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ARTICLE: How The Duchess Of Poker Became A Management Guru

Annie Duke has a remarkably diverse career. Her original ambition was to be an academic, and she was well on her way down that path to earning a PhD in cognitive psychology at the University of Pennsylvania. Some might say that cognitive psychology is the ideal discipline in which to be steeped to go into poker, but it represented a significant left turn, to be sure.

Duke originally turned to poker for money and as a way to pass time as she awaited faculty appointments. She discovered that she not only enjoyed it, she had a knack for it. She would go on to win more than $4 million playing poker, including winning 2004 World Series of Poker Tournament of Champions and the National Heads-Up Poker Championship in 2010.

She saw analogies in her approach to poker and how business leaders ought to think about the decisions they make. Each are bets of sorts. Executives make a great number of decisions each day that they cannot guarantee a positive outcome to. Those who are most successful develop a better way of evaluating the bets and weighing their risk tolerance accordingly. Duke has synthesized her approach in a book called Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. She describes her process in this interview.

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Peter High: How did a PhD candidate in psychology at the University of Pennsylvania end up as a poker champion?

Annie Duke: At the end of graduate school, a stomach illness put me in the hospital for two weeks. Along with recuperation time, I missed that season’s job talks for faculty positions. While waiting for the next interviewing season, I needed money. My brother, who was already a professional poker player, suggested that I play poker in the meantime, to support myself until I went back to become a professor. “The meantime” turned into 18 years.

Thinking in Bets

Thinking in Bets CREDIT: PORTFOLIO


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High: How did your studies help prepare you for poker?

Duke: My field was cognitive psychology, which includes how humans process information, how they learn, and build models of the world, and where they go wrong and right. In poker, all that applies. You are processing the feedback you are getting and trying to learn from it to build more accurate models of your opponents. In addition, science trains you in probabilistic thinking.

High: In your book, Thinking in Bets, you write about thinking of decisions as bets is a helpful construct to make better decisions. Please explain.

Duke: The short answer is that decisions are bets. When you decide, you are choosing what option to invest your limited resources (time, money, opportunity, and goodwill, among other things). The decision you make doesn’t determine which outcome you will get. Rather, it defines the set of possible outcomes and each of those possible outcomes has a probability of occurring and a payoff associated with it. Whether you call it betting or decision-making, it’s the same thing. You’re choosing to invest your resources in one option you prefer over others, looking for your best return on investment.

High: In poker, it is a given that you will lose your share of bets, not unlike the mentality of a serial entrepreneur or a venture capitalist. How do you think the average person can apply the lessons of this mentality?

Duke: Poker players and entrepreneurs both embrace the probabilistic nature of decisions. When you make a decision, you’ve defined the set of possible outcomes, but you can’t guarantee that you’ll get a particular outcome. That means that you can make a good decision that results in a bad outcome (or a bad decision that results in a good outcome) because of the intervention of luck.

When you embrace that, you’re less likely to have a negative emotional reaction or engage in self-recrimination when things turn out poorly. Poker players and entrepreneurs recognize they’re playing a long-term game, trying to make best decisions to steer themselves toward the best possible results in the long run. This makes them resilient in the face of short term fluctuations. That’s a good lesson for people to internalize, especially for getting perspective when things don’t work out.

High: You write that biases get in the way of making clear decisions. How do you suggest that we identify biases that are adversely impacting our decision making process?

Duke: There are a lot of cognitive biases that get in the way of good decision making. For example, resulting –  thinking that your outcome, good or bad, corresponds to whether you made a good or bad decision; hindsight bias – the tendency, after an outcome is known, to see it as having been inevitable; and confirmation bias and disconfirmation bias – when you pay more attention to information that confirms your beliefs and you work to discredit information that disconfirms you.

One thing these biases – and so many others – have in common is that they are much easier to spot in other people than in ourselves. That means the best way to minimize the impact of such biases is to find people to help us spot bias in ourselves (and to reciprocate, help them spot their bias). That requires that we be open-minded to what we see when those people hold that mirror up to us.

High: What frameworks or other mechanisms do you suggest that people leverage in order to make better decisions?

Duke: Obviously, one way to address it is to create a decision group with other people. In addition, I’ll focus on two other strategies.

First, embrace the idea of thinking probabilistically. When you’re considering a decision, think through the set of possibilities for your choices and take a stab at the probability of those outcomes and their returns. If you want to learn more about applying that framework, I highly recommend Superforecasting, by Phil Tetlock and Dan Gardner.

Second, become a better feedback-elicitor. Just as our beliefs distort the way we process information, if we tell other people our beliefs while we are asking them for feedback we will infect the process. Just as knowing how things turned out biases the way we think about past decisions, if you tell people the outcome when we are asking for feedback, we will infect the process. In general, when we’re seeking help in mitigating our biases, we need to be careful to quarantine people from our own beliefs and, when possible, from knowing how things turned out. For instance, if we’re asking for feedback, don’t tell the people on your team what your preferred option is.

High: You have founded a non-profit called How I Decide to develop curricula and tools to improve decision making and critical thinking skills for under-served middles schoolers. Why did you focus on middle schoolers, and what are some examples from the curricula and tools you have developed?

Duke: We offer a variety of programs, ranging from teaching decision fitness (keeping emotions calmed down) through the Mindful Choices program, to HabitWise, teaching what a habit is and how they’re formed, to a fantasy football program, GM Genius, which includes teaching about probabilistic thinking and cognitive bias.

A lot of life-changing decisions that can have a negative impact occur early in, and throughout, high school, like the choice to drop out of school. We’re trying to help kids get a better understanding of decision-making before then.

That said, the organization is going through a strategy change which includes changing our name, to the “Alliance for Decision Education.” Our programs have been effective and we’re going to continue offering them, but our goals have always been to increase scale. Our programs reach thousands of kids. We want to reach millions. We feel we can do that only by building a movement around making decision-education part of every child’s education, in the same way the movement around social and emotional learning led to SEL becoming a part of nearly every child’s education.

High: You note that as a professional poker player, you are cognizant that luck plays an important role in one’s success. How much of your own success as a poker player, as an author, as a professional speaker, and as an advisor has been impacted by luck as opposed to your own raw talent?

Duke: How much time do you have? I’ve always embraced the idea that how our lives turn out is the result of the combination of two influences: luck (the things outside our control) and the quality of our decisions. My life has been greatly affected by things outside my control. When I was born, where I was born, the family I was born into – those things just to start. For example, as a woman playing poker and in business, I’m sensitive to the fact that had I been born 100 years earlier, or even 20, the opportunities available to me would have been very different.

Luck may look “good” or “bad,” but it’s just the constant influence of things outside our control. For instance, if I hadn’t gotten sick in graduate school – a development I considered “bad luck” when it happened – everything that happened in my career after that (poker, speaking, consulting, writing) would have been different. I’ve tried to take advantage of whatever luck put in my path, but obviously, I’ve benefited from a lot of things outside my control.

Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Technovation podcast series. He speaks at conferences around the world. Follow him on Twitter @PeterAHigh.