Business Game Theory, Straight from the Poker Table

Long time readers of this blog know that I am a regular (but not constant) amateur poker player. I have a regular game with a group of friends, and our low-stakes game will range from one table of 6-8 players, to occasionally multiple tables with 12-20 players. And once per year, on the first Saturday in May, we hold our annual “Intergalactic Poker Championship” with a max of 32 players spread out over four tables. It is good fun with good friends.

I am a decent player, who will win on occasion. But in a group like ours, with lots of good players, it is easy to have a bad night and get knocked out early. And at the end of every game night, no matter how I did, I spend a few minutes deconstructing the decisions I made along the way that either made or broke my night.

My deconstruction always concludes, in part, that there is certainly luck along the way that will be necessary for a win. But like anything else, we make our own luck also. And far more often than not, it is the decisions we make, rather than random luck, that ultimately have the biggest impact on our success.

After our latest game last Friday night, I spent a few minutes over my Saturday morning coffee jotting down a few notes, trying to capture a few universal truths. Here is what I came up with… and if you haven’t figured it out yet, today’s post is no longer going to be JUST about poker. We are now discussing life and business as well.

Here is what I came up with:

1. Success is almost always about matching up your own strengths and weaknesses with the things that are available to everyone. In other words, in poker and in business, you have things that are uniquely yours. In poker, you have cards that are yours, that will be completely unique cards on the table. And then there will be other things, (in poker that means community cards), face up for everyone to see and use. And a strong or weak hand is entirely determined by how your cards match up with the community cards. Your cards mean nothing if you can’t match them up with something that is already on the table, available to everyone. In other words, it is the combination of your unique strengths and weaknesses and the publicly available resources that ultimately determines how strong your hand is. Same with your business.
2. Sometimes it is not always clear how strong or weak your hand is. Some hands, you absolutely know “this is a strong hand” and you know you can compete with everyone else, no matter what. So too, there will be times when you know you have a weak hand, no matter what anyone else has. Time to fold. But most of the time, your strength or weakness is relative, and it depends on what others might be holding. And this is where the game gets fun. You always have to be able to determine how strong or weak you think you are, and then play accordingly. Making consistently good decisions in this way sets up every other decision you will make, for better or for worse. Same with your business.
3. There is a wealth of information out there… you just have to look and listen for it. When you play poker with friends, there is often a lot of laughter and noise, and chatter about this or that. Some people are there to just enjoy the moment, others are there to try to win. Just like any other endeavor, people bring different motivations to it. But if you want to do well, then you better pay attention, and don’t be distracted by the surface clutter of what is going on around you. When you pay close attention to the facial expressions, the subtlety of language, the changes in behavior, you can often get a deeper insight into what is really going on around you. The guy next to you, the one with the big stack of chips, has been chatting a lot all night. But now he isn’t… what does that mean? Does it mean he has a strong hand and is nervous? Maybe. But he has been doing well all night long, so a strong hand has not caused him stress at any other point. Or does it mean he has a bad hand and is bluffing? Or does it mean something else? I may not always be sure. But I know it means something. It is not always obvious what to do with the information… but there is a ton of information out there. You just have to look for it. Same with your business.
4. There are moments when you have to go for it. And there are other moments when you have to pull back. And getting those two or three key moments correct will make or break your eventual outcome. Now how do you decide when to go for it, and when to fold? It all depends on the situation… how big is your stack of chips vs someone else’s? Is it early in the game or late? Are the cards you have in your hand already strong, or do you need some luck to fall your way with the cards on the table? In other words, it is a constant set of choices about when to go for it, and when not to. And you have to balance all of the variables when you are making that decision. Same with your business.
5. Great poker players, (in other words, great decision makers) actually take very little risk. When they seem to be “going for it” they are only doing that because they know the odds are in their favor. And when the odds are not, they fold and wait for a better hand. So what may seem like a lot of risk to the uninformed eye actually isn’t all that risky. Tom Cruise fans will remember the movie Top Gun. And my friend Colin, himself a very good assessor of risk (and a great poker player) often says “you win more often by thinking like Ice Man than by thinking like Maverick.”
6. Finally, you can have a great decision-making process, make all good choices, and still sometimes not win. And that’s OK. If your decision making was sound, and you simply had something go against you, that’s real life at work. Don’t lose a ton of sleep over it.  

Bottom line is this… in business, just like on the poker table, success is simply about balancing what you have in front of you, and the variables around you, and the information available. And making consistently solid decisions. It is the decision-making process that you have the most control over. Control that through a disciplined framework, and you will enjoy success more often than not. No one gets every decision correct. But if you are paying attention, and being consistent, you will get it right more often than not.

Good luck, at the tables, and in business. Have a great day.

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Does your team:
– Overwhelm the audience with too much detail?
– Make things too complicated?
– Fail to ask for what they want or need?

Does your organization:
– Waste time because of poor internal communication?
– Take too long to make decisions?
– Struggle to clarify and frame discussions?

Do your leaders:
– Exhibit poor executive presence?
– Lean on incomplete communication skills?
– Fail to align the organization?

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