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The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing [Kindle Edition]

Michael J. Mauboussin
4.4 out of 5 stars  See all reviews (49 customer reviews)

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Book Description

“Much of what we experience in life results from a combination of skill and luck.” — From the Introduction

The trick, of course, is figuring out just how many of our successes (and failures) can be attributed to each—and how we can learn to tell the difference ahead of time.

In most domains of life, skill and luck seem hopelessly entangled. Different levels of skill and varying degrees of good and bad luck are the realities that shape our lives—yet few of us are adept at accurately distinguishing between the two. Imagine what we could accomplish if we were able to tease out these two threads, examine them, and use the resulting knowledge to make better decisions.

In this provocative book, Michael Mauboussin helps to untangle these intricate strands to offer the structure needed to analyze the relative importance of skill and luck. He offers concrete suggestions for making these insights work to your advantage. Once we understand the extent to which skill and luck contribute to our achievements, we can learn to deal with them in making decisions.

The Success Equation helps us move toward this goal by:

• Establishing a foundation so we better understand skill and luck, and can pinpoint where each is most relevant
• Helping us develop the analytical tools necessary to understand skill and luck
• Offering concrete suggestions about how to take these findings and put them to work

Showcasing Mauboussin’s trademark wit, insight, and analytical genius, The Success Equation is a must-read for anyone seeking to make better decisions—in business and in life.

Editorial Reviews


"I just finished reading the most enjoyable business book I've read in a long time - although relegating The Success Equation, by Legg Mason Chief Investment Strategist Michael J. Mauboussin to this category would be a grave disservice, significantly understating its sophistication and selling short its achievement." -- David A. Shaywitz on

“Really enjoyed reading The Success Equation by @mjmauboussin over the last few days. A smart, insightful book.” — As tweeted by Daniel Pink

“… a fascinating book that forced me to reflect on my decision-making processes for investments.” — Tomasz Tunguz, Inc. magazine

"Mauboussin’s latest, excellent, book attempts to show how to work out what decides the outcome of a given situation. — James von Simson, portfolio manager at Thurleigh Investment Managers

"Mauboussin has always been a must-read. His 2013 book is no exception." — Tadas Viskanta, founder and editor of Abnormal Returns

The Success Equation makes a valuable contribution to the literature on decision making…thoroughly researched and well written…I highly recommend the book to anyone interested in making better investment choices.” — Financial Analysts Journal

“With this book, Mauboussin takes an important step in making a case for the role of statistical analysis in decision-making in various contexts, ranging from CEO compensation to child rearing to college rankings and even picking the next musical superstars. It is almost as if the number crunchers heralded in Michael Lewis’ Moneyball have found their second voice.” — Business World magazine

“Mauboussin excels at explaining his ideas, many of which are based on complex neuroscience in accessible terms, using case studies and examples from investing decisions, college rankings, and hospital procedures.” — Publishers Weekly

“… for investors and business executives wishing to minimise the risk of bad luck, this is a book worth reading.” — Financial Times

“there is a lot of thought-provoking stuff in the book, for sports fans as well as investors.” — The Economist

“For investors who don't mind wading into some technical weeds, though, Mauboussin suggests some concrete tools.” — U.S. News & World Report

“Well written and analytical, this book completely changed how I think about success.” — The Motley Fool (

“There are tons of statistics and abstractions, yet there is coherence and precision in Michael J. Mauboussin’s new book, The Success Equation. Filled with instances from sports and markets, it’s an insightful read.” — Mint (

“It’s always hard to get the balance between detail and readability right when writing a popular book about math. But Mauboussin manages it well.” — MoneyWeek

“…the clarity of Mauboussin’s writing, and the quality of the examples makes the book a worthy addition to the managerial library.” — strategy+business Magazine

The Success Equation makes a valuable contribution to the literature on decision making when both luck and skill are involved. It is thoroughly researched and well written. I highly recommend the book to anyone interested in making better investment choices.” — CFA Institute

“an engaging book.” — Choice Magazine

“In The Success Equation, Mauboussin explores the contributions of skill and luck, and discusses how interpreting past results through the ‘skill-luck continuum’ can help leaders to make better decisions...This can be a useful way to look at business leadership… [He observes that] luck becomes more important and skill less so, as people climb up the hierarchy, which also raises interesting questions about how leaders can continue to grow and enhance their skills… what leaders can do, is to improve their understanding of the impact of fortune on their decisions.” —The Sunday Times

“…a fine and different approach business readers will find involving.” — The Bookwatch, Midwest Book Review

