The Law of Averages guarantees someone will win, but it doesn’t say how.

May 18th, 2009 Comments

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Michael E. Raynor, Mumtaz Ahmed and Andrew D. Henderson, Harvard Business Review April 2009, Are “Great” Companies Just Lucky?:

Studies that examine high-performing companies to uncover the reasons for their success are both popular and influential. … But there’s a problem: The “great” companies from which these studies draw their conclusion are mostly just lucky.

The issue is about…

… the folly of attributing outcomes arising from systemic variation (the random nature of coin tosses) to the supposedly unique attributes to a few individuals, who are really just the luckiest coin flippers. Similarly, we can credibly claim that a firm is remarkable only when its performance is so unlikely that systemic variation alone cannot account for its results. Most success studies don’t address this fact, relying instead on the “self-evident” nature of exceptional performance.

Meaning: simply out-lasting one’s competitors is not a sufficient justification for claiming a firm is “great”, and that any attempt to figure out why those firms have succeeded (by “staying in the game”) will misinterpret the true causes of success.

Case in point: have you looked at the original list of “Good to Great” companies? How are they doing now?

By Taylor Davidson. Posted May 18th, 2009. Category: Creating Strategy using Design Methodology Comments

SIMILAR THOUGHTS

David Sanger

Quite a puzzle as to the relationship between persistence, quality and success. This, from a study by Bernardo Huberman referenced by Kevin Kelly:
attention over content is distributed in a highly skewed fashion, implying that while a few items receive a lot of attention, most receive a negligible amount. And yet people persistently upload content to social media sites, hoping for the highly unlikely outcome of topping the charts and reaching a wide audience. An analysis of the production histories and success dynamics of 10 million videos from YouTube revealed that the more frequently an individual uploads content the less likely it is that it will reach a success threshold. This paradoxical result is further compounded by the fact that the average quality of submissions does increase with the number of uploads, with the likelihood of success less than that of playing a lottery.
emphasis added

Taylor Davidson

Yep; power laws, long tail, 1000 true fans, chunks of attention, all sides of the same issue.

1) But people don't upload 10 million videos to YouTube (or create anything on the web) looking for wide scale success (or at least I hope we're not that universally misguided); we do it to reach much smaller groups of people, to share thing with small chunks: and if those small chunks of friends become large chunks of attention, then so be it.

2) "the more frequently an individual uploads content the less likely it is that it will reach a success threshold": I'm not surprised by that at all: uploading a ton of junk is meaningless, and on the Internet (and printed media, and music, and movies, etc.) success is more driven by individual items than large bodies of work. Word of mouth & internet "passed" links work more effectively when driving individual, single, simpler items than comprehensive, longer, nuanced items.

3) There simply isn't that much stuff that is "insanely great".