Excerpted from: HBR, Are “Great” Companies Just Lucky?, by Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson, April 2009
Studies that examine high-performing companies to uncover the reasons for their success are both popular and influential.
They’re the basis of the insights behind best sellers like In Search of Excellence and Good to Great.
But there’s a problem: The “great” companies from which these studies draw their conclusions are mostly just lucky. Many of the “great” companies cited are, in fact, nothing special.
A firm is remarkable only when its performance is so unlikely that systemic variation alone cannot account for its results. Most success studies don’t address this fact, relying instead on the “self-evident” nature of exceptional performance.
To understand how lucky some firms might get because of systemic variation alone, we ran simulations that gave us a picture of how firms might do if they differed only in their luck. Then, we compared actual results with simulated results, which allowed us to determine which firms had delivered performance so
unlikely that it was probably due to something remarkable about them.
Using this method, we evaluated 287 allegedly high-performing companies in 13 major success studies.
We found that only about one in four of those firms was likely to be remarkable; the rest were indistinguishable from mediocre firms catching lucky
breaks.
By our method, even in the study with the best hit rate, only slightly more than half the high performers had profiles
that were credibly attributable to something special about the firms. In short, what qualifies as remarkable performance is anything
but self-evident.
This doesn’t mean you should necessarily dismiss the advice offered in success studies. But, success studies should be treated not as how-to manuals but as sources of inspiration and fuel for introspection.
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The Homa Files 
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