Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts, by Annie Duke

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DIGEST THIS! THE ESSENTIAL IDEA:

There’s no doubt that information helps us to make better decisions. However, life like poker, involves engaging in a world of uncertainty and unpredictability. How then do the best poker players succeed to achieve great heights? The answer : they become the ultimate truthseekers. They adopt beneficial practices that aid them in navigating the darkness of a covert world, like a blindfolded survival expert without a map, relying on their experience and observations of the terrain to make their way out of the jungle to the shore. With a hunger for accuracy, they capitalise on the limited information they possess – avoiding the traps of beliefs and emotions, dispelling fact from fiction, scoping possibilities and probabilities, and embracing the role of Lady Luck – to ultimately find their way out of the poker jungle to the success of a winning hand.

TOP TAKEAWAYS

  • Two factors determine our life outcome – the quality of our decisions and luck
  • A decision is merely a bet on a possible future
  • Place a wager – put your money where your mouth is
  • Improving the quality of your decision-making is about increasing your chances of a good outcome, not guaranteeing it
  • Beware the danger of resulting – good decisions can lead to bad results
  • Focus on what you can control when decision-making
  • Embrace uncertainty – establish your limitations
  • Leverage the experience and knowledge of others to make better decisions
  • Conduct a premortemembrace failure before it happens
  • Beware of the tilt – limit your reactive decision-making
  • Hunger for accuracy and objectivity – learn the strategies of poker to become a truthseeker

WHY POKER CAN HELP YOU BECOME A BETTER DECISION MAKER?

  • Poker players make a multitude of decisions under intense time and financial pressure.
  • Playing poker involves playing in a world of limited information. Like life, it’s a world “that doesn’t easily reveal the objective truth”. The best players succeed by embracing this uncertainty, and employ ways of thinking, supporting structures and strategies that help them become better truthseekers and get closer to the objective truth, to win.
  • Poker therefore makes a great subject of study when learning about the art of decision making.
  • Annie Duke, the author of this book, is one such professional player who was particularly successful, and won over $4 million during the course of her career.

YOUR BEST DECISION

  • What’s the best decision you made last year? Why?
  • And what was the worst?
  • Chances are you will choose the best or worst decision you’ve made based on the outcome of that decision.
  • We often believe there is a corresponding link between the quality of our decision-making process and the outcome. However, the outcome could simply be due to luck.
  • Luck is defined as “success or failure apparently brought by chance rather than through one’s own actions”. It is about good or bad fortune, about results that occur outside of our influence, that we cannot control or predict.
  • Therefore, the quality of the outcome is not always determined by the quality of the decision process taken before the occurrence of that outcome.
  • Annie Duke argues that “there are exactly two things that determine how our lives turn out: the quality of our decisions and luck”.

DANGERS OF RESULTING – DRIVING WHILST DRUNK

  • Resulting” in poker is the tendency to “equate the quality of a decision with the quality of its outcome”.
  • A focus on resulting in poker can tempt a player to change their game strategy simply because they had a short run of bad hands.
  • “Drawing an overly tight relationship between results and decision quality affects our decisions every day, potentially with far-reaching, catastrophic consequences.”
  • For example, reaching the conclusion that your safe arrival home (result) after choosing to drive whilst drunk (decision) is evidence of a great decision making process would be nonsensical. And then changing your behaviour as a result of this outcome could be further catastrophic.
  • Hindsight can also spur us into this thinking trap. “Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable.” That is, that we should have been able to see what would result as a consequence of our decision.
  • When we work backwards from any results to figure out why an outcome occurred, we can be subject to cognitive bias which can make us assume causation where there is none, and lead us to cherry pick the data that fits this narrative.
  • American Football Example – In 2015, the New England Patriots defeated the defending Super Bowl champions – the Seattle Seahawks. The Seahawks, having advanced to their opponent’s one-yard line, were in a potential position to score in the final 26 seconds of the game. The call was made to pass the ball, which was then intercepted by the Patriots and secured their win. Pete Carroll, the Seahawks coach, was heavily criticised for the call to throw the ball as opposed to a handoff to one of the best running backs in the league, being such a short distance from the goal line. However, this criticism was a classic case of resulting – in the previous 15 seasons, the chance of an interception of a pass from an opponent’s one-yard line was only about 2%. That is, it only occurred twice out of every 100 plays – it was highly unlikely to happen. The quality of the decision making was good – Seattle chose a strategy with a high likelihood of a successful outcome but were unlucky on this occasion. They made “a good-quality decision that got a bad result”.

