The Myth of the Secret Genius

Brian Klaas

The Garden of Forking Path

Originally posted 30 Nov 22

Here are two excepts: 

A recent research study, involving a collaboration between physicists who model complex systems and an economist, however, has revealed why billionaires are so often mediocre people masquerading as geniuses. Using computer modelling, they developed a fake society in which there is a realistic distribution of talent among competing agents in the simulation. They then applied some pretty simple rules for their model: talent helps, but luck also plays a role.

Then, they tried to see what would happen if they ran and re-ran the simulation over and over.

What did they find? The most talented people in society almost never became extremely rich. As they put it, “the most successful individuals are not the most talented ones and, on the other hand, the most talented individuals are not the most successful ones.”

Why? The answer is simple. If you’ve got a society of, say, 8 billion people, there are literally billions of humans who are in the middle distribution of talent, the largest area of the Bell curve. That means that in a world that is partly defined by random chance, or luck, the odds that someone from the middle levels of talent will end up as the richest person in the society are extremely high.

Look at this first plot, in which the researchers show capital/success (being rich) on the vertical/Y-axis, and talent on the horizontal/X-axis. What’s clear is that society’s richest person is only marginally more talented than average, and there are a lot of people who are extremely talented that are not rich.

Then, they tried to figure out why this was happening. In their simulated world, lucky and unlucky events would affect agents every so often, in a largely random pattern. When they measured the frequency of luck or misfortune for any individual in the simulation, and then plotted it against becoming rich or poor, they found a strong relationship.

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The authors conclude by stating “Our results highlight the risks of the paradigm that we call “naive meritocracy", which fails to give honors and rewards to the most competent people, because it underestimates the role of randomness among the determinants of success.”

Indeed.

The article is here.

Here is my summary:

The myth of the secret genius: The belief that some people are just born with natural talent and that there is nothing we can do to achieve the same level of success.

The importance of hard work: The vast majority of successful people are not geniuses. They are simply people who have worked hard and persevered in the face of setbacks.

The power of luck: Luck plays a role in everyone's success. Some people are luckier than others, and most people do not factor in luck, as well as other external variables, into their assessment.  This bias is another form of the Fundamental Attribution Error.

The importance of networks: Our networks play a big role in our success. We need to be proactive in building relationships with people who can help us achieve our goals.

Will Your Ethics Hold Up Under Pressure?

Ron Carucci
Forbes
Originally published FEB 3, 2016

Here is an excerpt:

In an ironic appeal to self-interest, for which Haidt readily acknowledges the paradox, he says there are four important reasons “ethics pays.” First, there is the cost of reputation, which most analysts and experts acknowledge links closely to share price performance. Second, ethical organizations have lower costs of capital, as evidenced by Deutsche Bank’s commitment to focus on clients with higher ethical standards. Third, the white-hot war for talent, both recruiting and retaining top talent, takes a painful hit with an ethical scandal. Conversely, the best talent wants to associate with the best reputed companies. And finally, the astronomical cost of cleaning up an ethical mess can soar into the billions after shareholder losses, lawsuits, fines, and PR costs are added up. Still those aren’t the real reasons to focus on this, claims Haidt. The longer-term benefits to a world with greater ethical substance far outweigh the costs of cutting corners for short-term gains. Sadly, unethical choices have paid well for too many executives.

The article is here.