In it, Bezos expresses something that many business managers and many people do not understand. It’s about setting your company up to benefit from Nassim Taleb’s idea of black swans, or highly improbable events.
Fortune: In the past, you’ve said that a company learns just as much as by its failures as it does by its successes. Do you still believe that?
Bezos: Well, the key is that the company has to experiment, and what you want to try and do is reduce the cost of experimentation so you can do as many experiments per unit time as possible so you can do as many experiments per week, per month, per year as you can –and they’re not experiments if you know they’re going to work.
So you want to do a lot of these experiments, and many of them will fail, and that’s okay. Because if you’re doing enough of them, there will be some winners. That’s the only mindset you can have if you want to invent. At Amazon, we’re very focused on invention.
Bezos understands that much of business success and failure is luck.
That’s difficult for smart people to believe. They believe their input causes success. These people under appreciate how much of their past success and failure was due to luck. Sometimes their input helps improve the chances of success, but luck is still a key factor.
The lesson isn’t to give up and stop trying because luck plays such a big role. The lesson isn’t even that inputs don’t matter. They do matter, a lot.
The lesson is to understand that even the best inputs doesn’t guarantee success. Try as much as possible to improve your odds by trying.
I’m always amazed when I go to talent hubs like L.A., Miami and Nashville to see the quality of talent performing on the street or in the airport. These people often sound as good and look as good as the celebrities we know and love. Why haven’t they succeeded? They haven’t got their big break yet. Luck.