Leadership Outcomes that is Fooled by Randomness

Success is contagious. We love to connect leadership outcomes and success. As humans, we like to belong to a thriving community. What is more, we love to share feel-good stories on how we defeated the odds and become successful. In reality, we craft these stories around our egos and attribute an apparent set of causal events to our contributions. We disregard the random events and the total lack of causality that lead to the outcome.

Today, we see a growing inability among leaders to untangle subjective schemas from the objective reality. We’ve always noticed it between political leaders, and now even more so. More and more, business leaders are assigning arbitrary leadership outcomes to their vision, approach and leadership style. Even at business schools, the professors teaching strategic thinking and leadership are notorious at stimulating their egos.

And then, there are the so-called Thought Leaders. This use to be a kind of leadership outcome gained through the natural expansion of seeking knowledge, growth and innovation. It had nothing to do with ego but was all about passion. However, when we confront this group of thought leaders with a set of random events that lead to a successful outcome, they will put together an egocentric version of the story.

Leadership Outcomes and Hindsight

Hindsight bias is a massive contributor to connecting events leading to success. A state where we can look back and make ourselves believe that things happened as planned. Nassim Taleb popularized the concept of hindsight bias in his book Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets.

It is as if there were two planets: the one in which we actually live and the one, considerably more deterministic, on which people are convinced we live. It is as simple as that: Past events will always look less random than they were (it is called the hindsight bias). I would listen to someone's discussion of his own past realizing that much of what he was saying was just backfit explanations concocted ex post by his deluded mind.

Nassim Taleb

Probable Leadership Outcomes

Years ago when a supported confronted Gary Player on how lucky he is, his reaction was “the more I practice, the luckier I get“. The beauty is that he contributed his outcome on the golf course to his inputs during practice but still acknowledge that a certain amount of luck is required. Hence, removing his ego from the statement.

As a leader, you make decisions every day. Decisions are your job. According to Farnam Street, there are decisions where:

The outcome of your actions is 100% predictable. As long as you stick to a proven recipe, you know what the effect will be. Your leadership outcome is a function of how well you follow the recipe.
Then there is the instance where the outcome is unknown, but you do have an appreciation for the probabilities. Think of Tiger Woods tee-ing at the start of a tournament. He has no idea what the outcome will be, but the bookings can predict a probable outcome given his history. When things do go well, he may contribute it to his greatness. When things go wrong, he will have a reason outside of his control.
For some events or decisions, the outcome and probability are unknown. In this case, the impact of a possible decision and leadership outcome is unclear and unpredictable. Anything is possible. Most business leaders operate in this state.

Business leaders want to believe that they operate in an environment where they do have the outcome under control. In reality, they work in an environment of uncertainty where the distribution of outcomes and the individual outcomes are unknown.

Leaders Believing in Non-Randomness

The fact is, leadership is messy. Following a trusted recipe is easy, especially in a hierarchical environment. You can always pass the responsibility to the next level. And when things go well, the one at the top will take the shine. In the case of a negative outcome, the ones at the bottom will get under fire.

So the question is, how much luck is there in business decision making? Some people may swim more frequently in the “lucky pool” than others. Taleb defines it as a person who benefited from a disproportionate share of luck but attributed his success to some other, generally exact, reason.

Most of the time, these people swimming in the luck pool have no idea about their luck.

[W]e often have the mistaken impression that a strategy is an excellent strategy, or an entrepreneur a person endowed with "vision," or a trader a talented trader, only to realize that 99.9% of their past performance is attributable to chance, and chance alone. Ask a profitable investor to explain the reasons for his success; he will offer some profound and convincing interpretation of the results. Frequently, these delusions are intentional and deserve to bear the name "charlatanism.

Nassim Taleb

Leadership outcomes understanding luck

Taleb also emphasizes the fact that a random event can quickly diminish success that was initially due to luck, so may see it being at the right time at the right place. But he also puts it clearly if we plan success and not build it on luck it will last.

Making people believe and excited about your vision and empowering them to take action is hard work. Even more, surrounding yourself with exceptional people, allowing them to unleash their greatness, and take the back seat while they are successful is damn hard. Even more so, to take the sword when things do not go according to plan. In this case, we base the leadership outcomes on a well-planned strategy that will resist randomness.

Therefore, your leadership outcomes have less to do with luck and are achieved through professional effectiveness.

A Leadership Outcome Framework

The diagram below provides a framework for leadership outcomes. On the horizontal axis, we define the Precursor to Success as the randomness of events that leads to a specific situation. While on the vertical axis, we describe the Level of Success.

Lucky

Within the lucky quadrant, the level of success is high but has little to do with the leadership style. These are the people swimming in the “lucky pool”, random events determine results, and there is no link between the leadership outcomes and the events leading up to success. The chances of repeated success are low. Just as a random event determined success, it can also fail. Some may call it beginners luck. In this environment, you will find a high degree self-congratulatory backslapping and protestations of “excellence”. But leadership will seldom dare to challenge so-called successful individuals.

Losing

In the lower-left corner are the losers. They regard themselves as the unlucky ones. Those against whom the world turned. The fact is, they will repeatedly do the same things and expect the same results. In general, they have no idea what it takes to plan for success and to learn from previous mistakes. Change is also a scary concept for these leaders. Working in such an environment are demoralizing for all, and it may seem that you are part of a headless beast. What is even worse, now and then the loser may become lucky.

Learning

For the losers to improve their outcomes, they need to move into the learning quadrant. They need to create an environment where they can embrace learning and change. Leaders need to understand their and their team’s shortcomings and develop a strategy with actions plans to increase the predictability of outcomes. By learning from your mistakes, you improve the chances for success in the future.

Leading

Leaders in this quadrant are not easily “fooled by randomness”. They don’t rely on luck for successful outcomes, but will instead constantly challenge their way of working to produce predictable results. They know how to surround themselves with extraordinary people, empower them to take decisions and don’t feel threatened.

Bottom line: The best leaders don’t have to conquer – they empower.

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