The Success Equation - I can’t think of a better book to kickstart 2022.
Thought I’d share some nuggets of wisdom from this piece by Michael Mauboussin, as he lays out how the combination of luck and skill brings about success.
Importance of luck increases with competition
Competition drives people to get better, leading to increased & more consistent performance.
When everyone improves performance, there is very little difference between top performers.
Luck can play a pivotal role at this point.
The past is not an accurate description of the future
The human minds tend to always draw lessons from the past connecting dots based on cause and effect.
We forget to include the role luck played in that outcome.
As a result, our lessons learnt are not exactly accurate.
Determine the influence of luck vs skill
While we should look at history to support our learnings, we should know what we can & can’t learn through it.
Just like a lottery winner doesn’t have a skill in picking winning tickets, we can't measure all the factors that matter.
Difference between being rational and being intelligent
Even the most brilliant person can make a wrong decision.
Being rational allows you to control your emotions, set priorities and reflect on the learnings to extract wisdom from an outcome.
The process is greater than the outcome
Sometimes short-term results are not enough to evaluate winning strategies.
For e.g. in investing, short-term returns are more luck than skill. You must have an in-depth look at the past performance to figure out the winning processes.
Improving skills through checklists & feedback
Just like the checklist is handy for our grocery lists, it's also useful in high-risk situations to keep things under control.
Similarly, feedback is helpful in reducing doubts & false confidence in even the most skillful people.
Ability to modify your strategy based on the situation
Similar to how David (an underdog) beat Goliath with a slingshot instead of strength, the ability to think outside the box is vital.
Shift your strategy to advantage your gameplay.
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