I love reading anything by Michael Mauboussin. His most recent book is The Success Equation, which really explains the difference between skill and luck and how it plays out in our lives. By understanding skill and luck hopefully will help with predictions in our lives and by being able to make better predictions will help us in our success.
Some thoughts from the book: On page 8:
“Useful statistics are persistent (the past correlates highly with the present) and predictive (doing well or poorly correlates strongly with the desired goal).”
From page 10: I love this because I put too much emphasis on trends and really overlook the limitations of analysis.
“Knowing what you can know and knowing what you can’t know are both essential ingredients of deciding well. Not everything that matters can be measured, and not everything that can be measured matters.”
Here are some thoughts on skill which to me are worth the entire price of the book.
From page 19:
“So here’s the distinction between activities in which luck plays a small role and activities in which luck plays a large role: when luck has little influence, a good process will always have a good outcome. When a measure of luck is involved, a good process will have a good outcome but only over time.”
And this is my favorite quote of the book from page 19:
“There’s a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose. In games of skill, it’s clear that you can lose intentionally, but when playing roulette or the lottery you can’t lose on purpose.”
From page 31:
“One of the main reasons we are poor at untangling skill and luck is that we have a natural tendency to assume that success and failure are caused by skill on the one hand and a lack of skill on the other. But in activities where luck plays a role, such thinking is deeply misguided and leads to faulty conclusions.”
These are just several thoughts that Mr. Mauboussin brings to the table concerning luck and skill and I must say having read his previous books that he is one of the better writers in bringing a subject that may be difficult to understand where the reader after he reads, has a much clearer understanding of the subject. To me, that is the mark of an excellent writer and communicator.
I have also included some video from the author discussing some of his ideas in the book.