CHESS V POKER – POKER IS THE GAME OF LIFE

  • Chess is a game of computation – there are no surprise elements – there are a limited number of known possible moves and corresponding reactions. If you lose its because your opponent employed better moves. The only element out of your control are the choices made by your opponent, but the outcomes of their moves and options available to you as a result of those moves can be determined. You can go back and work out where you made mistakes or could have made better decisions. “In chess, outcomes correlate more tightly with decision quality”.
  • If in the Super Bowl example above, the outcome of the decision to pass from the one-yard line was certain and pre-determined as in chess, the Seahawks would win every time Pete Carroll made that call.
  • Poker, on the other hand, has more uncertainty built into the remit of the game. “Life is more like poker” than chess.
  •  “You could make the best possible decision at every point and still lose the hand” because there are more factors outside of your control. The outcome is in part down to luck. There is a lack of information – a player cannot determine the new cards to be dealt or the cards of their opponents.  You can’t go back and figure out where you could have made a better move because the cards of your other opponents are not revealed. When you win you cannot tell whether you played well or were lucky. “The uncertainty involved – the lack of information – makes it difficult to make a direct link between your decisions and the results that occur. In such situations where other people and other factors can have an impact on or influence the outcome, the result is not an indication of the quality of your decisions up until that point.
  • Our analogy of poker to life demonstrates that “the quality of our lives is the sum of decision quality plus luck”.
  • Improving the quality of our decision-making is about “increasing our chances of good outcomes, not guaranteeing them”.

THINK OF DECISIONS AS BETS

  • As we saw in the Super Bowl example above, just because an event is very unlikely to happen according to probabilities, does not mean it won’t happen. There was only a 2% chance of an interception from a pass play at the one-yard line and it still occurred.
  • In poker, a player holding a hand with a low chance of winning is not eliminated from winning. A lucky card could be drawn that enables them to win, despite the chances of that happening being low. The key is that the likelihood is low BUT NOT ZERO.
  • A 30 % chance of rain tomorrow does not mean it will not rain. It is just more likely than not – based on a range of possible outcomes – that it will not rain. “An event predicted to happen 30% to 40% of the time will happen a lot”.
  • In poker, to place a bet is to make “a decision about an uncertain future”. A bet is defined as “a choice made by thinking about what will probably happen”. We make decisions that are “based on the belief that something will happen or is true”.
  • “In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing … We are betting that the future version of us that results from the decisions we make will be better off.” We are looking to make decisions that will allow for the emergence of the best possible version of ourselves, our highest point of self-actualisation.
  • How can we be sure to choose the option that will bring us the most satisfaction? The truth is that we can’t be sure. There are factors outside of our control that will play a part in this. At the point of making a decision we are only choosing a potential self, not an actual realised self. Therefore, it is a bet, a best guess at the option that will lead to the happiest path for us. Bets involve a risk that things may not turn out as we may expect. “Not placing a bet on something is, itself, a bet”.
  • “A great poker player … [who makes] significantly better strategic decisions, will still be losing over 40% of the time at the end of eight hours of play. That’s a whole lot of wrong.” “The most successful investors in start-up companies have a majority of bad results.”“Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets.” This shows that you don’t have to win all of the time to be successful – you are allowed to fail quite a lot of the time. Being successful is to navigate through the uncertainty of life, learning from wins and losses as you go along, and calibrating your choices accordingly as you gain a more accurate and objective view of life.

