Business School at the Poker Table – Part 3

”Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”

-Sun Tzu – The Art of War

Reading this series in order is not required, but posts can be found here:

Part 1 – Expected Value

Part 2 – Implied Odds

At a glance, “Results Oriented Thinking” looks like it is some sort of motivational technique. It’s actually a crippling mental habit that a majority of people practice. Allowing an outcome to influence the way you evaluate a decision is results oriented thinking. That means you can justify any means by the end.

“I’m so glad I bought that lottery ticket and won!”

“That shady Instagram service cost me $2,000 but I ended up with 10,000 followers!”

“I went to the World Series of Poker with the last of my bankroll and won my entire summer’s losses back.”

These are horrible decisions that randomly worked out. Worse yet, they make compelling stories and sexy headlines to capture attention. Inevitably, these choices lead to ruin, or at the very least lead you right back where you started. It’s a very natural thought process to celebrate your victories and try to duplicate them, but it’s not always recommended.

The counter to this process is setting effective goals, which is a delicate art in itself. In poker, there exists a wide array of variables out of your control. The most obvious and most harmful goal is “I will make $5,000 this month from poker.” This is completely out of your control. A random string of bad cards at inopportune times can send even the most skillful player’s profits out the window, and chasing them with a last minute adjustment to your plan will only spew even more. You can’t alter the plan only because of short term bad results. Effective players set up a gameplan before they sit down at the table:

These are my opening hand ranges, my 3 bet ranges, and my limping ranges. I will play 10,000 hands this month. I will play $2/$4 No Limit Hold’em. I will focus on reducing my % of hands that reach showdown.

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These are effective, controllable goals in a plan, and nowhere does it mention money earned because it can’t be predicted. You can only oversee how long you play and how you manage the cards with the information you have. It’s common for profitable players to see losses over thousands of hands or have a negative month even if their expected value and gameplan is positive. In that same spirit, there are aspects of business that can be controlled and are effective to plan. Money results are not one of them. You cannot say “I will close $15,000 in sales this month.” You can’t control the way other people think or use your product. You can however say:

I will make 50 cold calls every week. I will tweet twice per day from the company. I will close 12 software defects this week.

These goals are all procedures that can help your business and the only dependent variable is your own, fully controllable, time. The goals may not always be met. They’re not always supposed to be met, otherwise they’re sandbagged, easy goals. They won’t always result in positive outcomes. You can stumble upon a long sequence of terrible prospects on the other end of the phone, or an unforeseen critical bug in your code. But in the long term, these goals can and should set you up for success in the areas you want improvement but cannot force your will on. The Poker Mindset by Matthew Hilger and Ian Taylor is a terrific book on long term, unbiased thinking and managing uncertainty.

Countering results oriented thinking leaves quite a bit of room for doubt. When a proposal or a product release doesn’t work out, the first thing you’ll want to do is rework your gameplan and find your mistake. The key to managing uncertainty is to recognize “This is what I know.” At the time I made the decision, these were the facts I had available. It didn’t work because of X that I could never have anticipated and I stand by my decision. Or you look back and realize, I missed X. After experiencing that loss and reciting your misstep, you’ll never make it again.

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