If you can’t improve your luck, how do you manage it?
Many thoughts on that one. But for the sake of point, lets say you are in competitive interaction. If you are the stronger player which you want to do is simplify the game. And the reason you simplify the game is that make sure that your skill will overwhelm at your competitor. If you are the weaker player, which you want to do is complicate the game, add dimensions to the battlefield.
In the world of business. For losing team it would be some sort of disruptive innovation. I.e. starting restaurant business could always slander media with pesticide epidemic of their main rival.
During football it might be playing using trick plays vs trying to go right down in the middle with your running pace.
Try complicate the game, you still going to be the weaker player but you delude the string of the stronger player.
SKILL AND LUCK
If you are not sure if something was due to skill or luck. Ask yourself if you could lose on purpose. If you could, there has to be some skill involved.
I.e. Investing, we know its really difficult for portfolio managers to build a portfolio that beats benchmark, but we also know it’s equally difficult to build a portfolio that does a lot worse than the benchmark. So it’s hard to win on purpose but it’s also hard to lose on purpose. And that should give us pretty quick indicator as to where the world of investing falls on the continuum.
More skilled society = more luck dependent niches become.
Gold medal winner of Marathon event during Olympics in 1930 could be done showering, eating his baguette and discussing event while the last guy would be still pacing.
Nowadays, difference between gold and bronze is depended on high tech sensors, we all seen those in swimming events where 0.04 seconds can be crucial.
Some activities (keeping in mind skill and luck) are past depended.
Path depended processes where what happened before, influences what happens next.
Why is Mona Lisa the most famous painting in the world?
Top 110 pieces during 1750 Mona Lisa wasn’t the most famous painting.
Around 1850 Mona Lisa wasn’t even deemed to be one of the most famous Leonardo da Vinci paintings.
In Summer of 1911 Painting was stolen. There was some stir in Paris and Internationally, so it was missing but it died out eventually and nobody cared. Thief held it at home for some time and made the call to antique shop in Italy, as he was patriot he wanted to return the painting home.
Eventually he got caught.
1914 it came back to France. To grate fanfare, hundred of thousands of people came to see it and then it got catapulted to what we would call pop-culture.
Now the problem with this story, it’s no way to prove it right or wrong. What if it is in fact, simply best painting in the world? People who’ve seen it weren’t actually really impressed.
Spoiler alert: Those small replicas aren’t “Little versions”, they are full sized versions.
Companies and luck
There are about 700 companies mentioned in most famous marketing books, and the question came out how many of those companies made it due to skill and how many due to luck.
Using 50 years of corporate data researches found out that only 12% of companies mentioned in those books were confidently coded as skillful, vast majority where there due to luck. Good part of those companies fade almost the moment ink dries out on the books.
Extra: Left and Right brain-hemispheres
Michael Gazzaniga neuroscientist did research on split brain patients. What they found is that your left hemisphere where your language resigns and there is interpreter, the job of interpreter is to create a cause for every effect it sees. If you throw something at it, it would make a cause on the spot. So when certain pictures with commands where shown to the left, right had no clue of those yet it made up a story of why it followed through with command.
During left and right brain hemispheres study, researches found out we tend to quickly, effortlessly and rapidly explain to ourselves what happened even when we didn’t have a slightest clue and even when we do, we do not take luck in consideration. As if it wasn’t bad enough on top of that there is also creeping determinism, during which we start to believe what happened is only thing that could’ve happen and believe that those events were more predictable than they actually were before the events took place.