“In dealing with success and luck Mauboussin presents a useful model.” — Eric Falkenstein, Seeking Alpha

"I just finished reading the most enjoyable business book I’ve read in a long time – although relegating 'The Success Equation,' by Legg Mason Chief Investment Strategist Michael J. Mauboussin to this category would be a grave disservice, significantly understating its sophistication and selling short its achievement." — David A. Shaywitz on

"Fascinating. Michael Mauboussin's insights into the relationship between skill and luck are clearly and simply explained, relentlessly logical and often counter-intuitive. This makes for great reading and provides powerful tools for understanding sports and markets. Anyone who wants to understand sport or business beyond the platitudes and assumptions routinely trotted out as expert analysis should read this book." — Ivan Gazidis, Chief Executive Officer, Arsenal Football Club

“If you liked Michael Lewis’s Moneyball, with it’s mix of data and great storytelling, you’ll very much enjoy Michael Mauboussin’s Success Equation.” — Jack Covert, 800 CEO READ

“Michael J. Mauboussin is always worth reading. … almost everyone will find something in this book that either he hadn't thought about before, or that he thought about incorrectly.” — Brenda Jubin, Seeking Alpha

ADVANCE PRAISE for The Success Equation:

Philip Tetlock, Leonore Annenberg University Professor, Wharton School and School of Arts and Sciences, University of Pennsylvania; author, Expert Political Judgment
“Mauboussin seems to know everything there is to know about how to skillfully disentangle skill from luck. He also knows how easy it is to botch the job and has great stories—from music studios to baseball dugouts to the New York Stock Exchange—that bring statistical abstractions to life.”

Howard Marks, Chairman and cofounder, Oaktree Capital Management; author, The Most Important Thing
“In The Success Equation, Michael Mauboussin helps us understand the difference between skill and luck and, importantly, how to tell how much each contributed to a given outcome. He reminds us that in fields where luck plays a big part, like investing, outcomes are of limited relevance in assessing performance. And, indispensably, he points out how important it is for practitioners ‘to develop an attitude of equanimity toward luck.’ I love that!”

James Montier, GMO; author, The Little Book of Behavioral Investing
The Success Equation is a brilliant and insightful book packed with interesting anecdotes and rigorous analysis. Anyone dealing in fields that blend some combination of luck and skill—which is most of us—will find their understanding enhanced by reading it. The central role of process in such environments is often underestimated. This book helps redress the balance.”

Paul DePodesta, Vice President of Player Development and Scouting, New York Mets—
“Few people acknowledge or care to accept the central role that luck plays in our lives. Michael Mauboussin not only understands the separation between skill and luck, but more importantly, provides a mental framework to deal with the reality. This is an important read.”

About the Author

Michael J. Mauboussin is an investment strategist and has been in the financial services industry for more than twenty-five years. He has also taught at the Columbia Graduate School of Business since 1993, and is on the board of trustees at the Santa Fe Institute.

He is the author of two previous books, Think Twice: Harnessing the Power of Counterintuition and More Than You Know: Finding Financial Wisdom in Unconventional Places and is coauthor, with Alfred Rappaport, of Expectations Investing: Reading Stock Prices for Better Returns.

Product Details

  • File Size: 1070 KB
  • Print Length: 312 pages
  • Page Numbers Source ISBN: 1422184234
  • Publisher: Harvard Business Review Press (October 16, 2012)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B00A07FR4W
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #48,414 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
94 of 99 people found the following review helpful
3.0 out of 5 stars Decent book with some interesting references to follow up December 24, 2012
By Jackal
Be aware of all the five-star reviews that have only read one book, or those that have read three books from the same author and nothing else.

This book is neither a masterpiece nor the author's best book, but still an interesting book.

I think most of the book is based on the author's blog entries. I personally prefer the blog entries which are more concisely written. I feel that this book has a bit too much filler material. The book is clearly not written for professionals in the investment community (even though they too can profit from reading the book).

I would have liked the book to go one step further than just present extended blog entries. Sometimes the author lack a critical eye. Sometimes he presents an interesting academic finding and then moves on to the next thing. One is left with a lot of lose ends. What was the point of including the stuff on disruptive technologies for instance. We don't know because the author does not tell us. Personally, I still found some chapters interesting and especially the references to more specialised sources in psychology and management. This requires extra work, but the author has a good ability to read widely. If you do not want to do this extra work I don't know if the book will provide you with value. After finishing the book you are not left with a clear way to distinguish luck and skill. You are left with the general notion that luck plays a big role in investing. Not sure that is sufficient for even most lay-persons.

