The Mardi Gras set forth on her maiden voyage on a Saturday in March 1972 with five hundred passengers aboard, including three hundred travel agents who received a free cruise to experience the newly founded Carnival Cruise Lines firsthand.¹ As the pilot navigated the shallow channel out of Miami Harbor, the ship’s stern ran aground on a sandbar at the edge of Government Cut, within sight of the tip of Miami Beach. For most of the people involved, the grounding was a harmless bit of fun. During the twenty-four hours the Mardi Gras was stranded, tourists rubbernecked from the beach, while passengers bellied up to the open bar, many quaffing a Mardi Gras on the Rocks, a drink improvised on the spot by a creative bartender. For Ted Arison, the founder of the fledgling cruise line, the maiden voyage was a disaster.

Theodore Arison had survived worse. Arison was born in 1924 in an agricultural settlement near Haifa founded by Romanian Jewish emigrants, underwritten by Edmond James de Rothschild, and located in what was then the British-administered Palestine. While vacationing in Yugoslavia in late August 1939, his father, Meir, who ran a shipping company, feared the imminent outbreak of war would trap his family in Europe. Meir found only one flight back to Haifa, departing the next day from Rome, and it was fully booked. He instructed his firm’s Italian agent to pay whatever it took to secure five seats, and packed his family into a taxi for a six-hundred-mile cab ride to Rome. Within days of the plane’s landing, Hitler had invaded Poland.

After escaping the Nazis, Ted Arison returned to fight them. In 1940, the sixteen-year-old dropped out of the engineering program at the American University of Beirut to enlist in a battalion of Jewish volunteers from Palestine who fought alongside the British Army in Italy and Germany. After a series of business ventures in Israel and New York, in 1966, Arison entered into a joint venture to found Norwegian Caribbean Line (Norwegian), the pioneer in Caribbean passenger cruises, which sailed out of Miami. After that partnership soured, Arison founded Carnival with a single rusted vessel infested with rodents and cockroaches. When Carnival entered the market in 1972, half a dozen established lines already offered cruises to the Caribbean out of Miami, and industry leaders Norwegian and Royal Caribbean controlled seven state-of-the-art ships between them. Competitors derided Carnival as the “Kmart of the Caribbean” and predicted the fledgling line’s bankruptcy, since the Mardi Gras often sailed with half her berths vacant.

While competitors saw the Mardi Gras as half empty, Arison saw her as half full. In the midst of a recession in 1974, he bought control of Carnival for a token dollar (and assumed the company’s debt of $5 million). Subsequent decades proved turbulent in the passenger cruise line industry. The competitive landscape churned constantly, with eighty-eight firms entering the U.S. market and seventy-seven exiting between 1966 and 2008 (see figure 2.1 below). Mergers and acquisitions further complicated the picture. Innovations in ship design transformed the cruising experience. Royal Caribbean’s Oasis of the Seas, for example, spans sixteen decks and features an outdoor amphitheater, a zip line, two rock-climbing walls, and seven distinct neighborhoods. By 2008, passenger cruise ships offered ten times more space than that of ships launched in the early 1970s. Shocks to demand (such as 9/11) and volatility in exchange rates, fuel prices, and the cost of capital further roiled the market.

While other cruise lines came and went, Carnival endured. In 2009, Carnival Corporation was the largest cruise company in the world and controlled not only its flagship line but also Princess Cruises, Costa Crociere, Holland America, Cunard, AIDA, P&O, Ocean Village, Iberocruceros, and the Yachts of Seabourn. The company provided nearly one-half of all cruises globally, and was twice as large as the number two cruise line, Royal Caribbean. Carnival’s rise from a single rust bucket to global leadership illustrates the role of luck in producing opportunities and of timing in seizing them.

