What Carl Sagan Teaches Entrepreneurs About Chance — and How to Handle "Cold Streaks" in Business In business, we must adhere to the laws of probability and keep flipping that coin. Here's why.
- The role of statistics and probability in business success
- How embracing the laws of probability and chance can help relieve the pressures we put on ourselves
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Business comes. Business goes. There are good days. There are some not-so-good days. Money in, money out. Every entrepreneur knows what all of these situations feel like. How much of these patterns of good and bad are in our own hands? How much of it is random and to be expected? These are the kinds of questions I ask when a situation arises that seems completely out of nowhere or unexpected.
Is this situation — good or bad — simply due to me and beyond my control? If so, what does it mean as business owners, and how do we respond in a way that doesn't frustrate us or our team?
What is luck? Baby, don't flip me…
Over the years, my company has experienced periods of what some might call a "hot streak," where it seems like every prospect is converting to a closed deal, and all is smooth sailing (insert sunglasses emoji here). You know the vibes. Well, what is a hot streak, truly? Is it luck, skill or simple statistics? Often when business is good, we attribute it to some success on our part — and I don't doubt that hard work and dedication play a huge role — but in the world of statistics and probability, we're likely to come across the streakiness of pure chance.
As Carl Sagan, American astronomer and science communicator, explained in his book, The Demon-Haunted World: Science as a Candle in the Dark, it would be more fascinating if there weren't any steaks in repeated patterns. He used the example of flipping a coin (I do not recommend flipping a coin during business meetings, even though my business partner and I have done it once or twice) and that in a round of, let's say, 25 flips of a coin with a 50/50 chance of landing on either heads or tails, you'd notice random patterns of streaks for both heads and tails.
Further, Sagan used a more skilled-focused example of shooting a basketball. A player with a "hot hand" is bound to have such a streak of scoring baskets just as much as a player with a below-average shooting percentage is bound to break a "cold" streak. What exactly does this all mean? I am no expert in statistics, but I take it to mean that in business, we must adhere to the laws of probability and keep flipping that coin (figuratively). Be ready for the good and bad.
Let the good, and bad, times roll
Any honest salesperson will tell you that there's no real way to control how — or when — decision-makers will actually decide to move forward with a purchase. I don't want to get too deep in the waters here, but decision-makers have a variety of deciding factors (mainly other people and budgets) that they have to swim through before ever getting to the point of converting from prospect to client. So, there is a probability a conversation that can go on for what seems like forever.
To save us all time, what I really want to focus on is how business owners and leaders can handle the doomed "cold streaks." Because the reality is no one ever questions when things are rolling smoothly. We don't stop and say, "Now wait a darn minute, this is too good!" Quite the opposite. Winning feels good, and when we're on a high, we want to keep going because there's no reason to stop. That is, until chance rolls in. That's when we get caught off guard and lose focus.
…And keep rolling…
We can't stop what happens by chance. More importantly, we can't let it stop us. And as harsh as this might sound, the world doesn't stop because you're having a bad day. Your bills are still due. Your employees are still expecting a paycheck. Clients still want the services they paid for. Life moves on. It's a lesson I know all too well. When my first business was suffering, I had to act quickly to make sure my kids had food on the table and a roof over their little heads. I had to keep flipping my coin.
That's just the way it is…things will *sometimes* never be the same
The next time something shakes up your "hot streak" or breaks a cold one, take a moment to acknowledge what's happening. Perhaps you've put out a solid ad, and new leads are running to your website. Or maybe a client had a tough year and needs to cut your services due to expenses. Or rather, a key team member just left your business for a competitor. Are these events appearing to you as your own doing, luck — or is there a statistical explanation? Maybe a combination of all three?
Don't be dismayed; there are certain things we can do to increase our chances of favorable outcomes. Sagan says of a basketball player's skill set, "Their average shooting percentages are a true reflection of their personal skills. This is only about frequency and duration of streaks."
This, the ups and downs of business, is a long game. The frequency of presenting proposals and hosting sales calls will, without a doubt, pose a random order of yeses and nos. And if we really want to win, we should all freshen up our skills in statistics. I'm kidding (kind of?). But, by embracing the basic laws of probability and chance, hopefully, some of the pressures we put on ourselves are relieved — specifically, the pressure that weighs on us when we've hit a streak of nos and not-yets. Give it another flip. Eventually, your chances will change.