Business Is A Poker Game: Acting Decisively

Previous columns discussed steps that create edges. But creating them won’t accomplish much unless you exploit them by acting decisively. Exploiting edges is fairly independent of the ability to create them. Many people know what to do, but don’t do it. They think well, but don’t play well.

The 1967 NFL Championship Game, “The Ice Bowl,” provided a superb example of acting decisively. Players were slipping on the ice and having trouble holding the ball, making every play riskier. With 16 seconds remaining Green Bay was behind 17-14 and about a yard from the goal line. Instead of tying with a field goal, Bart Starr won with a quarterback sneak.

Starr and Coach Lombardi accepted the risk of losing because a field goal would just tie the game. They had only a 50 percent chance to win in overtime and believed they had better odds for a touchdown. If they lost, the fans and media would viciously criticize their “stupidity” and “recklessness.”

They had the mental toughness, self-confidence, and decisiveness to take both risks. Pro football is like poker and business: You need decisiveness to take risks and get rewards. If you lose, you must be tough enough to take the heat.

Acting Decisively Without Complete Information

Most important decisions are made with incomplete information. Some risk-seekers don’t analyze situations; they just yield to impulses. Acting decisively means committing only after carefully analyzing situations.

Some risk-avoiders make the opposite mistake. They say, “don’t decide without all the facts.” But you’ll hardly ever get them all, and attempts to do so are often just excuses for procrastination. Poker is a great teacher because you can’t procrastinate. Put in your money, or fold your cards.

Poker and business winners accept that they must make risky decisions without complete information, but they definitely don’t act impulsively. They carefully analyze situations to create edges and act decisively to exploit them.

Jeff Bezos is an excellent example. He left a high-paying Wall Street job to start Amazon.com. Although it was a new kind of venture, he had carefully analyzed the retailing industry. He trusted his judgment and had the courage and decisiveness to take the huge risks of starting a new kind of business. He became one of the world’s richest men.

Being Selectively Aggressive

It means concentrating your resources rather than spreading them thinly. The resources can be poker chips, money, manpower, your own time, or anything else.

Most people aren’t selectively aggressive. They don’t control their thoughts and feelings well enough to create edges, and they lack the decisiveness to exploit them. They slowly dribble away their resources, taking little risks here and there.

When cash game winners don’t have an edge, they fold. When they get one, they attack mercilessly.

Risk-avoiders often choose the “safest” option. They check or call rather than bet or raise. They try to minimize risk, but can actually increase it. The small amount they save by not betting or raising can cost them a whole pot. As Barry Tanenbaum put it, “You must … act decisively… [being indecisive] is akin to standing in the middle of the street because you can’t decide whether to go right or left.” (Advanced Limit Hold’em Strategies, p. 72)

Most Competitions Reward Selective Aggression

It’s essential in almost every competition, but I’ll discuss only corporate planning, sales strategy, politics, medical emergencies, and career management.

Corporate Planning: Professor Porter, a respected authority, wrote: “The ability of a firm to optimize in any [market] segment is generally diminished by broadening the target.” They should keep that narrow focus when deciding how to compete. Trying to compete on both cost and product differentiation causes a firm to be:

“‘stuck in the middle.’ It possesses no competitive advantage. This strategic position is usually a recipe for below-average performance… Being stuck in the middle is often a manifestation of a firm’s unwillingness to make choices about how to compete. It tries for every kind of competitive advantage and achieves none.” (Competitive Advantage: Creating and Sustaining Superior Performance, pages 16,17, 264)

Selective aggression helped Japanese auto companies to grab a huge share of the American market. Instead of trying to compete everywhere, they focused entirely on the small car market.

At first the Big Three ignored them. They had neglected small cars because the profit margins were tiny, and they believed that people would always buy their poorly built, expensive, and very profitable gas guzzlers. By the time they woke up, the Japanese (and other foreigners) dominated the small car market and were attacking the bigger car markets, which put the Big Three into desperate trouble.

Sales Strategy: Top salespeople carefully study their products, market, and competition, and then manage their time and territory to concentrate on their best customers.

Political Strategy: Bill Clinton applied the triage principle, a form of selective aggression. When hospitals have more patients than they can handle during battles, epidemics, and natural disasters, they efficiently utilize their resources by dividing patients into three groups.

Those who will die, regardless of what they do. They give them enough morphine to ease the pain and ignore them.

Those who will survive, regardless of what they do. They give them moderate treatments and pain-killers and send them home.

Those who will survive only if they get immediate treatment. They concentrate on these patients.

Clinton knew that elections are won in the center. Since he would get the liberals’ votes, he almost ignored them. Since he couldn’t get the conservatives’ votes, he didn’t seriously try for them. Instead, he “stole” various moderate issues from the Republicans to win the center’s votes and two elections.

Managing Professional Careers: Most professionals congregate in population centers which creates severe competition. A few recognize their limitations and have very successful careers in less competitive markets.

Education And Career Strategy: Frederick Smith, the founder of Fedex, was a mediocre student. Highly ambitious students usually do everything their professors demand to get good grade point averages (GPA). Smith ignored his GPA and focused on the subjects that would help him to start his company. When he was only 28 years old, he did it, and the rest is history.

Bill Gates Went Much Further: He thought Harvard was wasting time he wanted to invest in building a software company. So he dropped out and concentrated on building Microsoft. Some professors may have thought: “It’s a pity that such a bright boy lacks ambition. He’ll probably never amount to much.”

The Bottom Line

To reach your poker and business goals, you must be decisive. Avoid the extremes of acting impulsively and procrastinating. Carefully analyze yourself, the situation, and your competition, determine where you have the biggest edge, and then act decisively to exploit it. You’ve seen that Bezos, Smith, and Gates became spectacular successes by being exceptionally decisive. It was hard and stressful, but no sensible person believes it’s easy to become a huge winner. ♠

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