Business Is A Poker Game: Poker Is A Great Teacher

Earlier columns related poker to business issues, such as selecting the right games, adjusting to situations, negotiating deals, and coping with losses. This one explains why poker is a great teacher.

Poker Is Pure, Naked Competition

Many people dislike and disguise competition. They pretend to be working together, helping each other or acting nobly, when they’re really competing ferociously. Poker players aren’t hypocrites. We want our opponents’ money. Millions of people play other games without betting, but hardly anyone plays poker without gambling.

Poker is “everyone against everyone,” which mirrors another important business reality. If you collude with your business competitors, an anti-trust suit can bankrupt you, and colluding at poker is cheating.

Ordinary Adults Play Poker

Some business books use sports as the teaching metaphor, but sports are played mostly by children and the professionals are extraordinarily gifted “freaks.” Success depends primarily upon size, strength, and speed, which are irrelevant in business.

Since poker is a purely mental game, players can be young, middle-aged, or old; male or female; athletes or cripples. They all rely entirely upon their brains and bankrolls. Which game will teach you better, one you haven’t played for years and can’t play competitively now or one you can play tonight?

Poker Has Clear, Simple Rules

Poker requires only betting, not card management. In many card games you must make many complicated decisions, such as bidding for a contract and deciding how to play your cards. In most poker games, your only decisions are fold, check, bet, call, raise, and how much.

If nobody calls, the bettor wins. After all the bets have been called, the best hand wins. Any normal person can quickly learn poker’s rudiments, but it takes years of study and practice to play well, and nobody completely masters it.

Poker Teaches You How To Manage Risks

Risks are an inescapable part of business, but many people don’t know how to manage them. Poker players must repeatedly assess complicated risks, decide what to do, and put their own money on the line. Even weak players learn something about managing risks and winners learn to manage them very well.

Poker Teaches You How To Manage Information

Poker and business are incomplete information games with two characteristics:

1. Good information management reduces risks and increases rewards.
2. Poker and business demand the same information management skills. You have to maximize the information you get and minimize or distort the information you give.

Poker Teaches You How To Handle Good and Bad Luck

Some people regard chess as a good business teacher, but chess is pure skill, and business involves luck. You can’t succeed at poker or business without knowing how to handle both good and bad luck.

Napoleon was a military genius, but he certainly understood luck’s critical importance. When asked what kind of generals he wanted, he replied, “Lucky ones.” Of course, he never relied on luck. He planned his battles brilliantly, but he knew that luck is a factor in war, that the best laid plans often fall apart, and that a general must exploit lucky breaks and cope with unlucky ones. So do good business people.

Poker has a nearly ideal balance of luck and skill. If a game is pure luck, such as craps or roulette, it can’t teach us anything. Hardly anyone gambles on chess because the better player almost always wins.

Without luck “the bad players would never win. And if they never won, there wouldn’t be any bad players.” (Mason Malmuth, Poker Essays, Vol. II, page 110) And without bad players, the good players couldn’t make a profit.

Poker Requires Self-Discipline

You probably know highly skilled players who are often broke because they lack the self-discipline to control themselves. You can’t win without controlling your thought processes, focus, feelings, and actions.

Poker Is Extremely Power-Oriented

So is business. Since only one hand wins, even the weakest player often asks the critical questions: How strong is my hand relative to the others? How does my skill compare to the competition’s skill?

Both poker and business demand that you accurately assess power and act effectively on your assessment. Only the winners learn how to perform both tasks well. The emphasis upon power and survival affects every decision. Winners do whatever they can to gain an edge, and they won’t play without one. Losers play the wrong cards at the wrong time against the wrong people.

The emphasis upon getting an edge applies to virtually all business competitions. All smart business people constantly look for competitive edges and try to increase them.

Poker Provides Quick Feedback

You can’t learn any skill without good feedback. Poker teaches so well because of its essential nature and fast feedback. Lyle Berman made hundreds of millions of dollars in business and is a member of the Poker Hall of Fame. He once said “Poker is like business.

You gather information, make decisions, and reap success or failure based on those decisions. The only difference is that in poker you see your results right away, whereas in business it may take you years to see the results.” (Quoted by Mike Sexton in “Inside Professional Poker: Look Who’s Playing Poker,” Card Player, August 1, 2003, p. 20)
Because poker’s rules are so clear, everybody knows immediately and exactly who won and how much. Almost everything in poker can be expressed in dollars won and lost, an unambiguous measure. If you make a mistake or a good play, you may immediately know exactly how much it cost or earned you.

This quick, clear feedback can help you to improve your game if you can accept it. Winners do accept and learn from it; losers ignore the feedback and repeat the same old mistakes.

However, because luck has such large short-term effects, you will often get misleading feedback. You can play stupidly, but catch a lucky card to win a huge pot or play perfectly, but be beaten by bad luck. The same can happen in business.

Poker Offers Repeated Opportunities To Experiment

You can switch games again and again. With dozens of hands per hour, you can repeatedly vary your play. You can fold hands you would usually play, raise where you would usually call, or bluff when you would usually check.

Every experiment gives you immediate feedback: You lost $200 in this game, but won $500 in that one. This bet cost you $50; that fold saved you $75. You can keep experimenting, trying out new strategies until you get it right. However, since luck affects your results, you must analyze why you won or lost.

Business experiments take much longer, have much higher risks, and have more ambiguous results. It may take months for the right opportunity to occur, years before your actions have any effect, and even then, the results may be confusing. Poker lets you conduct research quickly and cheaply. ♠

After publishing five long, expensive poker books, Dr. Al, [email protected], has switched to short, inexpensive, eBooks. Stay Young; Play Poker and How to Beat Small Poker Games cost $2.99 at Amazon.com.