PART I
How the Best Get Better
CHAPTER 1
Big Business Goals
How can you maximize your odds of great leadership success in business?
Why Big Business Goals Matter
In the iconic movie Pulp Fiction, viewers are introduced to a character called Mr. Wolf. He shows up on the scene to clean up the sordid mess created by the two main characters of the movie. The mess includes a dead body, an upset wife, and a blood-covered car. In the entire scene, Mr. Wolf doesnât lift a finger but is very effective by simply telling others exactly what to do. He solves big problems with the least amount of energy. This, of course, is why I like his character so much.
To be an engineer is to solve problems and achieve goals. This is the raison dâĂȘtre. This is why you do what you do. In secret, the actual fantasy of many engineers is to be Mr. or Ms. Wolf. When the Bat-sign lights up in the sky, you move in, solve the problem, briefly bask in the adoration of the crowd, and make a dramatic exit to deal with the next crisis. This heroic image solidifies our thinking that becoming better at problem solving will help us to become better leaders as well. After all, the reward for solving complex problems is the opportunity to solve even more complex problems. Yet what has got you here wonât get you there. The differences between a successful engineer and a great business leader are better skills and behaviors to solve different problems and achieve different goals.
Itâs therefore a good moment to introduce an interesting question: How can you use your engineering backgrounds to solve bigger and bigger problems and rapidly become outstanding leaders? This may be the greatest hurdle you will face in your entire career. The corollary to this question is, of course: Why is it that some engineers become outstanding business leaders and achieve big business goals, while others, talented as they may be, never rise to the top? To answer this question, you may need a better understanding of the role of skill, luck, and talent.
Why Skill, Luck, and Talent Drive Achievement
About 5 years ago, a group of senior executives enthusiastically told me that the massive success of their business was driven by an excellent strategy and a culture of getting things done. They were right about the nature of their results. Rumor had it that a money-printing press was in full operation in the bowels of their factories. They were wrong, however, about the reason for their splendid results. Within 2 years, the business came to a grinding and unexpected halt. After a painful restructuring, the business has recently been sold, the workforce has been reduced, and profitability still seems a distant dream.
This tragic story is an illustration of the illusion of control. It happens when you assign too much credit for your success to your own skills and talent, while underestimating the significant role of luck.
The formula for achievement is both profound and simple:
achievement = skill + talent + luck
A skill is applied knowledge or ability that leads to a predictable and consistent way to achieve a predefined result. Usually, it requires a combination of experience and training. A skill is therefore learnable.
Talent, on the other hand, is driven by the natural inclination toward a skill and generally determines the ceiling of a skill. For example, someone who loves working with numbers will achieve more in mathematics than someone who doesnât, even if their experience, intelligence, and training in the field of mathematics are the same.
Luck is the happy circumstance in which our skills and talents may bloom. For example, the gains of a roulette player completely depend on luck. His skills and talents are limited to choosing a number or a color, moving a pile of chips, waiting for the feedback and then repeating the process. Itâs as simple as that. On the other hand, the achievement of a chess master is determined mostly by skill and talent. Yet even during a chess match, luck can still play a significant role: A spicy Thai meal from the evening before may upset his stomach, and as a result deep thinking may be compromised by ungainly bowel movements at essential moments during the match.
To achieve success, you therefore have to operate at the intersection of skill, talent, and luck (see Figure 1.1).
Figure 1.1 Intersection of skill, luck, and talent for extraordinary achievement
If you are skilled and talented yet unlucky, you will forever be a best-kept secret. With skills and luck but lacking talent, you may make it to tier two, yet tier one will stay out of reach. With only talent and luck, you wonât be able to maintain momentum and run the risk of becoming a one-day wonder. Only with skill, talent, and luck will you be able to achieve outstanding results.
The two variables you are able to control as a leader to achieve extraordinary results are the development of skill and the application of talent. Development requires awareness of the skill, a decision to develop it, and, finally, the hard part: consistent actions to improve the skill. The difficult part of talent application, however, is often simply becoming aware of your talents. You may be brilliant at free-diving, a form of underwater diving that relies on the ability to hold your breath until resurfacing: No use of a breathing apparatus such as an oxygen tank is allowed. If you have never tried free-diving, you may be completely unaware of having this talent. Thatâs why itâs called a hidden talent. The truth is thereâs much more you havenât tried than what you have tried. Thus, the majority of knowledge about your talents are actually hidden. Thatâs also why the most important parts of your extensive library are the books you havenât read.
Why We Overestimate Skill and Talent
There are two reasons you habitually overestimate your skill and talent and underestimate the role of luck. The first is the DunningâKruger effectâa cognitive bias in which unskilled individuals suffer from illusory superiority, mistakenly rating their abilities much higher than average. This bias is attributed to a metacognitive inability of the unskilled to recognize their mistakes. It means that if you are completely ignorant and unskilled in a certain area, you may overestimate how well you will perform in this area. During a TV cooking program, the master chef made the task of cutting carrots look easy. Only when I heard that it requires a full year of advanced master chef training to learn how to properly cut vegetables did I realize there is much more to cutting vegetables than meets the eye. This is the DunningâKruger effect in action. Most people have no problem recognizing this effect in others. Think of surveys where more than 50 percent of vehicle operators consistently believe they are within the top 10 percent of safe drivers. You think youâre skilled, but in reality youâre simply lucky. As a general rule, if you encounter the DunningâKruger effect in others, keep in mind the words of Mark Twain: âNever argue with ignorant people. They will bring you down to their level and beat you with experience.â
The second reason is cargo cult thinking. The term cargo cult was first coined after World War II. During the conflict, several remote-island-based airfields were established for military purposes, baffling the indigenous, primitive populations. Often limited or no contact was established between the islanders and the more modern military forces. When the military finally left the islands, the original inhabitants tried to recreate the airfields using bamboo, stone, and other available material, waiting for the planes to return. Hence the name cargo cult thinking: If you build it, they will come.
