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 eachand 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 livesyet 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 decisionsin business and in life.

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing

Business & Money

Mauboussin, Michael J.

Management & Leadership

Harvard Business Review Press

Think Twice: Harnessing the Power of Counterintuition

No matter your field, industry, or specialty, as a leader you make a series of crucial decisions every single day. And the harsh truth is that the majority of decisions—no matter how good the intentions behind them—are mismanaged, resulting in a huge toll on organizations, the people they employ, and even the people they serve. So why is it so hard to make sound decisions? In Think Twice, now in paperback, Michael Mauboussin argues that we often fall victim to simplified mental routines that prevent us from coping with the complex realities inherent in important judgment calls. Yet these cognitive errors are preventable. In this engaging book, Mauboussin shows us how to recognize and avoid common mental missteps. These include misunderstanding cause-and-effect linkages, not considering enough alternative possibilities in making a decision, and relying too much on experts. Through vivid stories, the author presents memorable rules for avoiding each error and explains how to recognize when you should “think twice”—questioning your reasoning and adopting decision-making strategies that are far more effective, even if they seem counterintuitive. Armed with this awareness, you'll soon begin making sounder judgment calls that benefit (rather than hurt) your organization.

Finance

Expectations Investing offers a unique and powerful alternative for identifying value-price gaps. Rappaport and Mauboussin provide everything the reader needs to utilize the discounted cash flow model successfully. And they add an important twist: they suggest that rather than forecasting cash flows, investors should begin by estimating the expectations embedded in a company's stock price. An investor who has a fix on the market's expectations can then assess the likelihood of expectations revisions. To help investors anticipate such revisions, Rappaport and Mauboussin introduce an "expectations infrastructure" framework for tracing the process of value creation from the basic economic forces that shape a company's performance to the resulting impact on sales, costs, and investment. Investors who use Expectations Investing will have a fundamentally new way to evaluate all stocks, setting them on the path to success. Managers will be able to use the book to devise, adjust, and communicate their company's strategy in light of shareholder expectations.

Expectations Investing: Reading Stock Prices for Better Returns

Rappaport, Alfred

Economics

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