Predicting Success and Failure – The Stories We Tell Ourselves


Dave Munger writes about the futility of predicting unlikely events. Runaway successes are rare, and difficult to predict in advance. Luckily for us, catastrophic failures are rare as well. I laugh when people tell me they have "the next Google" – as if anyone could have predicted the dramatic success of the first Google. If your goal is to have that level of success, all you can do is build something that has the potential, and hope a little randomness fall your way. VC's don't predict winners, they just screen out the most likely losers and hope with enough investments, the black swan is friendly to them.

Munger's post references this interview with Nassim Nicholas Taleb, author of The Black Swan which I highly recommend. (Be forewarned though. If you struggle with counterintuitive ideas, you may not enjoy this book.)

In the interview, Taleb makes the following statement.

Taleb argues that history books make up reasons for events that are by their very nature improbable. If someone had sat in a coffee house in Vienna in 1913 and related the history-book explanation of the situation in at that time, explaining that Europe was on the brink of an unprecedented continent-wide war, Taleb claims, he would have been carted off as a lunatic.

I think we do the same thing in business. Why do some businesses go from good to great? We make up stories and see patterns where they don't exist, because we are looking for that magic bullet that will make our company do the same. Why did the latest project fail? When we piece it together after the fact, we often get it wrong. That's why I like to use the decision tickler.

So if randomness matters so much, why try? Because you can still take advantage of it. Experiment. Expose yourself to random ideas, random people, random chance, and sooner or later, you might catch a ride on a black swan.

  • I just finished “The Black Swan” and am reading it again. It’s a tough assignment unlike Taleb’s first book. But while “great” success follows a random path “small” success is under our control. Step one is don’t turn failure into a disaster! That path is never a random path.

  • I keep telling my clients that if they can predict the future, then they can make a bizillion dollars. Predicting anything, even things under one’s own control, is very difficult.

    With that in mind, I very much admire your link to the decision tickler. It seems to me a most objective and honest way to explore one’s own decision making process and success rate.

  • If you can still find success at a level much less than the highly improbable event threshold, then there is no reason not to proceed with cautious optimism.

    If the only way it works is if you make the 1 in a million chance, then only the mathematically challenged and true pollyannas need continue.

  • We normally don’t know what will happen on our journey to success and relying so much on a predicted future will not do us any good. It may even cause a problem because of expectations.