Randomness, skill, and investments podcast

I recently listened to a podcast with Campbell Harvey on Randomness, skill, and investments.  I found the discussion on randomness and skill particularly fascinating.  All I could think of during this discussion is the military’s evaluation and promotion process.  How many of these “great” leaders were a product of luck or randomness when they were in certain assignments?  I would venture a guess that it was quite a few.  I know I’ve been the by-product of some great people working for me and helping me along the way.  People that I didn’t choose, but rather were placed in those assignments.

Human Resources Command (the Army’s proponent for promotion and assignment) says they promote the best Soldiers and try to match Soldiers with particular assignments.  I don’t know if the randomness starts there or if they amplify it.  For an example of what I’m talking about, let’s look at the evaluation of an Army officer.  One of the major parts of the evaluation is the senior raters comments and box check against where you stand compared to your peers.  For the comments, you can get a senior rater who writes well and in the language the promotion board wants to see or you get a senior rater who doesn’t write well.  You could get a senior rater that will mentor an officer and takes the time to write a good evaluation or you don’t.  You get an assignment/job that fits in line with your particular strengths or you are in one that exposes every weakness.  You get an assignment with an above average staff that does amazing things or one that isn’t.  And then for the box check that can depend on the size of the rater’s pool, how they manage their rankings, the timing of your evaluation, or your peer group could overall be top performers.  Now granted the rated officer does have some influence in his evaluation, of things they can control, but there are also some variables that are outside of their control (randomness and luck) that can either benefit or harm them.  These evaluations are then judged by a panel to promote the “best” officers.  They sometimes get it wrong, but unfortunately this is the system in which we operate.

In the end, is it possible to separate skill from luck or randomness?