacting final outcome. I feel any outcome is net total of four factors; Skill, Effort, Environment & Luck. While Skill & Luck have been featured in lot of articles, including Michael’s book on Success Equation, I haven’t seen much about influence of effort & environment on outcome. In a way, these two are my twist to existing tails. I have already explained a lot about luck, let’s look at other factors.

Skill - Skill is the learned ability to carry out a task with pre-determined results often within a given amount of time, energy, or both. Skill can be acquired & can be enhanced through persistent practice. There may be tasks that don’t need skill, like; predicting outcome of a coin toss. Quick way to identify if an activity relies on skill or not, is to ask yourself; can you loose on purpose? If the answer is yes, outcome doesn't solely depend on luck, because you can only loose on purpose if you control part of outcome through your skill.

Effort – Effort is defined as a vigorous or determined attempt. It is different from skill. To me, it basically includes the passion or desire, creativity to achieve better results. One may have all the skills but without enough motivation or passion degree of success can be lower. Would you agree? For instance, great cricketer like Sachin can also fail if he is not focused. Of course there are other reasons of failure but magnitude of your effort & your motivation definitely plays its part.

Environment – This one is the trickiest. It exists but not always visible, it can be influenced to some degree but can’t be controlled. To me, it’s different from luck. Remember, luck cannot be influenced or controlled at all. Environment is at the realm of your task. Consider it as combination of human & natural circumstances that will impact your outcome. It can best be dealt with better foresight. In business sense, it is the planning part of your activity. Identifying risks, preparation to handle your stakeholders, mode of communication etc. are part of Environment. Remember Environment can be your catalyst or barrier.

Now that I have explained the factors, here is the Equation:

We corporate people (including me) are always in hurry. We don’t have time for theoretical gyan. If we can’t apply it, it’s of no use. So, this is how equation can be leveraged for task specific self-evaluations.

Evaluate first three factors (S, E, & E) for your task. Assign a number from 0 to 3 to each of these factors. Consider Low, Medium, and High for 1, 2 and 3 respectively. Add all numbers. Why did I exclude luck? We cannot predict luck; hence no number can be assigned to it. Luck can be good or bad. It can either increase or decrease your total. This is how you need to interpret the result:

  • Assume final Outcome is equal to 12
  • Closer your total of S, E, and E is to 9, better is your chance of succeeding in your task and lower is your dependency on luck
  • If your total is below 6 or lower, you relying too much on luck. You should stop and try to improve your skill, increase your efforts, and understand your environment better
Let me explain this with an example. Amrita wants to be a successful baker. She wants to run a profitable bakery shop of cakes & deserts. This is her task. I asked her to score on Skill, her answer was 2. On Effort, she gave herself a 3. She thinks Environment is a 1. Environment in this case can be support or challenges she can face from family, friends. It will include the competition she may face from market; after all making good stuff is irrelevant if you cannot sell it. Her total lands at 6. She can start the venture but she is relying too much on luck, unless she improves her skill score or prepares well for the environment. You can apply this equation to any project or task at any point when you wish to ascertain its success.

To conclude, we can’t control luck but we can improve three other factors that influences outcome, after all successful outcome is all we aspire for. Hopefully, luck will never run out. I know it doesn't solve my mystery of car accidents but I learned new stuff in the journey to decode luck, I hope you did too.

I don’t claim to be a research scholar on this subject. This article is merely my interpretation of said topic, which I represented with all my heart. Share it with others if you like it. If you did not, I feel for the time you invested in reading through this blog. Nevertheless, I appreciate your attention to my interpretation of luck & successful outcomes. Cheers !!