PUT YOUR MONEY WHERE YOUR MOUTH IS

  • “Thinking in bets” goes further than just declaring a particular position.
  • Being asked to “put your money where your mouth is and actually placing a wager on your favoured choice, makes you more willing to ascertain the certainty to which you favour that possibility.
  • When our money is at stake – just as in poker – we may be more willing to investigate our beliefs, conduct research and determine fact from fiction before placing a bet.
  • EXAMPLE – You are driving and end up getting into an accident at a junction after losing control of your car on an invisible patch of ice. Your first thought was that you were just plain unlucky – i.e. the accident happened as a result of circumstances outside of your control, influence or actions. But would you be willing to put a bet on that? When asked to put money behind this stance, we may hesitate and instead consider other alternatives more fully first. Could you have paid more attention to the weather forecast and decided not to drive on that day? Or perhaps even whilst driving you could have observed the weather, and anticipated that there would be some ice on the road. Perhaps you were driving too fast for the weather conditions. Or could you have taken a safer route, along a road that had been salted? Perhaps you could have steered differently.
  • When we have to place a bet, “we consider a greater number of alternative causes more seriously than we otherwise would have.” We are more willing to explore alternative hypotheses. We engage in “truthseeking” – and examine whether luck or skill was the main influence on the outcome of events. This is the value of “thinking in bets”.

BELIEFS AND DECISION-MAKING

  • “Our pre-existing beliefs influence the way we experience the world. That those beliefs aren’t formed in a particularly orderly way leads to all sorts of mischief in our decision making.”
  • Our beliefs are often formed not on the basis of facts but on hearsay. Furthermore, they can be become entrenched beliefs that go unchallenged over the years – “we form beliefs without vetting most of them”. This causes an issue for us when making choices as our beliefs inform our decision-making process. Our beliefs provide a filter for the way we look at the world and include biases and assumptions, particularly those we may be blind to, causing us to overlook or dismiss important information, diverse perspectives and recent developments.
  • Thinking in bets – being willing to place money on a particular outcome – gives us greater motivation to do the necessary work to determine fact from fiction, identifying where our beliefs are limited or harmful along the way.
  • For example, a misguided belief based on filtered down hearsay that a particular set of cards (known as suited connectors) were profitable starting cards under almost any circumstance was discovered to lead to net losses for student players on verification. When starting out in poker, Annie Duke adopted a misconception that a restricted list of cards were the only ones that players could win from, limiting her learning and earnings.
  • To think like a successful poker player is to become a truthseeker – with a hunger for accuracy and objectivity in order to win, and keep winning.

HOW UNSURE ARE YOU? EMBRACE UNCERTAINTY

  • Skilled poker players alike good decision makers become comfortable in a world of uncertainty and unpredictability.
  • A game of poker involves playing in a world of limited information. You don’t know the new cards to be dealt, or the hands of your opponents. You cannot determine retrospectively whether you won because you played poorly or were lucky.
  • The difficulty of decision-making when there is a lack of information can be illustrated by the following example. Imagine being a doctor using a weighing scale with only two measurement markers – one at 50 pounds and the other at 500 pounds, and no way to measure in-between. How can the doctor make a good assessment of your weight and health with such poor information?
  • Engaging in a world of incomplete information necessitates a mature outlook. Make peace with not knowing. Get comfortable with being unsure. As in life, we often have to make decisions without having full knowledge of all the factors involved.  Accept this to help you.
  • A decision – a bet on a particular outcome – is simply a best guess. Thus, your focus is not on being sure because you can’t be, but on just how unsure you are. Recognise the limits of your knowledge to help prevent decision-making based on erroneous assumptions and fooled thinking.
  • Talk in terms of probabilities not certainties. For example, if someone argues a particular point of view, ask how certain they are of this perspective and the basis of the information on which they are justifying their position.
  • Accepting the limits of your knowledge can lead you to seek more information or adopt other measures or observations to determine educated guesses. In poker – the most experienced players are better able to guess the chances of winning or losing a hand by being able to narrow down what their opponents’ cards may be based on their behaviour with certain types of hands. An expert trial lawyer will be better at figuring out a strategy that is more likely to be successful, particularly if they have experience with a particular opposition lawyer or judge. Yet still, their choices are still at best a mere guess.