THE BACKWARD-L VIEW OF TIME

Business leaders are often pictured as captains of industry, standing at the bow of a ship, peering through a telescope deep into the clear horizon of the future, plotting a course, and proceeding steady as she goes. Turbulence, however, enshrouds the future in a fog of uncertainty that frustrates long-term prediction. Volatility rules out smooth extrapolation of past trends, complex interactions stymie efforts to envision all possible outcomes, competitors thwart the best-laid plans, and new information forces a fundamental rethink of a situation. In turbulent markets, leaders view the future not through a telescope but through a kaleidoscope.

FIGURE 2.1 Number of Firms Entering and Exiting the U.S. Cruise Industry by Year: 1966–2008

Arison entered the cruise industry by serendipity, not foresight. After selling his stake in the freight forwarding business he cofounded, Arison was planning to start a business shipping fresh produce when quite by chance he met the owner of two ships that cruised the Bahamas. The owners were wrangling with the firm that managed the ships, and offered Arison the chance to take over the contract and run passenger cruises out of Miami. Arison agreed, although he knew nothing about the industry. A few months later he left for Miami to market cruises to the Bahamas and Jamaica. Before the first cruise left port, Arison faced a crisis when the owners defaulted on debt payments. Creditors auctioned off one ship and confined the other to port. With just a few months before the first cruise would set sail, Arison scrambled to find a suitable replacement and called the Norwegian owner of a passenger ferry. As luck would have it, the ferry had been docked for months, and the desperate owner agreed to the deal over the phone, even though Arison lacked the funds for a down payment and a track record in the industry.

The events that brought Arison into the cruise industry included both lucky and unlucky breaks, but none was foreseeable. In a turbulent world, the future throws out a steady stream of unexpected opportunities and threats. Arison, like anyone in a turbulent market, faced the future like a batter confronting a versatile but erratic pitcher who throws a random mix of pitches—fastballs, cutters, sliders, slurves, screwballs, and knuckleballs. Some pitches offer the potential for base hits, some are unhittable strikes, others are errant throws hurtling toward the batter’s head, all interspersed with the rare pitch that could be hit for a home run.

People rarely think of the future as hurtling threats and opportunities at them, in part because of how they visualize time. Most charts depict time as an arrow moving forward from left to right on the horizontal axis of a graph, while plotting another variable—anything from mortgage default rates to gas prices—rising and falling on the vertical axis. This graphing convention yields the familiar L-shaped graph that accompanies articles in the Wall Street Journal and populates PowerPoint presentations throughout the corporate world. Figure 2.2, which plots median U.S. housing prices each decade from 1940 to 2000, illustrates the conventional forward-L view of time.

The forward-L graph is so ubiquitous, that people rarely consider the deep assumptions embedded in this diagram. First, the forward-L implies that we stand with our backs to the past and peer—like the captain with the telescope—deep into a clear horizon of the future. The vertical axis—in this case measuring house prices—rises behind, truncating the view before 1940, but implying an unobstructed line of sight into the future. Smooth lines such as housing prices that stretch from left to right, moreover, invite extrapolation of a past trajectory into the future. When taking out a subprime mortgage, many homeowners implicitly assumed that housing prices would rise in the future as they had in the past. Deviations from this projected path are considered unexpected “jolts from the blue,” “disruptions,” or “black swans,” as if the future were obliged to conform to people’s desire for predictability.

FIGURE 2.2 Forward-L View of Time Median U.S. House Price by Decade, 1940–2000 (in 2000 Dollars)

The forward-L view of time is entrenched, comforting, and highly misleading. Flipping the L provides a more realistic way, in my view, to visualize the passage of time in a turbulent world. In the backward-L view, the arrow of time is reversed and flows from right to left, from an unknown future into a completed past. In this depiction, the vertical axis obscures not the past but the future, leaving executives, politicians, or investors to grope their way forward into a murky future, with limited visibility into what lies ahead.

They can, to be sure, turn their backs to the future and review historical events that have slipped into the past. With the benefit of hindsight, a string of incidents may appear to have been predictable or even inevitable. They are neither. Retrospective lines emerge in the backward-L view of time but guarantee neither continuity nor insight into the future. Like the jagged trace lines drawn by a seismograph recording geological fluctuations as they slip from the present to the past, retrospective chains of events can only describe the past. They remain mute about the future. Events seen in the rearview mirror appear more predictable than they were.

