For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. – Matthew 25:29
At first glance, the Matthew effect may seem unfair, but it consistently proves true.
The principle is evident everywhere, from politics to investments to startups. Investors prefer proven entrepreneurs over newbies. Likewise, people vote for a party they think will win and buy stocks that are rising in prices. In corporate circles, this is called “winner takes all” since momentum attracts users, markets, and investments. In short, people want to be associated with success, so this principle remains popular.
Another reason for the Matthew effect is that success breeds confidence. Those who win become bolder in their decisions and strategies. Because of their winning streak, Modi and Shah sidelined older party members like LK Advani and Murali Manohar Joshi in Indian politics. By contrast, the Congress struggles to implement bold reforms due to their lack of success. A similar phenomenon occurs in companies: when a CEO is successful, people rally behind them as they make bold bets. But, without such success, people take a more risk-averse and a cautious approach, hindering any significant gain in market share or capital.
Whether you like it or not, whether you understand it or not, the Mathew effect plays out in our careers and life. Smart ones let the effect build winds under their wings.