This poker champion has you covered in 7 steps.
In this week’s article, we’ll look at World Series of Poker winner, Annie Duke’s thoughts on decision-making and how you can apply that to your business. I used to think that poker was mostly about instinct. That you had to read the other people at the card table and that you’d get a gut feel.
Annie Duke is the only woman to ever win the World Series of Poker, and since retiring from the game in 2012 she works as a consultant in decision-making. Her book called “Thinking in Bets” changed my mind about what poker is. It has some useful lessons from the game that will help you in business.
Poker and business are identical in that you only ever have part of the information needed to make a decision. The rest is murky and unclear. You don’t know what cards the other players have, just like you don’t know what business competitors are planning. Do they have a flush, or will your key customer cancel?
Decisions in both worlds come down to making bets in the face of uncertainty. You never know how things will pan out, you never have all the information, so you make a judgment call.
She points out that you can’t look at the outcome to determine if the decision was good or bad. You can make a bad decision and get a good result. You can make a great decision and get a bad result. Luck plays a huge role in the outcome of every decision in life.
“What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of ‘I’m not sure.’”
― Annie Duke
The key to success is to follow a good decision-making PROCESS, consistently over long periods of time. You should look at past decisions and analyse the process NOT the outcome.
Annie’s advice
Here’s how you can apply Annie’s advice to business:
Document the learnings and apply any changes to you future decision making process.
View any decision for what it is, simply a bet on the future, in the face of uncertainty.
Document your decisions when you make them. Put your assumptions in, any analysis, view on competitor reaction, alternative options with your evaluation of each, etc.
Build a habit and cadence of reviewing past decisions. 3 months, 6 months, 12 months and therafter each anniversary after a major decision is a good cadence. Some decisions take years to fully evaluate so keep updating the anaylsis.
Document the process that you follow and apply it consistently to all problems. You can only improve a process incrementally if you have a process to improve.
When you evaluate a decision only consider WHAT YOU KNEW or SHOULD HAVE KNOWN at the time. Ignore information that you COULDN’T have known.
Be honest about what you overlooked. Often we didn’t look hard enough for information that WAS AVAILABLE.
Generally though, the experiment would be an obvious failure in the first few days of launching. That’s the nature of experiments. They generally fail.
So they started to try and fail quicker. They worked to be able to reduce the time to launch an experiment from three months to one. Then down to two weeks. One week. One day. Eventually doing multiple experiments EVERY, SINGLE DAY.
By the end, he explains, things were incredibly sloppy. Website links wouldn’t work. The wrong copy was used. Just a general mess
The amazing part? Some experiments were a resounding success, even though the execution sucked. Most ideas failed, even if the execution was great.
Being able to quickly try multiple things and learn almost immediately what worked is behind Netflix’s amazing success.
One such experiment was to try and do away with late fees to see what the result would be. They were sure it would fail. Before that if you didn’t return a movie on time you would be charged a penalty fee. It was a massive success. Demand for movie rentals skyrocketed as soon as they launched it. It’s one of the big reasons for Netflix’s early success.
What we can take from this
Some brilliant lessons stand out from this:
- A great idea (from the customer’s point of view) will work despite poor execution.
- A poor idea (from the customer’s point of view) will fail despite brilliant execution.
- Customer feedback will quickly let you know if an experiment worked or failed.
- Doing multiple experiments incredibly quickly and sloppy is much better than doing a handful slowly and polished.
- Hundreds of small experiments done in a short space of time will let you hone in on what works for customers and what doesn’t.
- Doing an experiment to prove a negative, or confirm a belief, is as valuable as trying to prove a positive.
- Sometimes the biggest successes are shown by experiments that you are sure WILL FAIL.
- Experiments turn theories and beliefs into actual KNOWLEDGE which you can then make informed decisions. This knowledge helps you come up with new theories and spawns more experiments.
Conclusion
How can you speed up the timeframes of rolling out experiments? Even if you aren’t client-facing, what can you experiment with and how can you do it quickly?