FIGURE 2.3 Backward-L View of Time
Source: Stock.xchng.

THE INVERSE POWER LAW OF OPPORTUNITIES

Not all opportunities are created equal. The opportunities and threats that emerge out of turbulence vary in magnitude. Over his career, Arison pursued many opportunities—some created no value, others were worth millions of dollars, and Carnival Corporation had an enterprise value of $25 billion in December 2008. I use the term golden opportunity to describe occasions when an entrepreneur or manager can create value in significant excess of the cost of the required resources. Whether the opportunity qualifies as golden or not obviously depends on the scale of the business pursuing it: a once-in-a-lifetime opportunity for an Inc. 500 founder may be too small to excite the CEO of a Fortune 500 company.

During the past decade, I have studied the distribution of opportunities and threats across markets and industries and found they follow a pattern mathematicians call an inverse power law, where the frequency of an event is inversely related to its magnitude. This pattern is common across a wide range of complex systems, including weather patterns, earthquakes, and traffic, where events arise out of the complex interactions of volatile variables. In practice, an inverse power law implies that individuals and firms face a steady flow of small opportunities and periodic midsized ones, all punctuated by the rare golden opportunity. Threats follow the same distribution, with many small annoyances scattered among the occasional midsized risk and the periodic sudden-death threat, such as a global downturn, that can undo a company. Figure 2.4 illustrates the distribution of opportunities and threats following an inverse power law.

The lines of the graph represent the magnitude of opportunities and threats over time, much as the traces left by a seismograph record the intensity of earthquakes. Magnitude in this graph is not a measure of an event’s importance to the world as a whole. Rather, the vertical axis measures the impact of an opportunity or threat on a specific firm’s ability to create or sustain value. Major world events, such as the rise of the Internet or Lehman’s bankruptcy, would appear on this graph only if they directly impacted a particular firm’s ability to create value. The 9/11 terrorist attacks created a sudden-death threat for airlines, presented a golden opportunity for security firms, and passed largely unnoticed among Chinese appliance manufacturers. Conversely, an industry-specific change such as a sharp reduction in textile quotas will have no impact on most firms but represent a competitive tsunami for European clothing producers. Rather than describing major events in general terms, such as “black swans,” it is more productive to analyze their impact on a specific firm’s ability to create and sustain value.

FIGURE 2.4 The Inverse Power Law of Opportunities

Golden opportunities arise when several windows of opportunity open simultaneously. In Arison’s case, demand for cruises exceeded the limited supply; established cruise lines had developed a network of catering and service providers; no existing competitor dominated the market; and the Norwegian owner happened to have a ship sitting in port. Such a favorable confluence of factors is rare. Among the turbulent markets that I have studied, golden opportunities typically occur once or twice in a decade for most companies. Carnival executives seized several golden opportunities since the company’s foundation, including a major capacity expansion in 1978 to meet booming demand, a 1987 initial public offering at the peak of a bull market, and the merger with P&O Princess Cruise Lines in the wake of 9/11.

The early industry leaders, Royal Caribbean and Norwegian, lacked Carnival’s boldness in exploiting major opportunities as they arose. When, to seize growing demand, Ted Arison commissioned the first new ship in nearly a decade, his counterparts at Royal Caribbean hesitated. They enlarged two of their existing ships by carving them in half with welding torches and inserting a new midsection to increase capacity incrementally. By the time they ordered new ships, Carnival had grasped a sizeable chunk of the growing market.

