Citation
Great by Choice: Uncertainty, Chaos, and Luck - Why Some Thrive Despite Them All
TL;DR
Successful companies get higher returns on luck, not more luck
Introduces 'Return on Luck' concept: successful companies don't experience more luck events but get higher returns on the luck they experience. When a lucky event occurs in a small founding population, it can fix a trait that persists for decades.
Nine years of research on companies that beat their industry indexes by 10x over 15 years, documenting how high-ROL companies deliberately preserve beneficial founder effects.
Key Findings from Collins & Hansen (2011)
- Successful companies get higher returns on luck, not more luck
- Lucky events in small founding populations can fix persistent traits
- High-ROL companies deliberately preserve beneficial founder effects