Return on Luck

And when we study this over and over again, what we find is we’re all hit in life with different kinds of luck. But a huge swing variable is there are those who grab it and then get a high return on that luck, and there are those who fritter it away. When you compound that over time, it tends to produce a very big difference. And the bad luck side is also important, because it’s not just return on good luck; it’s return on bad luck. It’s when the bad things happen to you. It’s when you get smacked and knocked on the ground. You lose your company or were fired from your company. Well, you can lay on the ground and whine about it, or you can basically figure out how it’s going to make you stronger.

There was this crisis called the Tylenol crisis. A horrible bad luck event for Johnson & Johnson when Tylenol capsules were laced with cyanide. Could have killed the brand. But Jim Burke, who goes down as one of the great CEOs in history for how he handled this, was able to take the Tylenol crisis and say, “If we handle this right, we will be responsible to our customers by pulling them off every shelf in the country. But we will do it in such a way that in the end it’s going to make us stronger; it’s going to make our brand stronger; it’s going to make our loyalty with customers stronger. We’re going to turn this bad-luck event into a high return.” And the interesting thing is there was another pain killer—we know this from Built to Last—that had the exact same incident at the exact same time, and they just wanted to manage their quarterly earnings. And they didn’t get a return on bad luck.

So, luck does not cause greatness. But return on luck is a gigantic swing variable. What will you do with the luck that you get?

 

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