August 2006

Many moons ago I posted a few life lesson articles by Steve Pavlina regarding how blackjack and poker relate to life. Well, it got me thinking and I figured I would offer some poker lessons from business. Most of these are from the perspective of an IT executive or project manager but could equally be applied across a broad spectrum of other business functions as well.

Analyze and Improve: One of the lessons I learned in my early days of management that helped accelerate my growth as a leader was to constantly measure, analyze, and evaluate performance. If a meeting went poorly, a contract negotiation fell apart, or a project derailed, I would spend days and sometimes weeks considering how it could have been handled better.

In fact, I even approached the problem from the perspective that I was the cause of every failure (but not to an unhealthy degree). Surely, had I done something differently, I would have achieved a different result. If I sent four emails and made five phone calls reminding someone to do something that they eventually failed to do, I didn’t view it as their failure but some sort of communication problem caused by me. How could I have changed that outcome? Did I communicate the importance of this task in an effective manner? Could I have had a backup in place in case the task was not completed? Should I have been present and personally supervised the task?

Sometimes at the conclusion of this line of questioning I might find that I did everything that was possible. Perhaps the person entrusted with the task was 95% responsible and I was 5% (or I was 95% responsible and they were 5% responsible). But as long as I had any fault, I tried to find a way to make sure that I didn’t repeat the same error twice.

In poker, we should adopt this same sort of relentless questioning of our outcomes. Don’t curse the fish for calling you when the real problem was that you were betting AK, unimproved, to the river when you knew you were beat. I play in a regular game with a player who will call you down with a hand as weak as bottom pair. Hell, he’ll call an all in bet with bottom pair. Should I get angry at him or should I look at my own game and ask why would I try to bluff a guy who won’t lay down a hand even if I stuck a gun to his head and told him that if he loses I would blow his brains out?

If you play mostly online, get PokerTracker and pick up Iggy and Hdouble’s PokerTracker Guide. Post hands on 2+2. Do whatever it takes to weed out the errors in your play.

Look Past What Was Said And Find Out What Was Meant: The corporate world is a funny place. “I’m behind you 100%,” can either mean that the person is fully supportive of your idea or it could mean that they will do everything possible to appear to support your idea while sabotaging it every chance they get. Obviously, not all business is a Machiavellian plot but when the Finance department asks you for a report listing all transactions, you should ask whether or not they actually want a report with all transactions or are they simply asking for that report so they can generate a derivative report which you could just as easily produce with two more lines of code.

For instance, when I was doing consulting work I met with a potential client on what would hopefully be a very lucrative engagement. As the meeting progressed I became increasingly uncomfortable with the opportunity as the potential client used certain words and tones to describe previous vendors. By the end of the meeting I was fully convinced I wanted no part of this business relationship because I knew that I would eventually get stiffed. I turned down the opportunity only to see it go to a friend of mine who completed six months worth of work only to have the client suddenly shift gears and refuse to pay.

What did I know that my friend didn’t? Well, I looked at the potential client’s motivations, their perception of contractors, and their insistence on inserting seemingly trivial contract clauses. The result of that analysis was that I believed that the client was cash-strapped, had a very low opinion of contractors, and was more concerned about contract clauses that would give them legal outs for non-payment than they were in the technical merit of the solution being proposed.

When we play poker, other people will be telling you things about their hands. Sometimes it’s with how much they bet. Other times it will be with the physical actions they make as they push their chips in the pot. A successful poker player learns to read those clues just as easily as a good manager in business learns to decipher the true meaning of what others are saying.

When a player goes all in on a seemingly safe board, are they more likely to have a big hand or are they trying to push you off your’s? If there’s a scary board, if they bet big into you does that indicate strength or weakness? For instance, let’s say you have pocket kings and the flop is:

AA2

Your opponent pushes all-in before you act. Against a mediocre player, my read is that he doesn’t have an ace and your kings are good here. Why would someone bet all-in when the only hand that can call them is an ace? An ace would much rather check and let you bluff at the pot since that’s the only way they can make any money on such a scary board.

Of course, this lesson is about seeing past what was said so if a tricky opponent pushed all-in on that flop I would be much more likely to give them credit for an ace since they would know that I know that only a weaker hand would push there. Who my opponent is would change my thinking drastically. My eventual decision would be based on not what they were trying to tell me with their bet but what they mean with their bet. If they’re trying to signal strength (a weak player betting into that flop) I’m likely to call. If they’re a strong player trying to signal weakness by signaling strength, I would fold.

You Cannot Control Other People’s Actions: While we can influence other people’s actions, we can’t control them. I spent three years in the US Army and even though smoking was prohibited in boot camp, there was a healthy underground market in cigarettes within hours of the drill instructors seizing any tobacco product recruits showed up to boot camp with (surprisingly, the recruiters told many recruits that they would be allowed to smoke in boot camp – imagine that). There is no penalty large enough to stop people from doing what they want to do. In many parts of the world, drug trafficking carries the death penalty. Yet, every year, countries hand down death sentences to drug traffickers.

