Every once when you size up a challenger or negotiate a deal, you use the same skills used in the game of poker. TSI takes a look at how poker and business connect can guide your strategy.
A good example of poker being a game of strategy than cards are the legendary bluffs that took place between Henry Clay and Daniel Webster. After several re-raises, when the pot was worth USD 4,000, Clay called. On which Webster laughed, shrugged, and threw away his cards saying, “I only got a pair of deuces.” “Well, then the pot is yours,” said Clay, also laughing.
Ever since it was created in New Orleans centuries ago, poker has been the most skillful of all card games. In the words of Oswald Jacoby, a bridge champion,
Some of the world’s top business strategists, CEOs, COOs, entrepreneurs, and senior executives have been known to use powerful strategic tools from poker for building business and corporate strategies.
TSI takes a deeper look at the strategies, negotiations, relationship building, and dealings underlying these game evenings to cull out vital learnings for business strategy professionals.
These lessons from poker heroes and villains are worth taking to your boardroom.
A senior partner from McKinsey expresses,
In business and the market, like in poker, uncertainty is a huge element. And strategy is the key to deal with it. The goal of a strategy is to give a direction with the best possible odds. Thus, senior executives shouldn’t only credit winning and discredit losing, rather identify strategies to minimize the risks inherent in uncertainty.
If five businesses have 80 percent chances of winning, there is still a possibility that one will eventually fail. And if five businesses have a 20 percent chance of success, then only one of them is likely to win. A superior strategy is the one with an 80 percent likelihood of success.
Risk needs to be a part of the discussions in business strategy – in terms of competition and regulatory forces thereof.
Human beings love winning and hate losing. It’s our survival instinct. As a result, we tend to play safe with our gains and loose with our losses. So, we are risk-averse when it comes to gains, but risk-takers when it’s about avoiding losses.
Wisdom suggests don’t take gains off the table early out of the fear that they may evaporate and do cut down the investment on losses when they hit an unacceptable benchmark (called stop loss in trading). This is the best risk management strategy senior consultants and strategists can take from poker and traders. It will make you exit from a bad investment soon and limit the damage it can have on your capital.
If a strategy with a USD 1000 investment gives you 20 percent chance of getting USD 2000 revenue (pay USD 1000 for USD 400), you fold it. But when the same investment gives you a 20% chance of earning USD 20,000 revenue (pay USD 1000 for USD 4,000), you take it. Don’t throw good money after bad. Quick calculations, situation assessment, and instinct – these are important to choose the best strategies that work.
In poker, cards are of less consequence that the players on the table, the money at stake, and the skills each one has.
As James Bond says in a film – poker is about playing a person rather than the cards. The cards are only the means. Game is the person. Good poker players notice the non-verbal cues, and the quirks and patterns of the players to succeed.
Likewise, strategists must keep the pulse of the competition, and recognize at once when the competitive landscape has changed. You are catering to a group of people – both within the workplace and outside of it, i.e. your competitors and consumers. Similarly, in negotiations, when someone overreacts (the conscious Gee’s, Hmm’s, etc.), you should just go with the opposite of what they are trying to convey.
This follows from above, but it focuses on how you project yourself in the market.
Wins are not all about the hand you were dealt, but about the hand your competition thinks you were dealt. Know the image you want to be projecting to your competitor – and act in a way that matches it.
The best poker players conceal the poker hand behind inconsistency by avoiding set practices and acting at random on occasions. They set the pace of the game depending on the company they are in – tight in a tight game, and loose in a liberal one. Calling all bets will put you in trouble as you will always be betting against a strong hand, and always dropping in the face of strong representation will make you be bluffed off easily.
You can play a hand perfectly, and still not come out on the top. As the game goes on, you may realize that despite having the aces, the best possible hole cards in poker, you don’t have the best hand due to the cards that open.
Similarly, in business, you may have the best product, but unless the conditions are perfect to the launch, it may not reach the heights it is deemed to. When strategizing, you may do everything right and still not be able to hit the goals. Most strategies fail several times before reaching their winning merits.
It’s a short-term problem. Keep taking chances. And in this while, get your fundamentals right. Amp up your understanding. Optimal decision making will eventually lead to profits overtime.
Most high-stake decisions businesses make are equivalent to the massive game of poker where they must go all in. If we go by the legends, you can win the biggest when the stakes are high.
The trick is to maintain focus and weed out any distractions; don’t let the pressure get to you – a skill useful in all fields. Take charge of the situation and be fearless. And, save your most aggressive moves for when you would be in the best position.
Your ability to make strong decisions and maintain a calm composure in high-pressure situations will impart you the emotional and mental agility to become a perfect strategist.
Business is a duel exercised with strategies instead of pistols. Have an ace up your sleeves with globally respected business strategy certifications and acquire the cognizance you need to play the odds.
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