Explaining Success: the Rule of Ten Percent and the Example of Market Share

This article has four aims. First, the author argues that, for good reasons, it has been impossible to find any single variable that accounts for more than 10% of the variation in business performance: he calls this the rule of 10%. Second he shows how a 10% effect can be presented graphically to seem much more significant. Third, given problems of measurement and definition, even the 10% which is explained may prove to be of limited value, which is illustrated with the well-established link between market share and return on investment. Fourth, even where variables can be identified and their contribution quantified, he questions the extent to which this can be done in a form useful to managers. The overall conclusion is that determinants of business success are so complex that managers should reject any "one big explanation" however convincing the presentation.