Cargo cult thinking is not limited to the minds of our primitive brothers and sisters. It has a prominent place in modern business thinking as well. We often believe that if we simply emulate the visible effects of achievement, the real achievement will follow automatically. Especially when the initial results look promising, we tend to think we are skilled, while in reality, we are lucky. For instance, Elizabeth Holmes, the notorious CEO of Theranos, started wearing a black turtleneck to mimic Steve Jobs in order to practice a reality distortion of her own. Though initially very successful, as the recent scandals around Theranos have shown, what she actually did was mix cause and effect: The rooster that crows in the morning doesnât cause the sun to rise. Likewise, cajoling the rooster to crow earlier will not make a longer day.
The absence of skill and talent and underestimating the role of luck are dangerous follies and the main reasons smart people sometimes do stupid things. The fact that there are lottery winners is no excuse for buying lottery tickets. Instead, you need to move to a place where skill and talent massively trump reliance on luck. Fertile land beats better seeds all the time. In order to find fertile land, you need to turn to the power laws.
How to Use Power Laws
Nature is unbalanced, and therefore output isnât necessarily determined by the size of input. For example, in the English language, fewer than 3,000 words are used more than 80 percent of the time. This law is known as the 80/20 rule, Pareto rule, or vital few. Only small chunks matter, especially when it comes to achievement. Our focus is to find fertile lands, where talents and skill can be maximized and the influence of luck can be minimized. The reason to minimize the role of luck is that you want your achievements to be sustainable. The fertile lands are marked by power laws. A power law describes how small differences can yield exponential results. For our discussion, we need to focus on the power laws of prime location, prime time, and prime knowledge.
A great example of the power law of prime location happened on January 12, 2007, when the world-class violin player Joshua Bell played for an audience of over 1,000 people. Interestingly enough, he played while dressed as a common street artist in the subway of Washington D.C. Mostly ignored by the apathetic and rushed subway crowd, it took him almost 45 minutes to earn a meager 30 dollars. A few weeks later, Bell played again, but now in Carnegie Hall, which was packed to its limits with ecstatic listeners who loved his work. In both cases, his talents and skill were identical, yet the results were vastly different. What changed was the influence of luck. The crowd at Carnegie Hall was self-selecting, yet the chance that the subway crowd would recognize and value Bellâs work was limited at best. By choosing a different venue, the reliance on luck to achieve success became much smaller.
Executive Question
Where is the prime area or location where your talents and skills will have maximum effect to improve your business?
The power law of prime time can be illustrated by understanding airplane pilot skills. The most important moments when flying an airplane are landing, taking off, and emergencies. An airplane pilot who crosses the Atlantic Ocean will spend less than 10 percent of his or her time doing these three activities. The remaining time will be spent on routine activities like watching the autopilot. A pilot who wants to step up the game and become better will need to focus on improving skills in landing, taking off, and emergencies. On January 15, 2009, US Airways pilot Chesley Sullenberger managed to make a successful emergency landing with his Airbus A-320 on the Hudson River. Pulling off this feat requires incredible skill, and, fortunately, Sullenberger had recently trained for peak performance during such a scenario, thus reducing the reliance on luck.
Executive Question
What are your prime chunks of time as a business leader, and how can you maximize their effect?
Finally, the power law of prime knowledge is especially applicable to knowledge workers. Bill Gates once remarked that a great lathe operator commands several times the wage of an average lathe operator, but a great writer of software code is worth 10,000 times the price of an average software writer. This means the impact of knowledge is often subject to power laws as well: By focusing on expanding the right skills, a great software writer doesnât need much luck to command a high salary.
Executive Question
Which additional knowledge would have an exponential impact on your achievement as a business leader?
Why Small Differences Create Extraordinary Achievements
Joshua Bell and, of course, Bill Gates are on top of their games. Their applications of the power laws result in a huge disparity in results and compensation between the absolute top performers and the muddling middle. First prize: a Ferrari. Second price: a set of steak knives. The power laws therefore open ways to real achievement. This phenomenon is called the razorâs edge, and it means that small differences, consistently applied, will have a huge impact on your results. Part of these differences are driven by luck. If Bill Gates had caught the flu the day he and the owners of an obscure software company called Seattle Computer Products were hammering out a deal, IBM would not have adopted MS-DOS as the operating standard for all its hardware and the company Microsoft as you know it now would probably not have existed.
Another part of these small differences is driven by talent and skill. The excellent software code writer who is paid 10 times more than the average code writer obviously doesnât have 10 times more skill and talent, but is only slightly better in the areas that truly matter.
Here lies the heart of extraordinary achievement. If you want to double your results, you donât have to double your skills, but you need to apply the power laws to become slightly better at what truly...