Managers tend to look for golden opportunities during an economic boom. The best opportunities, however, often arise in the worst of times for the economy as a whole. Distressed sellers must offload valuable assets at bargain basement prices. In 2008, for example, ING Direct snapped up the deposits that Iceland’s failing banks were forced to unload, while Spain’s Banco Santander acquired struggling British banks Alliance & Leicester and Bradford & Bingley. To conserve cash in a downturn, companies retreat from attractive opportunities, leaving them open for rivals. The global recession may force Adobe Systems to scale back its ambitions in Web design software, creating an opening for a deep-pocket competitor such as Microsoft to exploit. In tough times, firms can also drive hard bargains on tangible assets. Airlines could purchase Airbus A380s on favorable terms in the wake of the 9/11 attacks, a time when most competitors were reluctant or unable to make large commitments.

While golden opportunities matter, they are not a substitute for exploiting the myriad small opportunities that arise every day. Golden opportunities may appear obvious in retrospect, after the founder graces the cover of Forbes, but they are rarely apparent in advance. A series of venture capitalists declined to invest in Google, dismissing it as a me-too player in a mature segment crowded with established rivals including Infoseek, Lycos, AltaVista, Excite, Dogpile, Inktomi, HotBot, and Ask Jeeves. Established transatlantic cruise lines sailed between New York and Europe, and their executives observed the rise of Caribbean cruising without grasping the magnitude of the opportunity.

Like waves in the sea, a break that starts out small may swell to a golden opportunity as circumstances shift. When Intel first launched the 8080 microprocessor in 1974, company executives viewed it as little more than a niche product—suitable for traffic lights and cash registers—that should not distract them from their core memory chip business. Their assessment was accurate right up to the point when the personal computer market took off, stimulating massive demand for microprocessors. The rise of the microprocessor may seem inevitable in retrospect, but it was not at all clear at the time. In 1978, an Intel team responsible for selling microprocessors conducted extensive customer interviews and discovered more than fifty potential uses for the new chip. Personal computers did not even make the list.²

Small opportunities, moreover, can cumulate to a decisive lead over time. Arison and his team clawed their way to the top of the cruise industry one opportunity at a time. Carnival’s marketing department seized a series of moderate opportunities to build demand, debuting, for instance, the first nationwide television advertisement for cruises that featured the then unknown Kathie Lee Johnson (later Gifford). At a time when few tourists had taken a cruise, Carnival sent anonymous “mystery vacationers” to visit travel agencies around the country and ask for a vacation tip without revealing their identity. Any agent who suggested a cruise pocketed a crisp $10 bill. If the travel agent recommended Carnival by name, he or she received $1,000 in cash on the spot.

Many managers equate opportunity with revenue growth. The true measure of an opportunity, however, is whether it creates economic value, which is the difference between what a customer is willing to pay for something and the cost of all resources (including capital) required to produce it.³ Opportunities to cut costs are every bit as important to value creation as increasing sales. Founded with a rusty ship, no brand, and the specter of bankruptcy hovering at all times, Carnival executives relentlessly pursued any and every chance to reduce costs. To refurbish the Mardi Gras on a shoestring budget, for example, Carnival operations chief Meshulam Zonis found an orphanage in Seville, Spain, that taught orphaned teenagers trades such as carpentry, welding, and electrical work. The priest who ran the orphanage could not find work for his charges in Spain’s depressed economy, and Zonis hired more than a hundred of them at one time to work under the guidance of U.S. master craftsmen to renovate Carnival’s first ship. Where Royal Caribbean stocked bathrooms with a complementary gift pack with more than a dozen toiletries, Carnival offered a bar of soap.

Individually, none of Carnival’s marketing or cost-cutting opportunities could make or break the company, but taken together they filled the ships, increased profits, and allowed Carnival to avoid the financial distress that forced nearly 90 percent of new entrants to exit the industry. I am not arguing for execution of small improvements instead of a strategy of seizing golden opportunities when they arise. In turbulent markets, execution is strategic. The relentless pursuit of cost reductions enables firms to outlast less disciplined rivals when sudden-death threats descend. Unrelenting exploitation of small opportunities provide firms with the wherewithal to seize golden opportunities when they arise. A series of small wins enabled Carnival to strengthen its balance sheet and accumulate the cash to invest in new ships and fund major acquisitions. Lulled into complacency by their initial lead, Royal Caribbean and Norwegian, in contrast, lacked Carnival’s ruthless discipline in exploiting small opportunities.

