Citation
The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing
TL;DR
Activities exist on continuum from pure skill to pure luck
Provides framework for placing activities on a 'skill-luck continuum.' When effective population size is large (Ne > 100), outcomes reveal strategy quality; when small (Ne < 10), random sampling overpowers skill differences.
Key insight that luck-dominated activities require different decision frameworks than skill-dominated ones maps directly onto the drift vs. selection distinction in evolutionary biology.
Key Findings from Mauboussin (2012)
- Activities exist on continuum from pure skill to pure luck
- Large Ne (>100) = skill-dominated; small Ne (<10) = luck-dominated
- Luck-dominated activities require different decision frameworks