Success Does NOT Ensure Wisdom

Success Does NOT Ensure Wisdom

October 26, 2020

Consider these phenomena:

  • Growing start-up technology companies always want to hire individuals who worked in a “unicorn”, a company that gained a billion-dollar valuation.
  • Book stores have shelves of books on management, business and even personal improvement written by or about those who became wealthy or led successful companies.
  • Aspiring actors look to the major movie stars as role models, believing success comes from following their example.
  • Lots of college business and IT majors drop out of university in the hope of becoming as successful as Mark Zuckerberg or Steve Jobs – imagining themselves on the same path to success.  If you are a parent of one of those young people, is it smart to applaud that decision or fear for the disappointment likely to befall your child?
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Worshiping Success

In each case we are making implicitly flawed assumptions. Take the case of the hiring managers searching for unicorn alumni: If you hire someone who was an early employee of Google or Facebook, you are banking on the fact that by virtue of the candidates association with this massive success, they have special knowledge, experience, or abilities that will accompany them to your own organization.

If you dig into that belief, you start to see how flawed it is. Why? Because there is no evidence that anything they did or didn’t do had any causal impact on Google’s success. The same may be true even for Google’s founders.

This tendency only to look at the survivors and successes, rather than those who didn’t make it is called Survivor Bias.

Airplane Logic

The best illustration of this fallacy comes from the years during World War Two. As the allies worked to reinforce their war planes, they studied planes that returned from missions, and added structural reinforcement to the parts of the planes that had been hit. Abraham Wald, a statistician working with a team at Columbia University, suggested that they ought instead to harden those areas that had NOT been hit. The reasoning was that those planes that did not come home must have been hit in areas other than those of the surviving planes. Therefore, reinforcing those inverse areas would protect more planes.

Like so many insights, once you understand it, it seems so obvious.

The focus on the surviving planes –or the successful founders — or the massive movie stars – all assume that those who succeeded were successful because of the decisions they made, the path they took or the things they did. But without understanding the counterfactual – the decisions, experiences, and circumstances of those who failed at the same endeavor — we can easily be duped.

Low Odds

For every Mark Zuckerberg, there are hundreds of students who dropped out, attempted to create a start-up company, and ultimately failed. When they failed, they had no university degree, and may have wasted many years working on an idea that faded into obscurity. Similarly, for every actor who left home and moved to Hollywood, becoming a famous idol – there are hundreds of out-of-work actors waiting tables, doing odd jobs or languishing in cattle calls well into middle and old age. Assuming that Bard Pitt’s choices and talent were the unique qualities that created his success is an illogical assumption. We have no data on the talent or persistence of those hundreds of also-rans who didn’t succeed. They may have made the same choices –but gotten vastly different results.

Of those companies in Silicon Valley, who successfully got funding, 13% succeed in having a mass exit in the form of an IPO. In that fact alone, there are already numerous, statistically unlikely things that had to happen, none of which are related to the skill or expertise of the founder or her team:

• Be situated in Northern California.
• Manage to get proximity to the VC community through either relationships or institutions.
• Getting funded at a level sufficient to grow.
• Use the funding effectively.
• Do it at an economically advantageous moment.
• IPO or sell at a moment of high valuation.

Consider the startups outside of California. And those founded by women or minorities who are less likely to have the right connections –or who emerged from obscure schools. Then add in the companies that had an idea, but at the wrong moment in the Zeitgeist. Remember Friendster?

When we consider those who happened to work for the rocket ship of Google, what does their trajectory tell us about their own talent, grit, or ability? Only that they were on board the rocket.

Decision Quality Vs Outcome

It’s easy, from the perspective of 2020, to believe that every decision made by Google leaders was the right decision –because look at how well it all turned out. But good decisions and good outcomes are loosely correlated. They are not necessarily cause and effect phenomena.

If you bought 100 lottery tickets and won the jackpot, does that imply that buying 100 lottery tickets is a good decision? No. Millions of people bought tickets for the same drawing – and did not win. The decision and the result are not one of cause and effect.

Yes, without buying any ticket, you would not have won. But the others who used the same strategy and lost would be better off having not played. They’d still have the $100 they spent on losing tickets.

Failure is Instructive

People who work for companies that never got acquired, or that ran out of funding, may have more expertise than those who worked for Google. Why? Because they confronted challenges, and situations that provided them with both success stories and cautionary tales.

We often learn more through struggle and failure than through success. This applies to hiring, but also to whom we admire.

As you choose your next mentor or hire, don’t confuse success with ability. Those who struggled may have more to contribute than those who hit the jackpot.