Armed with a list of hands her brother scratched out on a napkin, Annie Duke cut her teeth in the world of poker at a daily game with a rogue cast of characters in Billings, Montana. By the time she retired from the professional poker circuit six years ago, Duke had amassed more than $4 million in tournament earnings and a World Series of Poker bracelet. She refashioned herself as a corporate speaker, consultant and, most recently, author of the book “Thinking In Bets: Making Smarter Decisions When You Don’t Have All the Facts.”
SMM: What do you mean by the title “Thinking In Bets?”
Duke: The idea behind the book is that every decision we make is a bet. What really is a bet? It’s a decision in which you are investing some sort of limited resource on an uncertain future that is based on beliefs that you have. No matter what decision you make, you can’t guarantee how the future turns out because any decision can end up in a variety of scenarios that can occur and each of those has some probability of occurring. Your job as a decision-maker is to say, “I have these limited resources and I want to try to maximize the probability that I get the best return on the decision that I make.” That’s really all you’re doing with betting.
SMM: What is the advantage of thinking about decisions as bets?
Duke: What thinking in bets does for you is bring to the forefront the idea that there is risk in every single decision you make, because whenever you make a decision, you’re obviously foregoing all other decisions. These resources are limited. You’re not just investing money, there’s time, there’s happiness, there’s your health. What it really brings out is the uncertainty in all of our decisions, which I think makes us better decision-makers, makes us more open-minded, makes us more open to descent… I think we’re really trying to get these beliefs into a better place.
SMM: Is thinking in bets a life approach or used for certain situations?
Duke: It’s something that can be a life philosophy. We can set some big, long-term goal and in that moment recognize that we’re trying to propel ourselves toward some sort of future, but it’s not certain. When we bring it into other kinds of decisions – all of these small, executional decisions that you have to make on the way to executing your longer-term goals – I think the risk in those decisions remains very implicit. I don’t think we think about that in a way that allows us to really get our beliefs into a better place and make all of these small decisions along the way better so we are actually more likely to get to our goals. We think about the larger strategic plan and these smaller decisions we assume we’ll make them just fine.
When you’re not thinking in bets, you tend to live in a world that is much more black and white, right and wrong, good and bad. Things happen because you did something brilliant or because it’s somebody else’s fault. The answer to most things is it’s somewhere in between. Things can rarely be just right or wrong. Most things lie somewhere in the middle. The more we recognize that in our life it improves all of our decisions.
SMM: In the book, you look closely at something called self-serving bias, which is the tendency to chalk positive results up to our own skill and effort while poor outcomes are often blamed on bad luck or other things out of our control.
Duke: It’s a common habit of mind that is incredibly destructive for learning. If all of your bad outcomes are because of luck, there is nothing to be learned from them. Conversely, if you onboard all of your good results, then you’re going to try to repeat those decisions and that’s not always the case, because sometimes you have good results occur from bad outcomes that you wouldn’t want to repeat again. If you drive while you’re intoxicated and you happen to get home safely, let’s hope that you’re not trying to repeat that. The answer is to get people around you who refuse to reinforce that kind of behavior. When you try to complain about your bad luck, have people who will ask, “Are you sure this was just unlucky?”
SMM: I love the concept you present that picking apart your wins may be more effective than studying your losses. That could really apply to sales.
Duke: What we forget is even when we do close a sale, we don’t ask questions that might improve our performance in the future – questions like, “Did we leave any money on the table?” The question we should always be asking ourselves is, “How close did you come to breaking it?” I can close a lot of sales by not ever coming close to breaking a sale. I’m going to bask in the glory of a lot of closing, but I should be coming close to breaking some sales. In fact, I should probably break some. Otherwise, I’m not testing how far I can push it. If you’re just fending off bad outcomes because they don’t feel good, while you might be winning in the sense of “I closed it,” you may not be winning in the sense of, “Did I maximize my return?” You need to understand what the edge is that you should be pushing up against. As a leader, you should have people talk about things that went well and the things they really believe they could have done better. That helps people understand that just because something turned out well doesn’t mean that your decision-making was perfect. The more you do that, the better your outcomes are going to be in the long term.
