Duncan J. WATTS has put a conundrum to me in his book[1], which I might share with you.

Assume two drivers A and B, both drunk, both running a red light on their way home. Driver A fails to notice a pedestrian as he goes through the red light and kills him. Driver B is equally inattentive; only, there is no pedestrian crossing his path, so he gets home “safely”. Both have behaved exactly in the same manner – only the outcome is different. Should be Driver B held accountable for the accident?

In a court of law there would be no discussion whatever. Driver A goes to jail – well-deservedly many of you may say. In business, we routinely applaud a CEO whose only merit is to have been kissed by fortune. We’ll construct narratives explaining why he is a genius – but is he, or are we rewarding plain luck?

Take VHS and SONY Betamax. VHS bet on the hunch that people would like to see movies at home. SONY bet on the idea that people would want to record TV programs. What did the public want? I suspect it did not know at the time. Both gadgets were “enablers”. The public liked VHS, and early success turned into stampede. Possibly, VHS was first on the market, and his “enabler” got the first chance to capture the people’s imagination. Possibly, VHS fulfilled inchoate expectations. Was SONY a poor planner, or just unlucky?

SONY had a second mishap of the same kind. It came out with a minidisc as the same time as Apple launched the iPod. Was Apple’s design predictably a winner? There is no indication than it was. It just happened.

May be there is a lesson to be drawn anyway. In both cases SONY bet on the fact that people would go for quality. VHS and Apple might have bet on convenience. Convenience often trumps quality. But always? People are happy to pay about twice as much for an Apple PC. “It is virus-free” – I’m told. Oh yes, but for the price differential I would be able to by triplicate virus protection… The only reason I’d go for Apple is the exterior design – MACs are beautiful - which has nothing to do with performance…

I have no answer to provide here, and I’ll let you mull over these examples. Maybe when the business papers next designate the next star CEO you’ll stop and ask yourself: is he good or just plain lucky? Or put it another way: maybe outcome is not necessarily a good proxy for performance.

Original post at the DeepDip.


[1] Duncan J. WATTS (2011): Everything is obvious (once you know the answer). How common sense fails. Atlantic Books, London.


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