Michael Raynor, Mumtaz Ahmed and Jeff Schulz

Although we need not “correct” for luck when allocating economic reward it is worth considering the role of luck when allocating other valuable commodities, such as our moral approbation and our efforts to learn from the experiences of others. Those who win lotteries justifiably get to keep the money, but few of us admire lottery winners just because they won the lottery. (Don’t confuse envy with admiration!) Neither would any of us seek to learn anything about lottery winning from them. They are individuals operating within a system, and that system generates “winners” entirely independently of the individuals within it. Winning the lottery is its own reward.

In the corporate world, the rewards of great performance are similarly self-contained: Superior profitability or stock price appreciation is valuable. But companies with great performance do not merit our admiration or study merely by virtue of their great performance. For although competition among companies is not nearly so dominated by luck as lotteries, neither is it a perfect meritocracy.

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