BEFRIEND YOUR EQUIVALENT OF HONEST POKER BUDDIES

  • As outlined above, playing poker requires engaging in a world of incomplete information. Unlike in chess, a player is unable to work backwards from the end result of a particular game to ascertain whether they played well or not.
  • Therefore to improve, it is vital that players learn from the strategies and advice of other more experienced players.
  • Annie Duke reveals that her game would not have improved without the input of her trusted poker buddies, who helped her work on her game strategy and gave her access and insight to their own experience, gaining knowledge she would never have had otherwise.
  • She was able to leverage on the experience of others to improve her game. Learning simply from our own experience puts a major limit on our growth – studying the experience, strategies, systems and outcomes from others helps minimise the repetition of the same errors. We can more clearly and objectively see the actions of others, examine the results generated and ascertain – did they succeed due to skill or luck?
  • Her “buddy system” helped reduce the number of errors she made and improved the quality of her decision thinking – she would consult them on game decisions, and they helped her where she felt she may have made a mistake or was confused as to what to do with a particular hand. They helped her with non-game specific decisions e.g. how much money to set aside for poker games (bankroll management) or whether to move up in stakes to a bigger poker game. They helped her understanding of outcomes when something happened in a game, being able to see things she could not.
  • The input of trusted others can help us make better and more effective decisions, as they can see our biases and blind spots more clearly than we can – they can help us with truth-seeking and get us closer to the elusive land of objectivity. They can help us to see what information we may have missed or minimised, and why others who have another belief may be right.
  • To ensure your biases aren’t merely amplified, ensure you are surrounded by people with a diversity of opinion, thought and perspective; who are committed to accuracy and objectivity more than confirming your stance in order to make you feel better. You want a support system that truly honours your growth through honesty.
  • This is similar to creating your own “dissent channel” – actively look for devil’s advocates when making a decision – ask them to tell you why a particular choice may not be best and the reasons for it. If someone argues for a position, ask them to argue against it to help reveal insights you may be missing. The American Foreign Service Association issues annual awards to members, recognising and encouraging constructive dissent within the Foreign Service. The US Department of State established a formal Dissent Channel to allow employees to raise dissenting views and have them addressed without fear of a negative outcome, and this channel has been given credit for a policy change that helped lead to the end of the genocidal war in Bosnia.
  • “Dissent channels…are a beautiful implementation of Mill’s bedrock principle that we can’t know the truth of a matter without hearing the other side”.
  • Forming a buddy system is also about being accountable for our decisions, thus improving the quality of our choice making process. “Accountability is a willingness or obligation to answer for our actions or beliefs to others.” Knowing that you will have to account to your buddy group when you make a particular decision may help you make a better choice in the first place. “The group gets into our head – in a good way – reshaping our decision habits.