PERFECT TIMING

An old joke among academics has two free market economists walking down Chicago’s University Avenue when the first exclaims, “Look, there’s a $20 bill on the ground.” “Impossible,” her companion responds without looking down. “If it were there, someone would have picked it up already.” Even a bad joke can make a good point, and this one underscores the fleeting nature of opportunity. In competitive markets, where entrepreneurs and firms are always on the lookout for chances to make a buck, good opportunities should be pocketed quickly. Twenty-dollar bills rarely remain on the ground for long.

When pursuing a fleeting opportunity, timing is everything. The variables that influence the nature, magnitude, and timing of an opportunity incessantly shift: one window of opportunity might remain ajar for a while, another widens abruptly, and a third threatens to slam shut at any moment. Arison excelled at darting through the windows of opportunity in the early years of the cruise industry. In 1978, Carnival commissioned the Tropicale, the first new cruise ship built in nearly a decade and by the far the most expensively built to date, with an estimated price tag of $110 million.

That Arison’s company, six years old and barely eking out a profit, could afford such an expensive ship in the midst of a recession shocked the industry. But Arison’s timing was impeccable, as he exploited shifts in the broader context. After decades of healthy growth, Denmark’s economy suffered stagflation in the late 1970s. The Nordic country’s economic growth rate fell by two-thirds and unemployment jumped fourfold. To bolster its shipping industry, the Danish government offered low interest loans to finance up to 70 percent of the cost of ships built in local yards.⁴ Carnival was first to take advantage of the new financing opportunity, and it built a ship large enough to capture scale economies and luxurious enough to increase customers’ willingness to pay for a cruise.

Other shifts in the broader context created demand for the Tropicale. In October 1978, President Jimmy Carter signed a bill deregulating the U.S. airline industry. With the stroke of a pen, Carter enacted changes that drove the average price of a domestic ticket down by nearly one-third by 1990 and triggered a doubling of passenger miles flown.⁵ Cheaper flights to Miami stimulated cruise demand. Deregulation followed the 1977 launch of The Love Boat, ABC’s weekly television series that introduced cruising to many Americans and served as a decade-long unpaid advertisement for the industry as a blend of fun, romance, and sex. During The Love Boat’s ten years on the air, Caribbean cruise demand nearly tripled.⁶

Timing was critical again when Micky Arison, who succeeded his father as president in 1979, sold a stake in Carnival in an initial public offering (IPO) on the American Stock Exchange in July 1987. The stock sale netted Carnival $400 million while leaving the Arisons with a controlling stake of 80 percent. Equity analysts covering the traditional cargo shipping sector struggled to explain the cruise industry. During the heady days of the 1980s bull market, however, investors swallowed whatever misgivings they might have had about the new industry and snapped up Carnival shares. In October of 1987, Norwegian announced its intention to go public as well, but it withdrew its offering the following Monday, when the Dow Jones Industrial Average lost nearly one-quarter of its value (the largest one-day drop in history to that time). Black Monday slammed the bank window shut for Norwegian.

Micky Arison wasted no time putting Carnival’s cash to good use. Within a few months of the IPO, he initiated discussions to acquire Royal Caribbean. When that bid fell through, he bought Holland America, the first in a series of acquisitions. Royal Caribbean maintained its independence by selling a stake to the Pritzker and Ofer families, but delayed any major acquisitions until nearly a decade later. Lacking Carnival’s funds, Norwegian could match its rival in neither acquisitions nor ship building, and watched the industry consolidation from the side lines.

