The Luck Factor: A Manager’s Guide to Understanding Success

It is tempting to attribute success solely to hard work, vision, and skill. Stories of self-made entrepreneurs and brilliant managers dominate headlines, reinforcing the idea that individual ability is the primary driver of achievement. Yet, a significant—and overlooked—factor in many success stories is luck. The danger lies in confusing luck with skill, a mistake that can lead to overconfidence, poor decisions, and eventually failure.

Why Luck Is Undervalued

Luck is a concept that’s hard to measure and even harder to admit. Acknowledging its role can feel like undercutting one’s achievements, especially in a culture that celebrates grit and ingenuity. But luck is pervasive. Consider the role of timing: being first to market with a product, launching in a booming economy, or hiring a key employee before they become a sought-after star. None of these are skill-driven.

Even uncontrollable factors like geography, upbringing, and access to education contribute to success. For example, a tech manager in Silicon Valley has advantages that a similarly skilled counterpart in a less developed region doesn’t. Recognizing these advantages doesn’t diminish their success; it contextualizes it.

The Dangers of Misattributing Success

When managers misattribute their success to skill alone, they risk creating a fragile foundation for future decisions. This miscalculation can manifest in several ways:

1. Scaling Prematurely: A business that grew quickly due to a favorable market might assume its model is infallible, leading to aggressive expansion without proper safeguards.
2. Ignoring Warning Signs: Managers who believe their success is only the result of their infallibility and superior skills are more likely to dismiss dissenting opinions or market signals that suggest trouble ahead.
3. Ineffective Leadership: Overconfidence makes managers resistant to feedback, alienating their teams and stifling innovation.

Case Studies of Luck and Skill

The Rise and Fall of WeWork WeWork’s meteoric rise under Adam Neumann is a classic example. The company grew rapidly due to abundant venture capital and a booming real estate market. Neumann was hailed as a visionary manager, but when market conditions shifted, the flaws in the business model became evident. Luck played a significant role in WeWork’s ascent, but poor management and overconfidence led to its collapse.

Bill Gates and Microsoft On the other hand, Bill Gates is a well-documented example of someone who leveraged luck and skill and recognized both as ingredients to success. Gates had the foresight and ability to build Microsoft, but he also benefited from being at the right place at the right time. His access to early computers, connections to key players, and market timing were strokes of luck that he was skilled enough to exploit. Gates has acknowledged this, attributing much of his success to being born in an era of burgeoning technology.

How Luck and Skill Interact

Skill and luck are not mutually exclusive. Skill allows you to recognize opportunities created by luck and maximize their potential. For instance, a chance meeting with a potential investor might be luck, but securing their investment requires skill. Similarly, entering a growing market at the right time might be luck, but sustaining growth in that market demands strong management and execution.

What separates successful managers is their ability to discern where luck ends and skill begins. This clarity enables them to build strategies resilient to changes in fortune.

5 Ways to Identify and Account for Luck

1. Analyze Past Decisions: Look back at key milestones in your career or business. How many were the result of your deliberate actions versus external circumstances?
2. Consider Counterfactuals: Ask yourself, “What would have happened if the timing had been different?” or “What if that key person hadn’t joined the team?”
3. Balance Risk with Reality: Recognize that what worked in one set of circumstances may not work again. For example, a risky investment made during a bull market might have succeeded because of market conditions rather than the inherent soundness of the decision.
4. Seek Diverse Perspectives: Surround yourself with people who can challenge your assumptions. These advisors can help identify when you’re relying too heavily on past luck or underestimating risks.
5. Be honest with yourself: Recognize achievements that can not be attributed to your skills is critical in identifying when luck played a significant role in achieving a specific accomplishment

Building Resilience in a World of Uncertainty

Acknowledging the role of luck doesn’t mean you can’t plan for success. Understanding the interplay between luck and skill makes you a better strategist. It pushes you to focus on what you can control—your team, processes, and decision-making frameworks—while preparing for factors you can’t, such as market downturns or geopolitical shifts.

One way to do this is by cultivating optionality. Businesses with diverse revenue streams, flexible cost structures, and robust contingency plans are better equipped to weather periods when luck isn’t on their side. Similarly, managers embracing continuous learning and adaptability are likely to thrive in changing conditions.

Shifting the Narrative

As a manager, it’s essential to model humility. Celebrate your team’s contributions, acknowledge external factors, and resist the urge to frame your success as entirely self-made. This approach not only fosters trust and loyalty but also sets a realistic tone for how success is achieved.

Moreover, acknowledging luck can inspire others to pursue opportunities they might have dismissed as unattainable. When managers admit that luck played a role in their journey, it demystifies success and encourages others to take calculated risks, knowing that luck can favor the prepared.

In the long run, confusing luck with skill is a recipe for hubris and potential failure. Recognizing the role of luck doesn’t diminish your accomplishments—it provides the foundation for sustainable success. By embracing this mindset, managers can avoid the pitfalls of overconfidence, make better decisions, and position themselves for success regardless of whether fortune favors them tomorrow.

Ultimately, the most effective managers know that success is rarely the product of skill alone. They respect the role of chance, prepare for its inevitable shifts, and use their skills to maximize the opportunities it presents. In doing so, they ensure that their legacy isn’t just a lucky break but a testament to enduring excellence.