ANALYSING THE QUALITY OF OUR DECISION-MAKING

  • Decisions are bets on the future … they aren’t “right” or “wrong” based on whether they turn out well on any particular iteration. An unwanted result doesn’t make our decision wrong if we thought about the alternatives and probabilities in advance and allocated our resources accordingly.” It’s simply that a bet – a best guess based on a range of outcomes that could occur – is inherently dependent on unknown information and unpredictable factors.
  • ““Wrong” is a conclusion, not a rationale.” It’s not particularly helpful as it doesn’t explain why we ended up with a particular result, it is more of a judgement.
  • Decision making isn’t always about choosing between two discrete choices, or right versus wrong. Knowing that making decisions involves a lot of grey helps us to realise that the outcome of our decision cannot be certain, therefore relieving the pressure to get it right, and instead enabling us to focus on putting in place the conditions we can control to make it more likely that a favourable outcome will occur.
  • “When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error.”
  • For example, we decide to host an outdoor summer charity fundraising event, with friends, family, spectators and passerbys, involving a range of games and sporting activities, and hire a suitable event space. Closer to the date we check the weather forecast –  there is a 70% chance of outcome A occurring (extreme heat) – unusually high, 20% chance of B (warm pleasant weather), 6% of C (rain) and 4% chance of D (thunderstorm). This gives a total of 80% chance of adverse weather conditions. We know we can’t control the weather, and so we focus on what we can control to host a good event, maximise fundraising whilst keeping guests safe and comfortable. We analyse the options available – cancel, postpone, change the format or go ahead as planned. Guests have already booked accommodation nearby to attend and are only able to gather together once a year, so we decide not to cancel nor postpone, but instead to change the format of the event, given the high likelihood of bad weather. We cancel the hire booking (losing the deposit) and decide to host an alternative event inside our home, given the short time frame available to find suitable indoor space. Our home is limited in size and so we decide to restrict the event to friends and family. On the day, the weather is nice – Option B occurs – had we have been able to predict this we could have gone ahead with our original plan and potentially raised more funds (from sales of goods and donations from passers-by). This result does not mean our decision-making was “wrong”. Without knowing the result that occurred it’s unlikely that any observers would conclude that the quality of our decision-making was poor. A suggestion for improvement could be to go ahead with the original plan but with contingency plans for bad weather (e.g. booking an outdoor space with an indoor option) should the budget allow for this. Or to set a minimum donation amount per person, to ensure a target amount is achieved.
  • The example shows that there isn’t always necessarily a fixed “best” outcome – e.g. the best event possible, or the most funds raised possible – firstly these are judgement calls involving a spectrum of grey – what do we even mean by “best” and “most”? We need to define what we mean by success in this case, perhaps defining a “minimum win”. Usain Bolt could win the 100m race, which could be deemed as a minimum win, but breaking the World Record while doing so would be a greater win, and breaking it by more than X seconds an even greater win, and so forth … there is no real limit. There are many factors outside of our control that play a part in the creation of an event and can’t be predetermined e.g. the mood or generosity of guests. All we can do is maximise our efforts and decisions towards creating the conditions –  within our control – that will further the chance of a favoured outcome. We cannot however guarantee it.
  • Redefining wrong allows us to let go of all the anguish that comes from getting a “bad” result. But it also means we must redefine “right””. Just because we get a beneficial result from making a particular choice, doesn’t make us right in our choice because things turned out well. It could simply have been down to the luck of the draw.
  • To learn and improve, we therefore need to analyse the quality of our decision-making process separate to the outcome that occurred.
  • For example, lawyers can evaluate a trial strategy before a verdict comes in. You can ask a trusted group to evaluate your prior decisions without telling them the outcome, just as poker players do when seeking advice about their playing strategies. Going back to the drink driving example above, if you were to tell those with your best interests at heart years later that you drove whilst drunk and without informing them of the outcome, what do you think their advice or judgement of your decision-making would be?
  • Redefining what we mean by wrong decisions by separating the decision-making process from the results that occur, does not excuse us from undertaking due diligence or doing all we can to aid in the generation of favourable results. There is no excuse for a lack of thorough research, consultation and preparation to avoid making assumptions or overlooking factors that could easily have been foreseen had we done the work necessary.

WHEN ANALYSING A PRIOR DECISION DON’T FORGET THE BRANCHES

  • Using the analogy of a tree and chainsaw as a comparison to our lives and the choices we make, can help us see more clearly why solely judging our decision-making by the outcome that occurred is limited.
  • The trunk represents the past path of our lives, composed of the outcomes from choices we have already made, the branches represent future possibilities. The juncture between the branches and the trunk represents the present moment. Once a choice is made, the unrealised options get cut off with a chainsaw, and the chosen branch gets incorporated into the accumulating past of the trunk of our life.
  • When we are looking back at the past (our trunk), possibly at a negative outcome and analysing how and why it occurred, we may fall into the trap of resulting – of concluding that the unwanted result was inevitable due to the (faulty) choice we made. This is because we are only looking at what is visible – that is, our analysis is limited by looking solely at the trunk – the past – and excludes all of the possible futures that were visible previously  – the branches that were cut off.  
  • If we had considered all potential options thoroughly before taking a decision, we can feel certain that we  undertook a good quality considered process of decision-making even if the outcome was a negative one. We can conclude that external factors or luck could have played a significant part in the generation of the unwanted result.