SMM: What does it look like if a salesperson and a prospect are both thinking in bets? Is that to the salesperson’s benefit, or is being the only one at the table who is thinking in bets an advantage?
Duke: It depends upon the type of negotiation. If you are in a negotiation that looks more zero sum, it’s not a bad thing to have the person who you are negotiating with be irrational because you can get some advantage out of that strategically. If you’re competitor is thinking in bets, it means they are going to be a more rational negotiator. That can work in your disfavor. However, often in these situations, you’re looking to maximize the benefit for both parties. There, you really want the person that you are sitting across the table from to be thinking in bets. You want them to understand how you are going to maximize for both of you. They’re more likely to see why it’s an advantage for both of you to be winning and it isn’t a fixed pie.
SMM: You explore the concept of belief calibration – making the argument that when leaders reveal some uncertainty in their beliefs to others, it makes them more credible. Can that be true in sales or marketing, where confidence in one’s products or services is paramount?
Duke: Don’t confuse confidence with certainty. That’s where we get tripped up. We think that presenting a certain case is also presenting a confident case. I think we can present a confident case and still wrap uncertainty into it, certainly within your team. For example, introducing a new sales strategy and saying things like, “I’m 70 percent sure that working this new tactic into our sales process is going to make things better.” It takes a very confident person to say that. There is a really big signal to admit that you are so confident that you’re not 100 percent sure. You have presented yourself as an incredibly thoughtful person who has taken the time to think through what the other possibilities are. The other thing that comes out of that is in a confident way, you open yourself up to people telling you what they know and whether they agree or disagree, or whether they think the 70 percent should be calibrated to 60 percent or 55 percent. You can now have a discussion about that. A person who is willing to invite that kind of descent is someone who is very confident. Also, you find a lot more places to A/B test. If you say you are 70 percent on strategy A and 30 percent on strategy B, you’ve discovered a great place to A/B test something.
SMM: You succeeded in the male-dominated poker world. B2B sales is not as male-dominated as the professional poker circuit, but do you have advice on how women in B2B sales can succeed in a male-dominated world?
Duke: When I was playing poker, 3 percent of the entrants in a professional tournament were women. I’ve been retired for six years, but I believe it’s still about the same. As with anything, we want to avoid painting with a broad brush. There are wonderful and amazing men who treat you as a human being and take you as you come. But we also know in fields like sales, where you are executing your strategy on your own and it’s face-to-face competition, there are people who treat women differently. There is a category of people who don’t want to lose to a woman, who don’t respect your skills, who don’t think you’re as smart or bold or can think as deeply.
One of the things I always try to tell women in that situation is to think about what your goal is. The mistake that a lot of us make is we want the other person on the other end of the exchange to not think poorly of us. This is true for men as well as women, but in this particular way it can be more magnified for women. We want the other person to not think less of our intellect or our creativity or our boldness than what we think we deserve. That can be counterproductive. At a poker table, people thinking less of me was good. It meant they were underestimating my capabilities and I could win more money because of that. People who were emotionally invested in whether they won or lost to me because I was a woman was good for me. Did it mean that I was going to be friends with them away from the table or that they liked me at the table? No, but that wasn’t my goal. It’s a really important lesson to figure out, “What is my goal in this exchange? Is it to be liked or respected, or is it to get the best out of this negotiation that I can?” When someone is treating us in a way that isn’t respectful, our natural reaction is to have that contribute to a negative emotion. If we shift to focus on what the goal is and think about whether that person’s view of you can help you in that overall strategy, then I think we can change the way that we view the world. The fact is I can’t change that person; I can only change my view of that person.
SMM: Speaking of goals, you dive deep into the concept of backcasting and premortems. Backcasting is picturing a positive outcome of a large goal and working backward to “remember” how you got there, while premortems do the same but imagine a negative outcome in order to figure out what might prevent you from succeeding. You say premortems are more effective. Does that speak to something else you talk a lot about – that losing feels twice as bad as winning feels good?
