Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts Kindle Edition

Annie Duke is best known as a professional poker player and author of poker oriented books, but in "Thinking In Bets" retraces her academic history -- it's a business book, a strategy book, a behavioral psychology book, an organizational effectiveness book and of course has residual elements of a poker book at its core. It is, quite simply, one of the best business books and actionable management books I have read in years -- it's up there with Peter Thiel's "Zero to One." If you're wondering what Pete Carroll's pass play call at the end of the 2014 Super Bowl, Steve Bartman's interference in the Cubs playoff game that eventually forced him out of Chicago, legal strategists, poker professional Phil Ivey and corporate planning have in common, buy and read, then re-read Duke's book.

I digested an advanced reader's copy of the book, and it's one of the few things I've annotated as I went, making notes that I've used in staff meetings and 1:1 discussions in the last few weeks. The whole thing reads the way you'd expect and want; it's like talking to Annie Duke in your living room with the right blend of snark, deep insights wrapped in powerful examples, and force. I've read several dozen business and strategy books, and most of them paint generic pictures of leadership or organizational behavior - "Thinking In Bets" actually lays out a map for where your decision making processes (and as a result, leadership and organizational acumen) are deficient, and how to build a self-improvement plan to address those shortcomings. It's a bit of personal coaching in a purely positive direction, which is as rare as it is helpful.

Here are just some of the things I took away:
- Resist the urge to associate bad outcomes (Seahawks losing to the Patriots in the Super Bowl) with bad decisions (Pete Carroll's play call was backing by solid data). My concern is that as we make continued investments in data science and analytics, we will tend to use that data for "resulting" rather than supporting the quality of decisions, and we'll end up with many fewer aggressive or game-changing decisions.
- We can improve the way in which we collect and vet data, and that process may challenge some of our assumptions (one of my immediate reactions was that adopting this line of thinking actually addresses the closely held belief firewall that Matt Inman addresses in his "belief" comic
- Finding a peer group that can help you build a non-confrontational, non-threatening decision review team will improve your executive function and "network leadership" (which explains why there are CxO councils, nerd exchanges, and even why hackathons are popular -- they are immediate and safe spaces in which to share decisions ranging from corporate strategy to Javascript toolkit choice)
- Some decision paths have hysteresis - even if you end up at the same outcome, the path you take to get there may be different and therefore your valuation of the outcome is different. The example Duke dissects is winning $1,000 and then losing $900 of it back, versus losing $1,000 and winning $900 back -- you're likely to be happier you "only lost" $100 versus the outcome where you "only won" $100.
- We have to imagine the future impacts of our decisions, which involves scenario planning, careful consideration of risks and future inputs (information) we may or may not see, and some of that future-proofing involves changing our reward valuation such that we are able to break consistently bad or ill-informed decision making processes.

Sound like a lot? It is. It's a dense book. I read it in parallel with a some "lighter" science fiction because I found I had to turn over some of the ideas in my mind and think about both how I've personally exhibited some of the impairing behaviors, and how I could better use these strategies in my professional and personal domains.

About a quarter of the way into this latest missive from Annie Duke I found myself wondering if she's writing for the business community but in a way that regular folks, you know ones like you and me who make decisions all the time, would get something out of or written for us but in a way that those in the corporate world would be well-advised to read. At about the one-third mark I realized (duh) that it's both and it's written with such charm and insightfulness (and humor) that it succeeds splendidly on both agendas.
Duke is a rare trifecta: she has a solid academic background in cognitive psychology, she was a world-class professional poker player, and is currently a corporate and business consultant. All three of these "Dukes" are poured into the book in compelling and unique ways. I'm a cognitive psychologist and have played a lot of poker (not in her league I can assure you) and so I'm intrigued by the way she lays out the lessons we need to learn.
First: in science, poker, and business you rarely, if ever, have all the information. In poker you don't know your opponents cards and you don't know what they're thinking -- including what they're thinking about what they think you're thinking. In scientific research you only know what's been discovered so far. You're ignorant about the unknown and are trying to extrapolate from current knowledge. In business and finance you unsure of the future, only know some things about markets, and work with incomplete models. In these partial information settings decision-making becomes difficult, tricky, and often contaminated by bias.
Second: virtually all the interesting things we do in life are bets. Every even mildly complex task we confront or decision we make is, in effect, a bet. And bets have consequences. We take an umbrella because we're betting it will rain. We hire a new manager and are betting on her skills. We chose college A over B and bet that we'll get better education. And in these and the myriad other bets we make every day, we don't have all the facts and, because of the ways in which our minds tend to work, we often run afoul of biases and misunderstandings that lead us to make poor decisions.
And Duke lays out for us the roots of these biases and trenchant advice on how to circumvent them -- with sometimes jarring effectiveness designed to force the reader to suddenly confront what they think they know but don't. Some examples: a) Try asking someone "want to bet?" when they claim something to be true. It puts them in a totally different place than when they were simply stating what they believed to be true. b) Look at decisions on the basis of how they were made rather than how they turned out -- you can win with a poor decision and lose with a good one but in the long run, it's the decision-making process that counts. c) Emphasize the need to stop thinking in certainties and recognize probabilities. d) Stop imagining situations as either-or and acknowledge that most things lie along continuums. e) Recognize when you're in an "echo-chamber" where only viewpoints you're currently comfortable with are expressed. Quoting Mill, she reminds us that truth only emerges when all sides are heard.
Along the way we're treated to stories of gamblers, pain and triumph in poker games, the noodling of philosophers, judicial habits of Supreme Court Justices, corporate CEO's, betting markets, biases of social psychologists, a short but penetrating exegesis on skepticism, some advice on child rearing, and a discourse on mental time travel -- and no, I'm not going to tell you what that is. Read the damn book.
Duke makes her living now as a writer and presenter of her approach to decision-making, a corporate speaker, and a business consultant. I can just imagine jaws dropping when she tells a group of high powered corporate execs that one sure way to succeed is to make sure they have naysayers in corporate headquarters, ensure that they ask for dissenting views and voices before making major (or minor) decisions.
Oh, and in passing, she's an engaging writer with a sense of humor who can turn a simple setting into a hilarious little psychodrama, especially when revealing some of the weird and wonderful things that happened to her during her days as a professional poker player.

A lively read that presents a useful and novel framework for analyzing decisions when you are faced with less than perfect information: that is, the situation you likely find yourself in on a daily basis. Annie Duke writes clearly, with verve and wit and uses examples not just from the poker table but from her experience as a decision strategist and from examples drawn from headlines and stories we all know: was it a bad decision--or just bad luck--that Seattle threw the ball (for an interception) when down by four with 26 seconds left on the clock in Super Bowl XLIX? Was Vizzini really using his “dizzying intellect” to consider all the possibilities in his duel of wits in "The Princess Bride"? Did Steve Bartman really cause the Cubs to lose the 2003 NL division series in his attempt to catch that foul ball? The book focuses on our human foibles that cause us to make bad decisions, the inherent difficulty in separating good (bad) results from good (bad) decision making (and sets forth how you can), and how to make more effective and better decisions. Yes, it stands on the shoulders of giants, drawing from many writers in psychology and science (including Daniel Kahneman, Richard Feynman, Nassim Taleb, B.F. Skinner, among a host of others), but I enjoyed the way the book weaves its tapestry of how to think probabilistically. I see how the principles that are presented in the book can be applied in much of my daily life, from those facing me as a father of two teenagers to better considering possible outcomes when making investment decisions. The book is worth more than its price.