My friend Ronan Mcgovern has a series on entrepreneurship on his blog. One post in particular caught my eye.
I wrote this blog comment in response.
You can see the original article here:
I’m enjoying your regular articles.
At the moment I’m reading “The Choice” by Dr. Eli Goldratt, Founder of Theory of
In the book he talks about “Luck”
He defines luck as the word we use – when opportunity meets preparation.
At first run through I agreed with him, but the two questions that kept coming up were…
1. “How do you prepare?” – for a project, new business venture, job, or new
2. How can you recognize and take advantage of opportunities at the right time?
The response from Dr. Goldratt was “Accurate thinking”
The closer we see reality as “it is” – the greater chance of success.
The next question was.. How do you do that, think accurately?
Answer I got: “By understanding the underlying cause and effect relationship of
the problem, venture, or goal you are trying to improve”
Ok… So In order to be best prepared, I need to document and understand the
cause and effect relationships of a situation.
Next question: Why is understanding the cause and effect relationship so important?
Because of one belief/assumption: “Inherent Simplicity”
This idea, discovered by Newton acknowledges – if you go far enough down the
cause and effect tree you will notice the diagram converges on 1 or 2 root
causes. These would encompass the 20% of activities needed to see 80% of results
in your venture.
Newton’s quote – “Nature is exceedingly simple and harmonious with itself”
understanding cause and effect is a method for focusing on the right thing, at
the right time, using the appropriate resources for the job.
While reflecting on this I recalled a conversation Bill Gates had with Warren
Buffet when he was growing up (I think around 14 years old). Gates looked up to
Warren Buffet, and as a surprise his mom decided to pull some strings and get
Buffet to join them for dinner. While at the dinner table they did not waste any
time and started talking.
To jump start the conversation, Gate’s mom asked – “What is the single most
important thing you can credit for your success” – Both Gates and Warren
answered – “Focus!”
With this preparation we can be sure to focus on the right activities, or at
least the activities with a greater chance for success.
The next question remaining is: How do you recognize and take advantage of
Well, The more you understand the cause and effect relationships of a given
industry, business, team, system…
The more likely you are to identify areas for improvement. Something the rest of
the world has neglected due to a lack of familiarity with the underlying
Now it is important to recognize the following:
“Every improvement is a change, but every change is not an improvement”
The story used was – computers.
If a consumer’s computer breaks or has a problem they may get frustrated and
upset. This would be the extent of their progress.
If an IT professional, or technician who builds computers and understands how
everything is put together and why it works comes across a problem with the
computer, they would go through the “categories of legitimate reservation” and
then run through a few assumptions for what the problem could be.. Assuming it
was a serious problem… They could go so far as taking the computer apart to
its component parts and putting it back together from scratch… a complete
reset/reboot/rebuild of the system.
Now.. We have an idea of how to prepare for a situation… even a situation we
may not have identified yet… and we have the understanding (assumption), we
will best be able to take advantage of any opportunities because of our
preparation; understanding cause and effect – (i.e. We’ll see what levers to
After this analysis, I was sold.
Luck = Preparation + Opportunity
Bad Luck = Lack of preparation + Opportunity
I’ve been practicing accurate thinking and it takes a lot of time, but I can see
how it also changes the way we communicate with others and their ability to
understand what we’re saying. It also requires a significant amount of effort.
While having a conversation with his daughter Efrat, Dr. Eli Goldratt was asked:
What choice impacted your life the most?
His answer –
” I wanted to live a full life. The most important decision that led directly to it was my decision to constantly devote time to understanding, really understanding, each one of my areas of interest: family, work, friends”
When he says understanding we know – He is talking about understanding
The key to this conversation however is he applied and went through the rigor of
understanding cause/effect only in his areas of interest.
Thus developing new insights, and being able to take billion dollar company’s
and 10X them.
They call it viable vision – where you turn a company’s net profit into its
current gross revenue over a few years.
See you tonight,