Where success is concerned, talent matters. So does skill. Education. Connections. Emotional intelligence. Embracing a growth mindset.

And, importantly, luck.

But not in the way you might think.

Take Bill Gates. Teenage Bill was smart, creative, and driven. He had many of the qualities that tend to lead to success.

But Gates was also fortunate, because his family could afford to send him to a private school, one of the few in the country with access to a teletype that could connect to a GE time-sharing computer. Later, his friend Paul Allen showed him an article about Altair, the first microcomputer kit, which led them to convert Basic into an operating system for Altair.

Gates might still have become successful. He definitely possessed the mental and emotional tools. But luck — or coincidence, if you prefer — also played a huge role.

Again, though, not in the way you might think.

As Malcolm Gladwell writes, “In any group of elite hockey players, 40 percent will have been born between January and March.” Being born early in the year tended to make them the biggest, strongest, and fastest in their junior age groups. A study published in Economics Letters found that people born in June and July are much less likely to become CEOs, if only because they were the youngest in their classes.

A study published in the Review of Economics and Statistics found that half the world’s income variation depends on the country of birth. As the researchers write, “The role of effort… cannot play a large role in explaining global distribution of income.”

Bottom line, luck definitely plays a role.

But what matters more is what you do with the luck that comes your way.

Good to Great author Jim Collins calls it “return on luck.” In the process of writing Great by Choice, Collins found that great companies aren’t luckier — don’t experience a greater number of “luck events” — than mediocre companies.

As Collins writes:

Throughout our analysis, we were very careful to distinguish between luck and outcomes. An enterprise can get bad luck yet create a good outcome, and equally, a company can squander good luck and get a bad outcome….

The 10X cases and the comparisons both got luck, good and bad, in comparable amounts. The evidence leads us to conclude that luck does not cause 10X success. People do.

The critical question is not, “Are you lucky?” but “Do you get a high return on luck?”

To Collins, Gates was certainly lucky. But Gates wasn’t the only person of his time who grew up in an upper-middle-class American family. He wasn’t the only person who went to a school with access to a computer. He and Allen weren’t the only people who read the Popular Electronics article. He wasn’t the only person who knew how to program in BASIC. In fact, he had less skill — and definitely less experience — than master’s and PhD students — and working professionals — in the electrical engineering and computer science fields.

Granted, Gates was lucky.

But what mattered was what he did with that luck.

What mattered was his return on luck.

As Collins writes:

… we’ve never found a single instance of sustained performance due simply to pure luck. Yet also true, we’ve never studied a single great company devoid of luck events along its journey.

Neither extreme–it’s all luck or luck plays no role–has the evidence on its side.

A far better fit with the data is a synthesizing concept, return on luck.

Gates decided to act on his luck (although at the time he probably wasn’t thinking in terms of luck; his life was his life, and only in hindsight did he recognize the role luck played.) More to the point, he decided to act on the opportunity. Plenty of people — not millions, but surely thousands — could have worked to be among the first to develop software for the fledgling personal computer business, but they didn’t.

Luck is passive; it happens to you. Gates experienced luck, but what mattered more is what he did with the luck that came his way.

Return on luck is active because you make it happen.