Are successful entrepreneurs just lucky?

Posted: February 21, 2017 by pauljayburns in Business ideas, Entrepreneurial character, Entrepreneurship Articles, Practical Tips and Advice, Teaching entrepreneurship

I am often asked how much of an entrepreneur’s success is down to luck. Of course luck plays a part – both good and bad luck – because it is something that happens to all of us. But entrepreneurs seem to defy the odds with more good than bad luck. I believe that they create most (but not all) of their own luck.

Related image‘Good luck’ in the context of entrepreneurship might be defined as the ability to spot a commercial opportunity and see it into the market place before competitors. Here research by three academics in the USA* shows us how successful entrepreneurs actively used what they call ‘discovery skills’ to find and develop their business ideas:

  • Networking – being exposed to and finding ideas from as many sources as possible;
  • Observing – just observing how people behave, particularly potential customers. Most people go through life on ‘auto-pilot’, not thinking about what they see, but entrepreneurs observe what is happening in their networked world;
  • Questioning common wisdom – asking ‘why’ do things have to be this way, and if there is no satisfactory answer, ‘why not’ – why can it not be different? Having observed behaviours entrepreneurs think about it and question why they happen;
  • Experimenting – actually taking the effort to try things out and finding whether the ‘why not’ idea works;
  • Associating – associating apparently different things so that the solution to a problem in one context can be applied to a problem in another –  the problem behind the business opportunity spotted by using the other discovery skills. For example, Henry Ford found the inspiration for the assembly line of his model T Ford from observing how a slaughterhouse worked and associating it with his vision of an affordable car for everyone.

In other words, these successful entrepreneurs were just more adept at spotting the commercial opportunities, or ‘good luck’, than most of us. They help make their own luck.

Image result for dice‘Bad luck’ in the context of entrepreneurship might be defined as the ability to avoid failure. Of course things happen that are completely out of our control – like a banking crisis – but some risks are predictable and once a risk is predictable it usually can be managed. If you can identify a risk you can monitor it and take steps to mitigate it (with the benefit of hindsight that even applies to the banking crisis of 2008). For example, an earthquake is a disaster – bad luck of the worst kind. But we can monitor seismic activity in an area, sometimes even predicting a quake. We can certainly avoid building in high-risk areas and even construct buildings so as to minimise damage in the event of a quake. We know that successful entrepreneurs are adept at risk management, building on their strong discovery skills to monitor emerging risks and using, among other techniques, incremental decision-making and partnering to reduce their exposure to it.

Of course, sometimes there is the completely unexpected and unpredictable piece of good or bad luck that comes along – nothing in life is 100% certain. But be sure of one thing. When an entrepreneur says their success is all down to ‘luck’, they are just being very modest. Hard work and good judgement are every bit as important.

*The Innovator’s DNA, J.H. Dyer, H.B. Gregersen & C.M. Christensen, HBR December 2009

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