Dem Pech aus dem Weg gehen

6. Februar 2014

3. Teil: Know what you care about

The degree to which early success causes subsequent success

If early success actually causes later success, the cream doesn't always rise to the top. When success breeds success and initial success is largely random, the most successful people are those whose early luck compounded - skill doesn't necessarily tell over time, because diversification is impossible. Sociologist Robert Merton first recognized this phenomenon in academic success and dubbed it "the Matthew Effect," quoting a Bible passage in which the rich get richer and the poor get poorer.

Consider the case of two aspiring venture capitalists: both are very smart and good at what they do. One went to Stanford; the other, Harvard. If they begin investing in 1995, Stanford hears about and invests in Google and Harvard fails to get the early opportunity to invest; if they start in 2005, Harvard gets a chance to invest in Facebook, while Stanford is left out. In either case, early success leads to better dealflow, more opportunities for acquisition (selling new investments to Facebook or Google), more opportunities to recruit talent, stronger networks of advisors, and many other advantages. Instead of averaging out over time, the initial difference between the investors is compounded. While nearly every career provides reputational benefits for (often unearned) early success, few compound the benefits of early luck as strongly as venture capital.

Mitigating the risks of uncertainty in your career

Risk for our purposes is the chance of an outcome you can't afford - so risk is entirely in the eye of the beholder. Often, skill can ensure that we meet the minimum economic or psychological thresholds we want from our work. But we can use an understanding of luck to pick strategies that minimize unnecessary career risk. Based on what we know about luck, here are some ways to avoid its downsides:

Avoid rigged games - Think hard about accepting a project that is highly uncertain if your performance will be compared to low-uncertainty projects.

Know what you care about - The more important relative performance is, the more you should avoid luck-dominated options, where the difference between good and great more likely results from luck than skill. Conversely, the more you care about "impact" - that the world look different as a result of your work - the more you should consider high-uncertainty choices. If you care most about certainty and social approbation, become a doctor; if you care about expected impact, start a healthcare company.

Reduce risk by smart timing - Pay attention to the order of decisions. Often reversing the order of two decisions can dramatically change their total risk. For example, starting a company as your first job out of college has very little downside - the worst case, you get interesting, valuable experiences that differentiates you among a field of bland candidates. Starting the same company after three years in your first job entails greater financial and career opportunity costs. (It often is still a good idea, but the potential downside is greater.)

Create portfolios - When operating in high-uncertainty environments, look for opportunities to diversify. As a product manager, you can run quick experiments to remove uncertainty from potential projects; as a middle manager, you can sponsor more than one project to increase the probability and magnitude of success on risky projects.

Reframe the risks you're taking - Poker players think in terms of expectation - whether a given decision, on average, would make or lose money - as a way of avoiding decision regret and outcome bias. Often the most rewarding professional experiences have the most uncertainty. Instead of concentrating on the results of a decision, think about its expected value - both in financial and psychological terms.

Focus on what you can control: Some aspects of our lives are either highly predictable or naturally diversified. Relationships tend to be both: putting effort into friendships almost always strengthens them, and we have both many friends and many opportunities to strengthen each friendship. Invest in relationships, and they'll pay a highly reliable dividend.

Zum Autor
N. Taylor Thompson is a member of the Forum for Growth and Innovation, a Harvard Business School think tank developing and refining theory around disruptive innovation. Follow him on Twitter at @ntaylorthompson.

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