Have you ever noticed that in both games and life, the difference in ability between players is often marginal, yet success is far from evenly distributed? This phenomenon is known as the Pareto principle or the 80/20 rule. The best in any area reap exponential rewards and are considered winners in their respective markets.
For example, a gold medalist who ran one millisecond faster than the silver medalist will receive ten times more benefits. Companies that face high-stakes lawsuits will seek out the best possible lawyers, regardless of the cost. Similarly, a surgeon who performs 10% better than average can charge more than 10% higher fees. The winners take all the attention, and their accomplishments are highly regarded.
Let's take a look at the bestselling books in October 2009. The Last Song by Nicholas Sparks was the runner-up to The Lost Symbol by Dan Brown, which was at the top of the New York Times Best Seller list. The Last Song's sales at 120,000 copies that week, an impressive feat considering that most best sellers sell in the range of 3,000 to 5,000 copies a week. However, The Lost Symbol, only a single position higher, sold a whopping 1.2 million copies. The difference in sales had nothing to do with the authors' ability but rather showcased the boundless potential for success.
So, what sets the top performers apart from the rest? How do we explain that despite only the marginal difference in ability, some can enjoy a disproportionate amount of success compared to others?
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In 2022, a group of researchers received the Ig Nobel Prize in Economics for their study into this question. The researchers simulated a population of 1000 individuals in a virtual world, each with a given fixed talent expressed as a real number between 0 and 1. They also assigned each individual an initial capital of $10, representing their success, and simulated 40 years of their lifetime.
During this simulation, the individuals were exposed to randomly moving luck events represented by green points, as well as accidents represented by red points. When an individual meet the green dot, i.e. lucky event, the probability of successfully exploiting that lucky event equal to their talent level. If they are successful, their capital will be doubled. Conversely, if they meet the red dot, i.e. accidents, their capital will be halved.
The researchers found that even with these simple dynamics, they were able to reproduce the Pareto law, which is an asymmetric fat-tail power law distribution of capital. This means that a great number of individuals in their simulation were poor, while only a small number were increasingly rich.
However, they also found that talent and capital were not correlated. The most successful individuals with the highest final capital had talent levels around the mean, while the most talented individuals ended up with very small capital amounts close to zero units.
The researchers also found that the most successful individuals were also the luckiest, having met the highest number of opportunities during their lives. The less successful individuals were also the most unlucky, experiencing a great number of accidents.
This result tells us that in order to win, not only do we need to improve our abilities and skills, we also need to work hard on attracting good luck. The question now is, how do we attract good luck? For this, we will look to Richard Wiseman and Albert-László Barabási for answers.
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Richard Wiseman conducted a study where he gave both lucky and unlucky (in their own mind) people a newspaper, and asked them to look through it and tell him how many photographs were inside.
On average, the unlucky people took about two minutes to count the photographs whereas the lucky people took just seconds. Why? Because the second page of the newspaper contained the message “Stop counting — There are 43 photographs in this newspaper.”
This message took up half of the page and was written in type that was over two inches high. It was staring everyone straight in the face, but the unlucky people tended to miss it and the lucky people tended to spot it.
Just for fun, he placed a second large message half way through the newspaper. This one announced: “Stop counting, tell the experimenter you have seen this and win $250.” Again, the unlucky people missed the opportunity because they were still too busy looking for photographs.
The personality tests revealed that unlucky people are generally much more tense and anxious than lucky people, and research has shown that anxiety disrupts people’s ability to notice the unexpected.
They go to parties intent on finding their perfect partner and so miss opportunities to make good friends. They look through newspapers determined to find certain type of job advertisements and as a result miss other types of jobs. Lucky people are more relaxed and open, and therefore see what is there rather than just what they are looking for.
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Hence, from this and other studies, Wiseman came up with four techniques to attract good luck:
The first technique is to maximize opportunities. Lucky people experiment with new things and act on possibilities, while unlucky people analyze things to death and never take action. Start small, keep trying new things, figure out what works and what doesn't, and iterate based on feedback.
The second technique is to trust your intuition. Intuition is not magic. When you have knowledge in a field, intuition happens when your subconscious brain has found a pattern that you haven't consciously seen. Unlucky people have those feelings too, but they don't act on them because they are too preoccupied with other things.
The third technique is to be ready for good luck, which simply means being optimistic. Optimism gives lucky people more "grit," allowing them to persevere when things get tough. While pessimists have a more accurate view of the world, optimists are more likely to be lucky since their assumptions lead them to possibilities.
The fourth technique is to turn bad luck into good luck. Lucky people find the good in bad things and believe that everything will work out for the best in the long run. They don't dwell on their bad luck and take steps to keep it from happening again. Giving up, feeling down, and shutting yourself off from the world won't help the world give you more opportunities. When things get tough, you can either give up or keep going. Lucky people are exceedingly resilient.
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Albert-László Barabási's book Formula also provides insights into the role of networks in attracting good luck. His first law states that "Performance drives success, but when performance can't be measured, networks drive success". Having a strong network provides access to a wide range of opportunities, which can translate into good luck. People within a strong network can provide valuable advice, support, and connections, which can help an individual achieve their goals. Moreover, a strong network can open doors to new opportunities that may not have been available otherwise.
For example, consider two individuals with similar skills and experience applying for the same job. One of them has a strong network of contacts within the industry, while the other does not. The individual with the strong network is more likely to get the job because they have a better chance of getting a referral or a recommendation from someone within their network. We will elaborate more on the strategies of building a good network in a subsequent chapter.
Albert-László s third law states that "Previous success multiplied by fitness equals future success". For instance, consider a talented young athlete who begins their career with a few noteworthy wins. As they continue to succeed and gain recognition, they are likely to receive more attention from sponsors, coaches, and fans, which will increase their resources and opportunities. They may receive more funding, better training facilities, and access to top coaches and trainers. Additionally, their success may attract other talented athletes who want to train with them, further boosting their opportunities for success. Thus, to have a better chance of winning big in the future, we can start seeding ourselves with small successes and build our way up to bigger and bigger successes.
Albert-László Barabási's fifth law states that "With persistence success can come at any time". It means that success is a numbers game. The more you try, the more chances you have of achieving success. The concept is based on the probability theory that suggests that the more times you attempt something, the greater the likelihood of success. In this sense, persistence plays a crucial role in increasing the probability of success. To even have a chance of winning, you need to persist to keep playing. If you stop playing, you won't even have a chance in the first place.
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In conclusion, ability is bounded, but success is unbounded, and unbounded success is largely determined by luck. Hence, we need to place equal emphasis and effort on improving both our luck and our ability. We can improve luck by maximizing opportunities, trusting our intuition, being ready for good luck, turning bad luck into good luck, building a strong network, seeding small successes and keep trying persistently. Remember, success follows the Pareto principle, and a few individuals reap the majority of the rewards while the majority languish. But with these techniques, you can increase your chances of being among the few who have unbounded success.