This blog was co-authored with Tsun-yan Hsieh.
Do a quick Google search of any prominent entrepreneur, and you will see at least one story about the role of luck in his or her success or failure. Uncertainty is at the heart of entrepreneurship and business building. Without it, there would not be the premium returns for which entrepreneurial ventures aspire and the successful ones realize.
By its definition, luck can't be controlled. It's chance. Probability. In business building, however, and among many of the great entrepreneurs, luck has a slightly different definition. You often hear entrepreneurs talking about how they "created luck."
In fact, entrepreneur's luck can be systematically influenced. We have categorized three types of entrepreneur's luck that can benefit someone who's creating or building a business:
1. Circumstantial Luck. You go to lunch with a friend and bump into another acquaintance who introduces you to a stranger who eventually becomes your biggest client. The unintended but welcomed outcome (a new client) was unrelated to the initial action (lunch with a friend). Being at the right place, at the right time, made the difference. You were circumstantially lucky.
2. Constitutional Luck. Age, heritage, cultural background, or upbringing can predispose you to a certain outcome. When I (Tsun-yan Hsieh) was an inexperienced junior consultant, a top senior executive took more of a liking to me than my more qualified and senior partners, simply because of a connection he felt with my Chinese origin. Business is often done in a clannish manner and having the "luck" of a certain cultural or hereditary background can be helpful. In other cases it can be negative, a case of entrepreneur's bad luck.
Another example of constitutional luck is age. It was extremely lucky for me (Tony Tjan) to be born at an age that allowed me to finish college during the birth of the commercial Internet as we know it. It was a good coincidence that I began my professional career at the start of one of the largest technology revolutions. I was in my early 20s at the time, and had the opportunity to gain innumerable lessons in the founding and building of a leading Internet services firm, all of which was possible because of a lucky constitution.
3. Ignorance, or Dumb Luck. As with the other kinds of luck, dumb luck's role in the outcome is clear only in hindsight. "I couldn't have expected this outcome because I was unaware of the cause and effect beforehand." This type of luck, such as winning the lottery and thus having the capital you need, or ironic obliviousness to risk factors in a business situation that then bolsters one's confidence, are examples of "dumb" luck.
How do some business builders appear to be luckier than others? How can some even claim to have more luck? While constitutional luck is uncontrollable, attributable to nature over nurture, our observations have shown that people who are luckier actually do things that increase the probability of circumstantial or dumb luck.
Luck is just chance; even if that is the case, there are ways to better one's chances.
Here are the three most important things lucky people tend to do:
1. Entrepreneurially lucky people are driven by a deep intellectual curiosity. Constant focus on self improvement affords more opportunities for luck to occur. Business leaders who regularly question the norm and who seek both continuous improvements in their business, and in themselves, end up being luckier because they want to learn. They read new things, try new experiences and are open-minded to a variety of relationships because they are curious. All of these things increase the probability for circumstantial luck. The need to push against complacency, reframe ideas, and seek external inputs may sound like "hard work," discipline," or even maniacal "competitiveness," but at it's much more than that. It's an inner resolve to learn and always believe in the ability to do better. You will simply see more -- and therefore increase your chances of finding luck -- if you adopt the open mindset that "there is always more to see and more to learn." Ignorance and curiosity can sometimes be two sides of the same coin. One's intellectual curiosity and willingness to try things can be driven as described in the "dumb" luck example above by ignorance of the potential outcomes.
2. Lucky people feel lucky and are optimistic. In a conversation with Tony Hsieh, the CEO of Zappos, he shared with me how people who self-described themselves as "lucky" picked up more hidden clues in a quiz. He described the fascinating test experiment in which two groups of people are given newspapers with hidden messages. While they are told to count certain images, the headlines and text on the pages have hidden messages telling them they are done and to mention a particular message to collect an extra $100. People who answered that they were "lucky" were much more likely to find the clue. Why? We think it is because they approach the world with an open and optimistic mind that enables them to see unexpected opportunity more readily.
In a recent blog post, I discussed the critical need for entrepreneurs to be internal optimists. Perhaps pessimists saw little value in the puzzle exercise, conducting it with reluctance and even criticism. Thinking you're lucky is closely linked to the first force of influencing luck, of being inclined to question. In many instances what people see as "dumb" luck is just having the right attitude.
3. Lucky people are vulnerable and humble. These qualities are the antidote to the hubris so common among successful business builders. Rather than thinking they have "seen this before," or "know that already," the luckiest folks tend to have a unique capacity for both confidence and humility. Being willing to not just intellectually challenge the norm (the first principle, described above) but to act on that challenge, in spite of risk, can create more opportunities, and therefore more luck. People open to their own vulnerability actually bring on people who know how to help them, and they create a valuable relationship network. Talk about circumstantial luck. What may on the surface seem like chance encounters that create pivotal differences for people are actually situations directly related to people's willingness to have the humility to believe that anyone in a "chance" encounter may be able to help them in unknown ways.
As Dale Carnegie has famously said in How to Win Friends & Influence People: "You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you." Have the humility to be interested in more people and watch more circumstantial luck come your way.
It's often hard, as we try to assign responsibility for an outcome, to untangle luck from foresight. It's easy, however, to become a luckier person, at least by the slightly modified definition of luck entrepreneurs use. Be willing to learn, approach life optimistically, and find the openness and humanness to realize that humility and vulnerability are the strongest magnets of wonderfully unforeseeable and lucky situations.
This article first appeared on Harvard Business Publishing on October 7, 2010.
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