As a manager, I long ago gave up trying to force people to do things. Instead, I provide them incentives to do what I need them to do. That doesn’t mean I blindly favor the carrot over the stick but it does mean that I understand that all I can do is influence people to do what I need them to do. If they don’t respond to incentives, then often the stick has to be brought out and by that time it’s the firing stick.

At the poker table, we can’t make our opponents fold. We can’t make our opponents call. We can’t control anything our opponents want to do as long as they want to do it more strongly than our incentive (or disincentive) motivates them. You will often hear poker players say things like, “How could he call me with Q4 off suit?” Well, you can’t control what your opponents will call with so why get yourself riled by it? The moment you can let go of that, the more you can objectively view the game. And by objectively viewing the game you can often find ways to exploit your opponent’s weaknesses. Better yet, you can find ways to exploit those very weaknesses that once drove you up the wall.

Always Keep The Objective In Mind: Quite often during a long project, it’s very easy to forget what problem you set out to remedy in the first place. The project becomes the goal even if the underlying circumstances have changed which may make the project completely pointless.

You can also take this advice on the smaller day to day battles you fight in the business world. Is it worth pissing off so and so in Finance to make a small gain today if there might be a time down the road where that same person could help you? The old adage, won the battle but lost the war, is as true in corporate American as it is on the battlefield. If you don’t have a clear understanding of what your goals are, you may find yourself winning lots of small battles but finding your butt canned at some point down the road because you’ve made so many enemies.

So, when we play poker, the same advice applies. How many times have you heard the advice not to tap on the glass? Do you tilt and make donkey comments about your opponents anyway? Do you flip up that set with a big smile when your opponent mucks his hand? Yes, you’re winning the small battles but you’re losing the war. You might feel better after cursing out the table donkey when he hits his runner, runner hand but if he begins playing better against you, you’ve lost the war. It might give you a small amount of satisfaction to show your monster hand but now you’ve given your opponent information on how you play your monster hands.

The whole idea of this game is to play with the biggest edge possible but many of us go out of our way to reduce that edge in return for a short-term level of satisfaction. Keep the long term goal in mind (making correct decisions and forcing your opponents to make incorrect decisions) and forget about winning the small battles.

Fully Understand The Effect Your Actions Have: In chess, most skilled players are thinking two, three, ten moves down the road. Although you can’t directly control other people’s actions you can predict them and guide them based on your actions.

One piece of advice I give to people who do consulting work is to never discount your services unless you’re comfortable working for that rate for the rest of your relationship with the client. Even if you’ve shouted it while jumping up and down on the client’s desk, written it in the sky, and had it tattooed on your client’s forearm, if you drop your price to get a gig the client will always know that you can work for that price. Most consultants drop their price to get a new client or get their foot in the door at a company but all they end up doing is shutting down future business opportunities. If you drop your rate to get the gig, the client is going to feel hurt (at best) or even insulted (at worst) when you pitch your next gig at your normal rate. Seeing the big picture and taking a look several moves ahead makes it easy to understand why this seemingly no-brainer business generation tactic often leaves consultants with a lot of one contract gigs.

In poker we often fail to recognize what effect our actions have on our opponents. If I’ve stolen the blinds from the button five times in a row, I’m going to be a tad more cautious that sixth time. Why? Because he’s probably getting tired of me stealing his blinds and is going to play back at me at some point. My previous actions (stealing the blinds) are probably frustrating him and now I have to think about how he might react.

If you’re going to show a bluff, know how that is going to impact your opponents’s game and adjust your game to counter his adjustment. One of the reasons why I love playing heads-up NL SnG’s is for exactly this sort of interaction. I attempt to manipulate my opponent’s into playing a game different than the one they thought they were sitting down to play and I try to stay one step ahead of them in terms of strategy. If I’ve recently burned my opponent by slow playing a big hand, he’s going to be wary of anything that smells like a slow play in the next few hands. One way I could take advantage of that is to play a draw passively and suck free cards out of him because I know he fears the check-raise. If I have an opponent who plays too passive, I’ll keep showing bluffs to him until he gets frustrated enough to start playing back with weak hands. Then I change gears and lure him into playing his weak hands into my strong ones.

All of this may sound counter to what I said about not being able to control other people’s actions but all I’m doing here is providing the incentives for the person to do what I want. If I’m at a table with a maniac who refuses to slow down no matter how many times I trap him, well, I’ll just keep trapping him. I would prefer to keep him off balance by making him change his game but since I can’t directly control how he plays his cards, all I can do is keep punishing him until he either runs out of chips or he changes his behaviors.

I know this is hardly the first writing to compare poker to business and it won’t likely be the last but I think many ideas cement better in the mind when taken out of their normal context and applied to other interests or experiences.

I hope you’ve enjoyed.

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