Using data and logic pays off at the poker table, and we think it will pay off for your organization as well. Whether you are a foundation or non-profit reviewing grant applications, a startup incubator or accelerator reviewing applications from budding entrepreneurs that want access to your programs, or a business making big decisions around strategy and product – making use of as much relevant information as possible within the time available will improve your outcomes over time. It’s important to find a way to implement solutions, software or otherwise, to aid in the management of these submissions, applications, and group decisions.
8 Key Decision Making Observations and Lessons
I had the absolute pleasure to join some fellow tech startup entrepreneurs in an after-hours poker tournament held at Communitech‘s VeloCity Garage, a starup incubator making a lot of noise in Waterloo Canada. Everyone put in their steep (by startup standards) $20 buy-in and the mood quickly changed from friendly chatter and smiles to moments of silence peppered with jabs at one another’s businesses and intellect. I expected nothing less from this group. When you put a bunch of people in a room that are ambitious and competitive by nature, cash starved by default, and a pile of $20 bills promised to the winner – war will ensue!
Being the decision making aficionado that I’ve become, I joined this tournament because I wanted to watch how different people made decisions, how the process changed as the stakes got higher, and which decision makers were most effective and successful. I saw the poker table as an analogy for the boardroom table. People gathered around, a diverse set of personalities and skill sets, all trying to make profitable decisions the best way they know how. Of course, I also wanted to get to know my fellow entrepreneurs and have a shot at all of that cold hard cash too!
I’m going to give you 5 observations I noted while playing in the tournament, and 3 takeaways from those observations that will help you and your organization make better decisions that lead to better results.
- People that either: lacked a background in a discipline that encouraged the use of logic in decision making, had a strong belief in their gut and luck, or had little experience with the game of poker, tended to make decisions based on “feel”. If it felt right, they followed that feeling and made the decision without further thought. If it worked, they felt like a God, and if it didn’t (it usually didn’t) they questioned their instincts.
- The more statistically inclined took their time to make a decision - they were taking into consideration their position at the table, amount of chips in the pot, how much more they would have to put in compared to what is in the pot already, the cards in their hand and the statistical likelihood that they currently have the best hand or will end up with the best hand, and then putting all of this together to make a final decision backed by data and logic. They also used a more qualitative approach in conjunction with the quantitative, carefully making an analysis of human behaviour and previous moves by each player.
- When players took this logical approach, they did not feel as bad when they lost the hand because they knew decision quality was measured at the time it was made and not by the outcome. At that point in time, before the statistically unlikely future had taken place, they made the right decision. With an understanding of probability, they knew that making that same decision over and over again (creating a larger sample size) would be profitable.
- As the game progressed and the consequences of a poor decision increased dramatically, each hand took noticeably longer. I think this change of pace was due to the make up of the surviving players. Towards the end, everyone that was left had an analytical approach to the game. They were watching their opponents for slight changes in behaviour that they had correlated with certain outcomes throughout the evening. Everyone at the table was running the statistical likelihood of potential outcomes before making a decision. Everyone was weighing the risks and rewards of each possible move. Finally, the stakes were higher and the numbers bigger which created a larger cognitive load.
- Decision makers that used the data available to them won, plain and simple.
3 Critical Decision Making Lessons
- Always use the data available to you. Only use your gut instincts when there are gaps in the data that just can’t be filled by the time the decision needs to be made. Only having the data available in a way that is difficult to interpret is not an excuse for reverting to your gut. Your decision-making process should easily allow teams to drill into the details for each of the prospective options without feeling like additional work. Invest in solutions that facilitate data driven decision-making processes. These types of solutions are becoming increasingly affordable, and one good decision can more than pay back your investment.
- Make extra time for complex and/or high stake decisions. These decisions warrant more data collection and more time analyzing said data due to the large potential downside of a poor decision. If your organization doesn’t have the additional time and resources for these tough decisions, then it should have the resources to invest in a solution that speeds up the data driven decision-making process while maintaining its integrity. Again, these are becoming very affordable and easy to use.
- Always judge the quality of your decision at the time it was made and not by the outcome. It is so very common to judge a decision based on whether or not the outcome was favourable. This becomes more likely when your organization isn’t making decisions backed by logic, data, and the documentation that accompanies this approach. An organization using data and logic will have that documentation along with the comfort that comes with the knowledge that the absolute best decision was made given the information available at the time the decision was made. Like the statistically minded poker players, these organizations know that over time, these logical decisions will be profitable.
There you have it! No matter where I am, what I’m doing, and who I’m doing it with, I am always on the look out for decision-making insight for all of you!
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