One thing the author misses is that luck and skill are not cast in steel. Luck is like a Russian doll. What is luck for an investor is not necessarily luck for the CEO. What is luck for the CEO is not necessarily luck for the R&D department. Etc.
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34 of 41 people found the following review helpful
I have read all of Michael Mauboussin's HBR Blog posts and thus have eagerly anticipated the publication of this volume in which he examines - in much greater depth than the articles permit -- a common mistake when making predictions: failing to recognize the existence or miscalculating its influence, "and as a consequence we dwell too much on the specific evidence, especially recent evidence. This makes it tougher to judge performance...The problem is that we commonly twist, distort, or ignore the role that luck plays in our successes and failures. Thinking explicitly about how luck influences our lives can help offset that cognitive bias."

Obviously, luck can be an important factor. The challenge that Mauboussin embraces is to explore and thereby understand "the extent to which luck contributes to our achievements, successes, and failures." He shares what he has learned so that those who read this book will be much better prepared to take luck into full account when making decisions, especially those that serious implications and could have major consequences.
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17 of 20 people found the following review helpful
I would highly recommend "The Success Equation" for anyone looking to better understand how luck affects our lives. Thankfully, Mauboussin's new book also provides a host of mental tools that can be used to cope with the fact that luck - not just our ability or skill - determines a large portion of our fate. In fact, it is for that reason that "The Success Equation" goes well beyond one of my other favorite books on the topic, "Fooled by Randomness" by Nassim Taleb. Taleb's excellent book rightly highlighted the human tendency to overestimate causality in certain environments, such as the business world. I credit "Fooled by Randomness" for making me more cautious in my assessment of the perceived skill (or lack of skill) of many individuals or groups (companies, teams, etc.), but I regret that it did not provide many tools (aside from Monte Carlo) or mental models for figuring out the relative contributions of luck and skill to a particular outcome. Mauboussin's book does just this, and for that reason alone it should be a mainstay on the bookshelf of anyone who works in a field where luck plays a central role ("which is most of us," as one of the blurbs says).

Now, Mauboussin doesn't argue that one can make an exact science out of this attempt to disentangle the relative contributions of luck and skill, but he does provide some tools for properly framing the discussion and for at least making the attempt to do so. The author says his goal is to help readers make better decisions than those completely in the dark. I agree with him that this is an important exercise. At least in the business world, it seems like on a daily basis one encounters muddled thinking when it comes to discussing the success or failure of businesses and individuals.
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Most Recent Customer Reviews
4.0 out of 5 stars like me, you will probably miss some of the ...
Even though everybody knows about this mixture of skills and luck, this book tries to handle the subject explicitly. I think that this is already highly recommendable. Read more
Published 27 days ago by Harald Modis
5.0 out of 5 stars Five Stars
Excellent discussion on the subtleties of success in life
Published 29 days ago by Jeremiah
5.0 out of 5 stars Five Stars
Excellent protective packaging and price. Good clean new copy. Timely shipped
Published 1 month ago by Orlando G. Suarez
5.0 out of 5 stars Skill or Right place at the right time?
How much is success due to skill versus luck? This book introduces that topic and tries to explain it. I recommend this book highly. Read more
Published 2 months ago by M. Deibler
5.0 out of 5 stars Ultimate untangling guide!
This book gives a lot of insight and helps in boosting our processing power in any field you name, be it investing, business or even speculating!
Published 4 months ago by KARAN ARORA
3.0 out of 5 stars Great insights but a tough read
The intent of the book is laudable and it does a great job of untangling the concept of skill vs. luck. Read more
Published 6 months ago by saggipoison
5.0 out of 5 stars Five Stars
A very enjoyable read!!!
Published 7 months ago by Amazon Customer
4.0 out of 5 stars Four Stars
A bit tedious but educational.
Published 8 months ago by Bill B
5.0 out of 5 stars good book to understand the relationship between luck and hardworking
In the world of business and trading, it is essential to understand the cause and effect of things but in a lot of times the relationship is non-linear. Read more
Published 8 months ago by Kingsley from HK
3.0 out of 5 stars A statistics refresher with American sports examples for executives
An easy read, helping you remember the basics from the statistics course in the university, you already half forgot. Read more
Published 10 months ago by Peba
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More About the Author

Michael J. Mauboussin is head of global financial strategies at Credit Suisse. He is also an adjunct professor of finance at Columbia Business School.

Learn more at

Photo by Andrew Kist.

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