TIME-TRAVEL TECHNIQUES FOR BETTER DECISION MAKING

INVEST IN YOUR FUTURE SELF

  • It can be difficult to analyse our decision-making process looking back, particularly when we are generating unfavourable results. Facing our failures can bring up sensitivities and vulnerabilities within us. Instead, focusing on how we can grow and improve for the future can help us open up to a productive discussion.
  • “Rehashing outcomes can create defensiveness. The future, on the other hand, can always be better if we … focus on things in [our] control.”
  • For example, if your child fails an important exam, rather than asking what happened that led to this result, we can shift focus and instead ask “is there anything you could do to improve your test results in the future?” Focusing on what can be changed in the future feels more positive and expansive as it places emphasis on what can be controlled rather than bringing up a past that reminds you of failure that cannot be changed. This is similar to adopting a growth mindset.
  • Focusing on failures of the past with a lack of self-compassion can lead to self-criticism.  Instead choose to invest in a future self, to learn lessons from the past and make better decisions in the future.
  • You are recruiting a future version of yourself to help you with decision making in the present. In a sense this future self becomes your very own decision-making buddy.
  • Ask yourself, “Who do I want my ideal future self to be?” Then make decisions based on that self, not the present-day person wanting instant gratification. For example, choose to exercise to further the creation of a future healthy self, rather than relaxing now; choose to invest money that could bring you greater returns in the future, rather than spend it on a more expensive car you don’t really need right now.
  • It’s easy for us to succumb to the temptations of “temporal discounting”, that is “using the resources that are available to us now as opposed to saving them for a future version of us”. “The best poker players develop practical ways to incorporate their long- term strategic goals into their in-the-moment decisions.”
  • Don’t sell your future self short – don’t discount your future self to temporarily satisfy your present-day self. When making a decision think about the future consequences of your decision, and whether you are taking away from meaningful gains for your future self in order to give your current self something less meaningful.
  • Similarly, try to benefit from the lesson of regret before making a decision. Ask yourself, “If I choose this  decision will I regret if after?” If so, make another choice.

ESTABLISH A ULYSEES CONTRACT: PRE-COMMIT TO YOUR FUTURE SELF

  • When we know we want to commit to a particular decision, we can take steps to establish conditions and enhance our environment in advance of carrying out a choice, to make it more likely that we will see through our intention. This is effectively establishing a Ulysses Contractacknowledging our weaknesses and limitations of our future self and taking present day measures to minimise them, helping us keep to our promises. You employ strategies in the present to create barriers to prevent breaking those intentions (through impulse, desires, or emotional cravings) in the future.
  • In poker, Annie Duke set a predetermined “loss limit” of $600 at which point she would leave the game, thereby anticipating a future self who might be tempted to play on under the influence of high emotions rather than rationality, and thereby helping her to avoid further losses.
  • In everyday life, Ulysses Contracts could include helping your future healthy self to evolve by developing supporting factors above and beyond a reliance on your future willpower, by ensuring your environment supports this commitment e.g. getting rid of junk food in your home and not buying or allowing them into your home. You could automate your savings or overpay on a mortgage and in doing so pre-commit to a wealthier self in the future. You could go public with a commitment to run a marathon and thereby create a means of holding yourself accountable. You could also set up a positive impact fine, donating to a charity when you do not fulfil a commitment such as exercising every day.

