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20 | Kitchen & Bath Design News | May 2015 L ife is uncertain, full of large unpredictable, consequential forces that can beat down the small business owner – or even sink successful ones. Certainly that's what happened to thousands of kitchen/bath dealers after the new housing market crash and 2008 banking meltdown. Quite a few of these fallen dealers were big fsh to cabinet manufactur- ers, delivering $500K, $1M, $2M or more in annual purchases. Almost overnight, these companies vanished into thin air, leaving behind millions in unpaid invoices. Some would say these dealers just experienced bad luck…they had key builder accounts that stifed them…or that the owners had their money tied up in real estate where the equity was now greatly re- duced and rendered inaccessible. Professor and author Jim Collins would not agree. Based upon years of research on successful companies who thrived in tumultuous times, Collins would say – as he has in his book Great By Choice – that these kitchen/bath dealers did not expe- rience bad luck, just a poor Return on Luck (ROL). His evidence demon- strates that luck doesn't cause success or failure. People do. TWO VIEWS OF LUCK It's human nature to write of some- one's huge success to good luck, such as being in the right place at the right time. Collins debunks that view. He concludes that our success – and our survival – derives entirely from thor- ough preparation, skill, hard work, inspiration and determination. For Collins, the "luck event" must meet three tests. First, some signif- cant aspect of the event needs to happen independent of the kitchen/ bath design frm owner. Second, the event must have potentially good or bad consequences. And third, it must be totally unpredictable. His research found that certain business leaders earned a high return on luck (ROL) at pivotal moments that distinguished them from their competi- tors. Furthermore, this ROL had a "huge multiplicative effect" on their busi- ness going forward. That's how they routinely outperformed competition over long periods of time. These lead- ers were capable of quickly "zooming out" to recognize when a "luck event" was happening. Then they "zoomed in" to consider whether they should let it disrupt their strategic plans or not. Collins cites Bill Gates at Microsoft as a prime example of such leadership. Gates didn't get a lucky break or cash in his chips. He learned how to write code, then dropped out of Harvard at age 19. He started his company and kept driving, pushing, working, stag- ing the "20-Mile March," hiring great people and building a culture of dis- cipline. He sustained these concerted eforts over three decades to become the world's #1 billionaire. Business leaders like Gates use difculty as a catalyst to deepen pur- pose, reconnect with values, increase the level of discipline, respond with a heightened degree of creativity and cultivate a greater sense of productive paranoia. Extreme preparation and incredible resilience together became the signature of their greatness. TAKEAWAYS FROM THE RECESSION The philosopher Nietzsche once said: "To live is to sufer, to survive is to fnd some meaning in the sufering." Those kitchen/bath design frm owners that sufered mightily through the Great Recession, most losing 50-60% on their sales volumes and draining their life savings to stay afoat and survive, are now fnally enjoying the rising tide of a moderately growing economy. That's wonderful news to hear. But have they found meaning in their recent sufering? I think not. For the most part, it seems to me that owners today are so happy to be busy, they are "too busy" to refect on what should be meaningful takeaways from the Great Recession. They just don't want to think about those dark days. At most, those that were successful high- end designers, enjoying highly visible industry profles, may be a bit more humble today for their sufering. And while that's probably a good thing, in my judgment, not much else has changed. Nietzsche was also famous for an- other saying: "What does not kill me, makes me stronger." We all experi- enced the pain of the Great Recession. For Collins, when adversity happens, the real question is: How can we lever- age that bad luck to make us stronger, better, smarter? Life's roller coaster actually can help us produce strategies for man- aging the odds and managing luck – both good and bad. According to Collins, managing luck involves four things: (1) the ability to zoom out and recognize luck; (2) developing the wisdom to know when luck should disrupt your strategic plans; (3) be- ing sufciently prepared to endure an extended period of bad luck (like the Great Recession); and (4) zooming in to create a positive return on luck. Luck by itself isn't a strategy – but earning a good ROL is. PEOPLE LUCK IS KEY Today, I continue to be stunned, and a bit saddened, by the large number of kitchen/bath designers who continue to let life's events just happen to them. It's splendid that the economy has gotten better. But as a community of small business owners in a specialized feld, we don't seem to have gotten much smarter, better or stronger for our recent sufering. We haven't gotten smarter by gain- ing regular access to a group of select, non-competing peers that can help us truly realize when a pivotal moment is before us, or by being brutally hon- est with us when we fail to confront a fatal faw or fail to take swift action. Do we really still think it's best to go it alone, keep doing the same pre- recession gig: just grinding out the business that's coming in our doors, too busy and too blind to see an op- portunity or storm coming our way? Nor have we gotten better prepared to manage our businesses by carefully budgeting our operations to skillfully navigate the business forward. Or de- veloped a written strategic plan that defnes what our company should be when it is completely developed. Or applied the latest in industry-specifc, management technology and cultivate a corporate climate of discipline. Despite all of the efort that goes into planning and executing a kitchen to ft like a glove (and earn the desired gross proft), do we really still believe that we can reach our corporate Leveraging Luck, Both Good And Bad The most successful dealers earn a high 'return on luck' through careful preparation, resilience and the ability to zoom in and know when to let luck alter their strategic plans. Bettering Your Bottom Line { Ken Peterson, CKD, LPBC } Continued on page 22 "Our success – and our survival – derive entirely from thorough preparation, skill, hard work, inspiration and determination."