Maximizing Return on Luck: Lessons from New Balance and Coco Gauff

In the book “Great by Choice,” Jim Collins introduces the concept of return on luck (ROL). After comparing good and bad luck events at numerous companies, he found that, on average, the high-performing companies, or as he called them, the 10X companies, had the same number of luck events as their counterparts. What set them apart? Their superior returns on luck.

Consider this recent example. New Balance signed tennis star Coco Gauff when she was 15, around the time she turned pro. For a while, the investment wasn’t paying huge returns for the company — until she won the US Open. Now, sponsoring someone who goes on to win the US Open is a great luck event for New Balance, but their response was noteworthy.

The company released a t-shirt in stark white with bold black text. Initially reading “Call me Coco,” the word “Coco” was strikethrough and substituted with “Champion,” rendering it “Call me Champion.” New Balance had already conceived this design and even had a few in circulation for prior tournaments. Yet, they significantly increased their inventory for the US Open, staking millions in the process. Imagine the atmosphere in that decision-making room.

Following her victory, they swiftly distributed these shirts to her family in the locker room, ensuring they were worn, not merely draped over shoulders. During her post-victory speech, as she mentioned her father, the camera spotlighted him donning the shirt, surrounded by similarly attired relatives. This led to a staggering 500 percent surge in traffic for New Balance, resulting in massive sales of both the shirts and their sneakers. This was an exemplary execution of maximizing return on luck.

As MSPs, we’re in the middle of a massive good luck event. We’re navigating a historically booming market. The luck event is uniform for all of us. The question remains: Who will achieve the highest return on luck?

TOPICS: MSP adviceMSP profitabilityMSP success
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