PhiloPsycho Freedom

Humans are pretty crazy things, aren't they? They can take random events and patterns and force order and meaning onto it. We not only want order; we need it. This is no better illustrated than in a study I referenced in another post (last paragraph of it). Participants needed to take back some of that control and meaning in their environment, so much so that they saw a pattern in a randomly changing arrangement of black and white pixels.

We also feel a need to attribute performance to people's abilities when it may be entirely independent of such factors. This has been illustrated by looking at Hollywood production companies, stock brokers, coaches, and basketball players. Statistically analyzing the data collected from each of these groups has shown that a person's performance was more controlled by random factors than by the people themselves: The producer didn't influence the success of the studio; the stock broker who has chosen the correct stock enough times in a row is lucky, more than anything; coaches had little influence on the ability of the team; basketball players on "hot streaks" didn't perform significantly better than average.

There's a basic stats principle called "regression", or "regression to the mean", which says that people will vary around their average performance, but won't stray too far from it. In the above cases (not including the stock broker), each group was performing around their mean. The producer who got fired for lack-lustre choices in projects may get fired, but it simply could've gone from one extreme (the high side of the mean) to the other (the low side of the mean), making it appear like he's a terrible chooser. When the next hot shot comes along and performance does better, it's a simple regression to the mean, meaning that it went from the low side back to the average. Same for the coach, and basketball player.

The stock broker is slightly different though. Say there are 10 stock brokers and they all pick random stocks to invest in. Let's give them a running chance and say that they all have a 50-50 chance of gaining or losing money. From the first pick, 5 will appear to be good brokers. Replay this again, 2.5 appear to be better choosers. Run again, and now it's 1.25. It may seem ridiculous to be looking at 1.25 stock brokers,  but if we take a much larger number, it becomes more clear. Of all the hundreds of thousands of stock brokers, a few are going to be consistently successful in their stock ventures. People will look at them in amazement saying "they must have talent! They've been successful for years and never picked a bad stock!", but that isn't the case. These people aren't psychic.

Of course, people are going to argue with me saying that players really do go on hot streaks, or that producers play a huge part in the companies, but in reality we're just creatures who are terrible at intuitively analyzing statistical principles and need to impose meaning and order on "patterns" we see. The performance of these companies or groups is more a sign of the overall workings of the company and less about the leader, deal with it.