The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing

by Michael J. Mauboussin

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Overview

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael J. Mauboussin

“Much of what we experience in life results from a combination of skill and luck.” — From the Introduction

The trick, of course, is figuring out just how many of our successes (and failures) can be attributed to each—and how we can learn to tell the difference ahead of time .

In most domains of life, skill and luck seem hopelessly entangled. Different levels of skill and varying degrees of good and bad luck are the realities that shape our lives—yet few of us are adept at accurately distinguishing between the two. Imagine what we could accomplish if we were able to tease out these two threads, examine them, and use the resulting knowledge to make better decisions.

In this provocative book, Michael Mauboussin helps to untangle these intricate strands to offer the structure needed to analyze the relative importance of skill and luck. He offers concrete suggestions for making these insights work to your advantage. Once we understand the extent to which skill and luck contribute to our achievements, we can learn to deal with them in making decisions.

The Success Equation helps us move toward this goal by:

• Establishing a foundation so we better understand skill and luck, and can pinpoint where each is most relevant
• Helping us develop the analytical tools necessary to understand skill and luck
• Offering concrete suggestions about how to take these findings and put them to work

Showcasing Mauboussin’s trademark wit, insight, and analytical genius, The Success Equation is a must-read for anyone seeking to make better decisions—in business and in life.

Product Details

ISBN-13: 9781422184233
Publisher: Harvard Business Review Press
Publication date: 11/06/2012
Pages: 320
Sales rank: 375,504
Product dimensions: 6.40(w) x 9.30(h) x 1.10(d)

About the Author

Michael J. Mauboussin is an investment strategist and has been in the financial services industry for more than twenty-five years. He has also taught at the Columbia Graduate School of Business since 1993, and is on the board of trustees at the Santa Fe Institute.

He is the author of two previous books, Think Twice: Harnessing the Power of Counterintuition and More Than You Know: Finding Financial Wisdom in Unconventional Places and is coauthor, with Alfred Rappaport, of Expectations Investing: Reading Stock Prices for Better Returns .

Table of Contents

Acknowledgments ix

Introduction Sorting the Sources of Success 1

Chapter 1 Skill, Luck, and Three Easy Lessons 11

Chapter 2 Why We're So Bad at Distinguishing Skill from Luck 33

Chapter 3 The Luck-Skill Continuum 47

Chapter 4 Placing Activities on the Luck-Skill Continuum 67

Chapter 5 The Arc of Skill 91

Chapter 6 The Many Shapes of Luck 109

Chapter 7 What Makes for a Useful Statistic? 133

Chapter 8 Building Skill 155

Chapter 9 Dealing with Luck 177

Chapter 10 Reversion to the Mean 197

Chapter 11 The Art of Good Guesswork 213

Appendix 235

Notes 241

Bibliography 265

Index 281

About the Author 295

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The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing 3 out of 5 based on 0 ratings. 1 reviews.
Sidewinder More than 1 year ago
The theme of this book, untangling the role of skill and luck in our lives, merits the attention that this book has received. However, that meritourious subject matter notwithstanding, this book was a major disappointment to me. Curiously, the lessons in this book that have the greatest heft and offer the greatest insights are made through direct citations of other sources. Mauboussin's book is particularly derviative of Nassim Taleb's writings (Black Swan) and Daniel Kahneman's (Thinking, Fast and Slow). There is no value added with The Success Equation, and in fact, the insights presented are given insufficient treatment relative to primary sources from which they are pulled. Additionally, Mauboussin makes numerous assertions about the role that chance/skill play in various activities, including investing and various sports, without sufficiently explaining his methodology. He repeatedly cites himself as the source for the many charts in the book. His conclusions about the role of skill in various activities, e.g. baseball vs. basketball vs. investing are, at best, grossly oversimplistic. His methodology seems to leave much to be desired, but he hardly sheds any light on that methodology. Take a pass on this book, there are numerous books that address the same subject matter that are far superior.