What Poker Taught Me About Business
Poker is a popular game played by millions of people around the world. Its universal appeal stems from the fact that it is easy to learn, extremely social, provides the opportunity for profit and takes a lifetime of commitment to master. The parallels between success in poker and in business are numerous, and they are worth examining during these trying economic times. Winning at poker and at business both rely on identifying where you have a positive edge, measuring your odds, trusting your instincts, escaping the “sunk cost trap” and committing to constant learning and improvement.
Identify the Positive Edge
Have you ever met a brilliant entrepreneur who fails to succeed no matter how many times he tries? Or the opposite— a seemingly inept entrepreneur who succeeds despite himself? Success in poker and business both depend on identifying a situation in which you have a positive edge over your competitors. In poker, this is referred to as “game selection.” It is the art and science of finding a game in which you have a great enough edge over your opponents to maximize your odds of beating the game. In business, it’s your competitive advantage that gives you the edge over your competitors and maximizes your chances of success. Both the poker player and the entrepreneur must recognize that the competitive balance changes over time, and what was once a positive edge could now be a negative expected value situation.
Manage What You Measure
A timeless business adage states that you cannot manage what you don’t measure. In both poker and business, calculating the odds and expectations are critically important. However, the best poker players in the world are not always mathematical geniuses; they rely on the lessons learned from the millions of hands they’ve played in their lives. They combine their experiences, the odds and the non-verbal cues they observe into a situational analysis, resulting in an instinctual ability to make decisions. Similarly, successful entrepreneurs often rely on their gut instinct and their market knowledge to make major business decisions. Trusting my instincts can be a scary proposition, especially when the stakes are high; however, by doing so and learning from my mistakes, I will position myself to leverage my industry expertise into masterful decisions.
Escape the Cost Traps
The concept of sunk costs in poker is critical to any successful poker player. Every dollar that a player puts into the pot is no longer theirs, and all future decisions must be made without thought to the investment made in prior hands. The dynamics of the poker hand can change on a dime, and a player can go from being a 90 percent favorite to a 10 percent favorite with the turn of a single card. The best players recognize this change and can fold hands without regard to the money they’ve already invested in the pot. In these challenging economic times, I’ve found it’s of the upmost importance for me to evaluate all aspects of my business, and be willing to fold underperforming divisions, regardless of the time, effort and investment I’ve devoted to them.
Never Stop Learning
Finally, both the successful poker player and the successful entrepreneur understand that they can never stop learning and improving, regardless of their level of success or achievement. In poker, players read books, discuss hands in online discussion groups and attend poker seminars to improve their game. Business leaders must make the same commitment to learning by reading, participating in EO learning events, attending industry conferences and sharpening their skills to stay competitive in their industries. I make it a point to never stop learning, and in turn, I find new ways in which to excel in the competitive business landscape.
Poker and business offer unparalleled profit opportunities for those who are positioned to capitalize on them. By applying the teachings of the poker table to the boardroom table, entrepreneurs can navigate these challenging economic times and position their businesses for success for years to come.