Duke: With both of these, the reason why it is important to imagine an outcome in advance is because once we have an outcome, it casts a very long shadow over the decision process. It’s hard to see our way out of not reasoning why the outcome makes sense. For example, if you close the sale, the fact that you had success is really going to color the way you view whether you actually executed a good strategy. If you don’t close a sale it’s also going to color it. The quality of a decision is not determined by one outcome. But you get yanked around by having the outcome already occur.
Backcasting and premortems allow you to think about the decision process well before the outcome occurs. If you have a goal – say you want to increase sales by 5 percent year over year for the next three years. With a backcast, you imagine having accomplished that three years from now and try to determine what would have happened in order for that to occur. That’s a good thing to do, but in some sense we already do that naturally. When we’re thinking about a strategic plan, we tend to think about positive scenarios. You really want to go through and understand what things had to have happened. And by the way, you want to see what involved more or less luck. You want to understand what is in your control that has to do with decisions that were made so you can increase the probability of those things happening, then also recognize the good things that have to happen that have to do with a lot of luck. How can you reduce the luck in that? Or, maybe having seeing that, you need to adjust your goals.
What we tend not to do as naturally is think of all of the bad things that can happen. We don’t like to think about failure. It doesn’t feel like we’re being good cheerleaders for our company or our team. It feels like we’re being skeptics in the bad sense of that word. Imagine the headline three years from now is you failed to increase sales by 5 percent year over year and you have everybody write down five reasons why they think that might happen. You see some very interesting things come out of that. Let’s say you have an incredibly strong salesperson on your team named Kristine. What if Kristine quits? Who’s going to say that in a normal strategic plan? That’s considered something that’s not generally accepted in the room. But when you turn the game into let’s think of all of the bad things that can happen, all of a sudden something like that happens. It allows you to see where the weak points are – where the things that might not go your way lie in the terrain that’s in front of you. It allows you to think about Kristine quitting. How can you bolster the rest of the team so that you’re not so reliant on the strongest salesperson? Now you’re anticipating better than your competition. It allows you explore the negative side that you normally wouldn’t explore and put plans in place to be nimble instead of totally reactive. It’s actually the road to success. As you sort of step on those mines, you’ve actually mapped out where those mines are and you’re much more likely to avoid them and have plans in place if you do happen to step on one. Now, when the bad outcome occurs, there is much less finger pointing. There is much less “I told you so.” There is much less “You should have known. Why didn’t you listen to me?” It actually ends up bolstering morale because one of the things that really hurts morale is when someone feels there is a different way to go or there might be a bump in the road and they feel they didn’t have a platform with which to speak.
SMM: You finished second on the 2009 season of “The Apprentice.” What was that experience like, and is our president someone who thinks in bets?
Duke: This is actually really relevant to the question you asked about being across from the table from someone who does not think in bets. What was interesting about being on that show is the majority of people on the show didn’t think they were playing a game. It’s actually somewhat of a strategic game. When you start to think in a certain way and you begin to map things out probabilistically and you’re thinking about the world in a certain way, it does bring out when other people aren’t thinking that way. In a situation like that, it really worked to my advantage. Also on that show, some people are playing a different game. Some people are playing an exposure game – they’re just trying to get television exposure. They aren’t trying to win the game. Sometimes you get people in a room and you all have different goals and values. One of the things we have a tendency to do is impose our values on other people. If people aren’t playing in a way that is logical for our values, we think they are playing poorly. That’s not necessarily the case because they may have different goals than we do and different values. We would all be better off if we recognized that.
In terms of Trump, I’ll say two things: He is who he is. What you see is who he was on the show. In terms of thinking in bets and how he speaks publicly, I’m a humongous fan of expressing things in a less certain way. He is someone who expresses things in a much more declarative manner. That’s his style.
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