Did bad luck cause the financial crash? Chengwei Liu certainly thinks it played a big role. The Warwick Business School Associate Professor of Strategy and Behavioural Science believes luck is underestimated in business, with the financial crash an extreme example of CEOs ignoring how it works.
Liu likes to make a comparison with Thanksgiving turkeys. Imagine, back in 2006, your company has an employee who invests a huge position in sub-prime mortgages. He is making money every day. But one day his luck runs out and he loses a great deal more than what he made. Your company then goes bankrupt because you encouraged many other employees to replicate his exceptional performance. But before the luck ran out, you were happily making money. Just like the happy turkeys on 364 out of 365 days a year.