Good timing is not the same thing as being first. Too early to seize an opportunity can be as bad as too late. Carnival overtook a host of cruise lines that entered the industry earlier, including not only Norwegian and Royal Caribbean, but also Flagship Cruises, Prudential-Grace Lines, and Eastern Cruise Lines, firms whose names have slipped into the annals of shipping history. Had Ted Arison commissioned the Tropicale five years before the Love Boat and deregulation, he might not have filled the ship. Had Micky Arison tried to float Carnival in the early 1980s, the company’s shorter track record and the less buoyant capital markets might have lowered the stock’s valuation or precluded an IPO altogether.

Getting the timing right distinguishes opportunity from innovation. Innovators, according to the conventional wisdom, can whip up a value-creating combination at the time and place of their choosing, heedless of what is happening in the larger competitive context. Professors W. Chan Kim and Renée Mauborgne, authors of Blue Ocean Strategy, an influential best seller on innovation, for example, argue that the “structure and market boundaries” of any industry “exist only in managers’ minds.” Managers who accept the Blue Ocean approach “do not let existing market structures limit their thinking. To them, extra demand is out there, largely untapped. The crux of the problem is how to create it.”⁷ Citing examples such as Southwest Airlines, the authors contend that managers can impose a creative business model in the stodgiest of industries anytime they like. All they need is the creativity to think outside the proverbial box and the courage to impose their new vision.

I’m not convinced. Innovation is important, and Blue Ocean Strategy is one of the more helpful books on the subject. Vast swaths of the innovation literature dangerously underestimate how external forces dictate the optimal timing to pursue an opportunity. Professor Costas Markides, one of the most insightful scholars of innovation, notes that Charles Schwab, Sony, Texas Instruments, Gillette, and Amazon are household names, while K. Aufhauser, Ampex, Bowmar, Auto-Strop, and Charles Stack remain unknown.⁸ The difference? The unknown companies first introduced innovations that the well-known firms later commercialized. The pioneers were more creative. They were also too early, arriving before willing buyers, necessary technology, and supporting infrastructure were in place to commercialize their innovation. The winners timed their entry to match market conditions.

Carnival owes its success, in good measure, to a long list of external forces beyond Arison’s control, including the completion of Miami’s new port in 1964, Danish stagflation, The Love Boat, airline deregulation, and a Wall Street boom. Ted and Micky Arison and the management team they assembled were talented, alert, and tenacious. They excelled at seizing opportunities. But they could not have forced or foreseen the contextual shifts that allowed them to prosper. The windows of opportunity exist in reality, not only in our minds. We cannot open them at will.

Leaders should, of course, influence context as much as they can—for example, by lobbying governments, preempting competitors, or shaping industry standards to their company’s benefit. Ted Arison lobbied local officials to expand Miami’s port, and Carnival’s aggressive marketing accelerated consumers’ awareness of cruising as an attractive vacation alternative to Orlando or Las Vegas. But leaders should also recognize that the forces dictating the timing (as well as the form and magnitude) of opportunities often lie beyond their grasp. Managers cannot conjure up a golden opportunity just because sales are falling, investors are clamoring for growth, or the CEO read the latest book on innovation.

A narrow focus on innovation not only underestimates the importance of the external context but can also lead managers to value novelty for its own sake. Royal Caribbean wins praise for its shipboard innovations, such as rock climbing and ice skating. But not every innovation boosts customers’ willingness to pay enough to offset the additional costs it imposes. For all the company’s innovation, Royal Caribbean’s profitability, return on equity, and market capitalization have lagged Carnival’s. New initiatives should be measured against the yardstick of value creation, not creativity alone. The focus on novelty can also distract people from mundane opportunities, such as subsidized government financing for ships or low-cost labor, that create significant value despite lacking the glamour of the novel.

THE LUCK OF THE DRAW

When considering an officer for promotion, Napoleon reputedly asked whether the candidate was lucky. Soldiers cannot always choose the battle they must fight. Nor can entrepreneurs or managers control the shifting contextual variables that give shape to opportunities. Whether they find themselves in the right place at the right time to encounter specific opportunities is largely a matter of luck. The confluence of external circumstances produces opportunities. Entrepreneurs and managers must be alert to notice the opportunity and tenacious to seize it, but luck places it within their grasp in the first place.

