Decision-Making with Annie Duke
Championship poker player, Annie Duke draws from her twenty-year poker career and cognitive psychology studies to teach people how to make smart decisions in high stakes situations. From her PhD studies at the University of Pennsylvania to her rank as one of the top three most successful women in poker history, she has perfected actionable techniques and strategies in “decision science.”
SPEAKING.COM: How do you get smart, successful business professionals to relate to the idea that there are situations where they are not making rational decisions?
DUKE: I tell audiences, “I studied cognitive psychology in grad school, but what opened my eyes was seeing it in action every day at the poker table.” Poker can be an ideal learning environment. You make lots of decisions, they have real-money consequences, and you get feedback quickly in the form of wins and losses. Rarely in the rest of our lives do we have such a quick, closed feedback loop.
The real puzzle for me was that, even in poker, the rate of learning slows down much too soon. The same players make the same mistakes over and over again, despite the repeated feedback that what they are doing in certain situations isn’t working.
For most of my 20 years in poker, I tried to understand how some fundamental thinking processes affected decisions and learning. How does uncertainty affect our perception of how we’re doing? How does our self-image filter our experiences? How do we handle conflicts between what’s best for us now, compared with the future?
Of course, these processes don’t just affect poker players; they are part of our thinking everywhere. The very best poker players have come up with some interesting ways of reducing the damage of these thinking processes. My goal has always been to learn what those players are doing, and figure out how we can apply it throughout our lives.
SPEAKING.COM: What are the most common decision-making errors leaders make?
DUKE: If you are leading a company, you likely earned that position from good decisions and successful outcomes. If you are a senior partner at a big law firm, you are probably a great lawyer. If you run the options-trading desk at a securities firm, you are probably a great trader. If you are in charge of a growing e-commerce company, you are probably great at identifying that market and building the platform.
Building a successful company culture, however, can require a different skill set. One of the most common mistakes occurs when a successful leader (and a successful company) creates an evaluation system tied too closely to outcomes. Outcomes and decisions are only loosely correlated. We all know this but only occasionally build this into our evaluation process. Some huge long shots come in. Some great decisions still lead to failure.
Learning comes from understanding mistakes, even mistakes that led to lucky successes. How do a company and its leaders treat negative outcomes? If the focus is solely outcome driven, that becomes the culture down the line. That’s how employees feel the company keeps score.
A leader can strive to create a culture that evaluates decision quality, separating decisions from their results. It’s inevitable that good outcomes are rewarded and bad outcomes are discouraged, but that does not have to occur by ignoring the decision process. It may be easier to evaluate solely on outcomes, but it is not necessarily more accurate, and it is definitely less helpful for learning.
SPEAKING.COM: Can you explain a bit more about your concept of “decision fitness?”
DUKE: One of the biggest things you have to battle at the poker table is making decisions in an emotionally “hot” state. It’s one thing to be in a deliberative state of mind and plan rationally. It’s another when you have to make repeated decisions under potential emotional stress. This is especially true in poker, where you constantly make decisions, always with the threat of losing a hand, losing money, looking bad in front of your peers, and doubting yourself.
The reason we have aphorisms like “take 10 deep breaths” or “sleep on it” is because of the importance of taking a step back so your reflexive, emotionally-charged actions don’t take control of your decisions. In poker, you don’t always have the option of stepping away from the situation. Even when you do, the emotions connected with winning and losing can make you a particularly poor judge of your emotional state.
Working through your emotions in poker is an important element in success, often more important than other game-specific talents. Once you understand what the best poker players do, you can apply those lessons to every aspect of your life.
SPEAKING.COM: What are a few secrets to avoid allowing emotionally charged decision making to negatively impact our lives?
DUKE: 1. Focus on the decision making process instead of outcomes. Outcomes can be bad. That doesn’t mean you made a bad decision. Take emotional charge away from bad outcomes by disconnecting the outcome from the decision process.
Also, when you have an outcome that makes you unhappy and you focus on analyzing the decision, it moves your thinking process into the frontal cortex. Your frontal cortex inhibits the reflexive reaction of your limbic system. It takes you out of the emotional part of your brain into the thinking part of your brain.
2. Take advantage of resets. When you have the opportunity, sleep on it. Take some deep breaths. Call time-out.
3. Become part of a supportive culture. You don’t have to isolate yourself and face all your challenges alone.
SPEAKING.COM: How did you get the idea to combine the fields of cognitive psychology with decision-making lessons picked up from the poker table?
DUKE: It happened naturally though the evolution of my career. I started as an academic, working on my Ph.D. When I took a sharp left turn and started playing poker, I didn’t expect that my cognitive psychology background would give me a particular advantage in poker. And I had no idea that poker would allow me to study cognitive psychology in a way that would have been almost impossible in an academic setting.
After initially focusing on poker fundamentals and “poker” strategy, I realized that what I was studying in cognitive psychology was playing out at the poker table in a way that was much more pronounced than you can see in an experiment. Poker involves real-world decisions. You make a lot of them. You make them fast. You are face-to-face with your opponent. And your decisions have immediate, real-money consequences.
It was an organic process. As poker’s popularity soared, I had opportunities to speak to groups about applying lessons learned at the table. I used these opportunities to formalize my thinking about the convergence of cognitive psychology and poker decisions, re-establishing my ties with academics and consulting with leading thinkers.
SPEAKING.COM: What has been your biggest life lesson?
DUKE: Growing up, I thought the most important thing was to be right: knowing the answers, demonstrating I knew the answers, and using my reasoning abilities to distinguish, diminish, or dismiss information and people indicating otherwise. We all have those tendencies and I still fight against them, but the biggest life lesson I’ve learned is the value of flexibility. That applies to every sort of human behavior.
Understand that the goal is not to be right; it is to find the truth. Those are two separate things.
Life has taught me to move away from needing to be right and move toward learning the truth of the matter. To do that, you have to be a flexible person. You have to be open to new information. You have to listen to other people, even when you disagree with them.
To bring Annie Duke to your organization, please contact Michael Frick at: Mike@Speaking.com
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