TNIE (23)
To appear on 21-4-22
‘Transforming organizations’: a series in New Indian Express.
The role of luck in organizational transformation
By R Gopalakrishnan
(The writer is an author and business commentator. His articles and videos can be accessed on his website www.themindworks.me and his email ID is rgopal@themindworks.me)
How important is luck to achieve transformation goals? Luck is controversial. Some believe that reliance on luck makes people easy going. Others believe that luck is an indisputable reality. But change agents should not rely on luck to deliver results. The reality is that we must do our very best, come what may. Luck may play a negative or positive role in the result.
Kent Evans and Bill Gates were very close at school and were buddy computer geeks. Kent Evans died prematurely in a mountaineering expedition, while Bill Gates went on to found Microsoft. Bad luck for Evans, but surely not good luck for Gates. In the film, A Streetcar Named Desire, Stanley Kowalski (Marlon Brando), said,” You know what luck is? Luck is believing that you are lucky, that’s all…to hold a front position in this race, you’ve got to believe that you are lucky.” Was he right?
Psychologists have identified four moods produced by luck. If we have bad luck, we feel that we had no control over that event. If we have good luck, we believe that our actions had a lot to do with the result. If someone else has good luck, we feel jealous. If another person has bad luck, we may feel a mean sense of joy, what the Germans call schadenfreude. The absence of causality in matters concerning luck is clear to the discerning.
Every month since August 2020, I have written on organizational transformation. The greatest challenge that leaders face—whether companies, hospitals, clubs, or governments—is how to adapt to a rapidly changing environment. Leaders were required to possess intelligence (IQ) before the 1980s; then came the era of empathy (EQ), but, of late, there seems to be a tendency towards adaptability (AQ). For leaders of tomorrow to possess high IQ, EQ, as well as AQ is surely the future challenge of leadership. In this series, I have touched upon pitfalls to be avoided, people strengths that should be leveraged and illustrated the principles through the examples of how Hindustan Unilever and Tata responded to challenges posed by liberalization.
Did Lever, Tata, or any other organization succeed in the transformation purely because of their strategies? Largely, yes. If someone else followed the same actions, can success be assured? Not assuredly. Transformation programs do not follow the laws of physics, so there is no cause-and-effect relationship between inputs and outcomes. To quote Sir Isaac Newton, “I can calculate the movement of the stars but not the madness of men.”
In great companies, continuous adaptations over decades have produced the dramatic and compounded effect of adaptability. We should not underestimate the benefits of compounding over a long period of time. Warren Buffet created wealth by investing cleverly over a long period of time–most of his wealth accumulated from the time factor, not the cleverness factor. That is not plain luck!
Independent India has successfully executed multiple transformation programs. With the hindsight of time, India has been reasonably successful with these programs, a privilege not applicable to its South Asian neighbors, who sought immediate pleasure in the arms of China. Some examples of India’s success are a constitutional democratic framework, five-year planning schemes, population control programs, green revolution for food grains, white revolution for milk, and so on. All imperfect but bearing positive signs of sustainable success. Debates will, of course, be ongoing.
Recently launched public transformation programs are doubling farmer incomes by 2022, achieving GDP of USD 5 trillion by 2025, improving ease-of-doing business on the ground, and more effective cooperative federalism between the union and the states, just to name a few. Not enough time has elapsed and, anyway, there has been the bad luck of covid, lockdowns, and Ukraine.
It is useful to contemplate the role of luck in transformations. One published study in 2018 examined the impact of luck versus talent. The study showed that sometimes the most talented individuals are not the most successful. Individuals with a ‘median’ level of talent, but who enjoyed luck, experienced higher success. A paper by Cornell University suggested that while western culture places a high value on effort, talent, and risk taking, a large proportion of success can also be attributed to luck and random chance. (Boyer Law Firm Blog, 11th March 2021).
In another article titled Are Great Companies Just Lucky? (HBR, April 2009), the authors asserted that the high-performing companies owe their success to luck, not smart practices. The analytically oriented consulting firm, McKinsey, however, argued that there are indeed seven principles for achieving transformational growth (McKinsey Insights, 22nd April 2021).
These are bewildering array of conclusions and hypotheses. That is the reason why managers should reflect on what luck is, is there a difference between ‘earned’ luck and ‘unearned’ luck, does luck play a role, and how should a change agent think about luck? These are worth exploring in the next few articles, and I propose to do so.
In my book titled, Six Lenses, published in 2016, I had devoted a whole chapter to the subject of luck. A reader from Goa criticized me for doing so, considering that I bear credentials of being an educated and enlightened student of physics, engineering, and management. Why not devote a couple of my monthly columns to the subject?