Ted Arison was lucky to bump into a shipowner desperate for a new manager, lucky to be between jobs at the time, lucky to have some cash on hand, and lucky to find another ship when his first two were seized. Lakshmi Mittal was lucky to run a steel mill in Indonesia as governments around the world privatized their plants and emerging market growth stimulated demand for steel. Mittal or Arison might have succeeded a decade earlier or later, but not with the specific opportunities that made their fortunes.

Admitting the role of luck in success may strike you as obvious; it certainly seems unarguable to me. Nevertheless, the shelves at airport bookstores sag under the weight of best-selling business books that select successful companies, study what they did, and conclude that anyone who does the same thing will reap the same rewards. But these studies overlook how churning external forces set the context for success. A review of ten management best sellers found that none deemed the topic of luck (or chance or timing) important enough to deserve an entry in their index.⁹

Perhaps the most profound thinker on the role of luck in human affairs was Niccolò Machiavelli, who estimated that fortune accounts for half of success or failure, leaving the other half in our hands.¹⁰ Machiavelli’s approximation acknowledges the role of both luck and agency without falling into the trap of false precision. It is true that Mittal and Arison were lucky, but it is equally true that they weathered bad breaks and exploited opportunities much better than others.

In a world where chance matters, is there anything we can do to improve our luck? The most common answer to this question is some variation on Arnold Palmer’s observation that “the more I practice, the luckier I get.” The “practice makes lucky” approach works well for opportunities that fall within the scope of past experience. Decades of finding ways to reduce costs, for instance, helped Carnival managers spot new opportunities for further efficiency gains.

The juiciest opportunities, however, often differ significantly from what worked in the past. Ted Arison knew a lot about freight forwarding and a little about cargo shipping but nothing about cruising when he moved to Miami. Honing established routines can blind people to opportunities that arise from unexpected places. Despite decades of experience, most established cruise lines failed to redeploy their ships to the Caribbean routes, even as the rise of transatlantic flights decimated their traditional business. Transatlantic cruise executives saw Miami as a minor port compared to New York and cruises as a frivolous distraction from the serious work of ferrying passengers across the Atlantic. Practice blinded them to the opportunity that could have salvaged their dying industry.

Machiavelli offered three images of fortune, and each conveys an important insight about snatching opportunities out of turbulence. Comparing luck to the wheel of fortune, a popular image in the Renaissance, Machiavelli notes that the low may be lifted and the mighty humbled. This wheel of fortune implies nurturing hope during the dark days (apt advice in the depth of a global recession) and avoiding the hubris that leads the mighty to fall. Living in a less enlightened era, Machiavelli also likened fortune to a fickle woman who yields her attention to the bold suitor over the timid advances of the tentative beau. The implication of this image is to strike boldly when an opportunity presents itself. Lady Fortune favors the bold.

In one of his most vivid images, Machiavelli wrote that fortune “resembles one of those violent rivers that, when they become enraged, flood the plains, tear down trees and buildings, lift up the earth from the side and deposit it on the other; everyone flees before them, everybody yields to their impact, unable to oppose them in any way.”¹¹ Although we cannot control the torrent, Machiavelli argues, we can limit its damage by constructing embankments—what modern business parlance might describe as mitigating identifiable risks. An optimist might even spot an opportunity to build a hydroelectric plant.

In thinking about how to seize the upside of turbulence, I propose a different image of fortune. In the era before engines and electronic navigation replaced mast and compass, a sailing ship’s progress, and indeed its survival, depended on elements beyond its control. Not even the best seaman—think Captain Jack Aubrey in Master and Commander, for example—could predict the elements with accuracy, let alone raise the winds or calm the waves. A seasoned captain could, however, still master the sea. Not in the sense that a trainer masters a horse, by bending the beast to his will, but rather by harnessing favorable winds when they gust, riding out the inevitable storms, and remaining ever alert to the shifts in weather that demand a change in tack.