Du Malone writes: There’s this striker who’s just had a phenomenal season. He’s been banging the goals in left, right, and centre. And he’s just finished as the league’s leading goalscorer.
An then this other striker who has never hit such heights. He’s been playing several seasons now, but has never finished as the leading goalscorer. Never even seriously been in contention.
He does, though, have a creditable record. For several years in a row, he’s been scoring an above-average number of goals each season.
So who should you sign?
Instinctively, most of us want the chart-topper.
Bur according to research by Dr Chengwei Liu of Warwick Business School, this preference may be irrational.
Research on performance
In an interview for the UK talent firm, FJ Wilson Talent Services, Dr Liu explains his findings as follows:
“My main research program addresses a fundamental question in strategy: should we attribute performance differences to skill or to luck?
For example, the most successful are often perceived to be the most skilled and therefore receive the highest rewards and are imitated.
I show that the belief that the exceptional performers are the most skilled is flawed because exceptional performance is more likely to occur in exceptional circumstances and top performers are often the luckiest people who have benefited from rich-get-richer dynamics that boost their initial fortune“
“The misattributions of luck can imply opportunities for informed entrepreneurs and strategists because these mistakes can lead to systematic mispricing of talents. For example, most firms pursue the top performers, i.e., “stars”, believing that they have the highest talents or skills.
My research empirically shows that this practice is flawed because the top are likely the luckiest while the “second best” are in fact the most skilled.“
To return to the goal-scoring example. It may be that the goalcorer was playing in a context that was peculiarly suited to them. At a different club, in a different team, they might not enjoy the same success.
Especially when you consider that, in the course of one season, factors don’t always balance out. You may strike lucky with, for example, offside decisions or defensive errors.
In contrast, if someone consistently performs well, even without ever performing outstandingly, that performance is unlikely to be the result of luck. Especially if they achieve this performance in a variety of contexts. If you buy that player, you will be buying not luck, but talent.
Dr Liu adds: “The bias that favours the top leads to the second best being seriously underestimated. This provides an opportunity for the more informed — through the acquisition of superior talents with a price lower than their actual worth“.
Dr Liu’s research has major implications for data analysis in sport.
I don’t know whether clubs like Burnley and Sheffield Utd are familiar with Dr Liu’s research, but it seems to me that, one way or another, they’ve cottoned on to the gist.
To football managers the moral is clear: Rather than making decisions on exceptional performance, especially over the short-term, search for consistently strong (though not necessarily outstanding) performance over several seasons, ideally in diverse contexts.