Success Equation: Role of Skill & Luck

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In one of the blogs on value investing  I read about the book success equation by Michael Mouboussin. Spent the last couple of weeks on reading this book. If you have read Taleb's Fooled by randomness, you would get the core of this book by just browsing the cover.But Michael Mauboussin focus on the role of luck and skill in specifically three areas - Sports, Investing and Business. Taleb never focused on sports in any of his books, because it never interested him as he calls that prostituted randomness. 

But in this book Michael Maubossin the biggest area of focus is untangling role of skill and luck in Sports. He does cover business and investing along with sports, but sports take the larger share. He does look into various research by sabermetrics he has used is present in almost every other chapter. Hence I understood some metrics related to baseball better after reading this book. But leaving that focus aside, he tries to get across the point that - role of luck plays a larger share in some areas compared to skill for success. By placing the various sports in the skill and luck continuum, he shows how role of skill can and luck can be untangled in each of those sports success. If roulette and baccarat are games to be placed on the extreme side of luck , chess and swimming would be in the extreme side of skill. Then there is a lot of sports that could be placed between these extremes. Let me not repeat what is in book, and leave it to the readers interpretation. But here are some of the key take away in the book, (the ordering is based on my own preference)
  1. The more skillful players enter the game, more skill is required, but along with this increased skill the role of luck increases in determining success. 
  2. When skill plays a larger role in success - focus on deliberate practice with a good feedback system in place (like a coach, mentor). But hours and hours of practice would push that small increment in skill which differentiates the experts from the rest of the majority.
  3. When luck play a larger role in success - the outcome is probabilistic in nature - focus on sticking to the right process. This is similar concept what you would learn in Bhagavad-Gita. Work with what you do seem to understand, and do not worry about the rest. This would ensure that you don't have large loss but you may hit with some occasional huge success sticking to the process.
  4. When you compete with a weaker player try to compete on own turf and directly, but when you compete with weaker player try to change the game and dont fight their own turf.
  5. Focus on the right statistic given more and more luck is getting involved in the success. Especially the
He does reiterate some of the concepts from Taleb on how to handle things in the Fourth quadrant or the black swan domain where there is extreme pay off and unpredictable outcomes as introduced by Taleb in his Black swan, how do we handle things. Overall a quick and good read , especially if you baseball statistics, you would enjoy reading this book.

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