Luck: A Key Idea for Business and Society, by Chengwei Liu. New York: Routledge, 2020. 124 pp.

Abstract

Conventional views on luck and business hold that luck involves unsystematic variance that cannot be measured or analyzed. Furthermore, top performers, according to conventional wisdom, perform the best because they are the most skilled. It is not a matter of luck that Bill Gates or Usain Bolt is successful; they are among the best at what they do. Along these lines, business schools deemphasize the role that luck plays in outcomes and focus, instead, on topics like skill and leadership. This seems sensible. Focus on what you can control—and luck, by definition, is uncontrollable. Chengwei Liu argues that conventional views on luck are mistaken; luck is a key idea for business and society. First, luck can be measured via regression to the mean. The basic idea behind regression to the mean is that outlying firm performances are often not indicative of actual skill. As such, we should expect future performance to regress toward the mean. This is because continued streaks of good or bad luck are unlikely to occur. Being lucky is not a repeatable skill. Second, businesspersons can strategize around luck because the ways in which people are fooled by randomness are predictable. Third, in luck-dependent fields (such as business), extreme outcomes are not the result of exceptional skill or the lack thereof but are due to exceptionally lucky circumstances. This is not to say that skill is irrelevant. Top performers are skilled, but conventional views about the relationship between skill and luck only apply for the moderate range of performances. These three claims make up what Liu calls the “unconventional wisdom of luck” and are the main themes of his book. In chapter 1, Liu highlights the differences between conventional views on luck and his own unconventional approach. He also outlines the plan for subsequent chapters of the book. In chapter 2, Liu reviews five common ways in which luck is defined in the business management literature, that is, luck as attribution, randomness, counterfactual, undeserved, and serendipity. A strength of this chapter is its interdisciplinary appeal. Psychologists will be interested in Liu’s claims regarding cognitive biases and luck attributions. Liu discusses many of the ways in which people are fooled by randomness, for example, via self-serving biases, hot-hand fallacies, halo effects, and ignorance when it comes to regression to the mean. Philosophers who work on the nature of luck will be interested in Liu’s discussion of luck as a counterfactual. Liu raises the criticism of modal accounts that “perfect counterfactual analysis is impossible if one cannot specify all of the initial conditions that could have altered the course of history” (15). Liu is on the right track. For themodal account, the extent to which an event is a matter of luck will depend on what initial conditions one holds constant across possible scenarios (Hill 2020). However, modal theorists, such as 316 Business Ethics Quarterly