ON TILT? ZOOM OUT

  • Whilst shopping, someone cuts in front of you in the queue, you get annoyed and decide to raise the issue with the person who gets defensive and starts to blame you instead. You get engaged in an argument, reacting to the other person’s provocations, and end up dropping your basket of shopping all over the floor, leaving a trail of cracked eggs and spilled milk. Upset, you rush out of the shop and get caught in a downpour of rain, having also left your umbrella in the shop. Once home you realise you haven’t bought the ingredients needed to make your husband’s birthday cake, and panic at signt of the time – the shops will be closing. You start moaning about how unlucky you are and how unfair life is.
  • By zooming out you can gain perspective by asking “Is this experience going to matter in a year’s time? Is this event really going to affect my future happiness or life state?” Unlikely … in fact, it will probably be a funny story to tell.  
  • This approach of gaining perspective by considering the wider picture and longer-term significance of a triggering event can lessen our reactivity in the moment to relatively inconsequential matters. It can help get us out of the intensity of our emotions in the moment, and avoid overreactions, so we can instead make more rational decisions.
  • In poker, emotional reactivity and its impact on decision making is called tilt. If you are triggered and become emotionally unhinged causing you to make drastic choices, you’re “on tilt”. Recognising the signs we are approaching tilt is key to finding our way out.  If we can see that we are getting emotional and not in a “decision fit” state, we can choose to take an alternative course of action leading to a better outcome –  e.g. choose to walk away, take some deep breaths, sleep on it. It’s always best to avoid decisions while on tilt.
  • When it comes to our happiness, zooming out to take the longer term perspective can help us to avoid magnifying and overreacting to any small dips or changes in our mood. Viewing our happiness as a long term stock investment that appreciates over the longer term, an help avoid monitoring and reacting to the ups and downs, and ebbs and flows that occur moment to moment, day to day. Having an expectation that there will be relative dips and peaks can help us stay the course towards our longer term ambition.
  • The perspective of the wider picture is also important in terms of how we view “failure” or “success”. We can win $100 and be sad and lose $100 and be happy – how? Imagine playing poker – in the first 30 mins you win $1000, in the next hour you lose $900, ending up with a $100 winning balance. However, chances are you would feel far happier if you started with a loss of $1000 in the first 30 mins but then go on to a winning streak in the next hour, ending up being down by $100. We tend to feel greater pain at our losses than happiness for our wins. In the first scenario the $1000 was ours to lose and we did (for the most part); whereas in the second scenario we felt we achieved something by gaining most of it back.
  • Similarly, if you aimed to run 20km but run 15km you would be unhappy. But if you aimed to run 10km and run 12km you would be happy, even though you ran less than in the second scenario. Perhaps your aim was to give up alcohol for a year. You could be unhappy because you did not reach your ultimate goal, or be happy at failing only once over the course of that year, particularly in comparison to the previous year when you drank at least 4 times a week.
  • This illustrates that how we view results depends on our how we got there, not so much about the outcome. Whether we are sad or happy, whether we feel we have lost of gained something – our view of the outcome based on the process to get there – can have an impact on the quality of the subsequent decisions we make, affecting our motivations. Therefore, it’s important to zoom out and look at the averages of our results objectively over a period of time, rather than reacting to our moment-to-moment subjective feelings about a result.

SCENARIO MAP THE FUTURE

  • Poker players engage in a world of uncertainty and need to make some sense of incomplete information in order to play well. Although they cannot see their opponents’ cards, they can try to anticipate the likelihood of what may play out and use this to help build their game strategy. The best poker players, are adept at conducting reconnaissance, just as the military do when scoping a terrain to figure out the best strategy for mission success. They observe the reactions of their opponents’ to calculate the likelihood of the cards in hand, and their possible future moves, thinking many hands ahead.
  • You can employ the same technique to help make decisions and determine the optimal strategy in the uncertain world of life. Map out as many possible scenarios of a future event as you can think of and assign probabilities of each occurring. Accuracy is not important – you can’t be accurate because you don’t know what the future holds. It’s simply a prediction. Then think about what your response would be to each of those scenarios if they were to occur.
  • For example, you want to get a new job, and have identified five roles you are interested in, with only two days to submit the applications. In that time, you assess that you would likely be able to complete only three applications, and your initial thought is to rank the roles in order of salary and apply for them in that order, completing the highest first. However, thinking about the optimal strategy, a better decision would be to assign probabilities to the likelihood of your success in getting through to interview stage, based on the match of your skill-set and experience to the roles. You multiply the probabilities and salaries to give you a rank of importance or most value. E.g. a role with a 30% chance of success x £50k salary would be more valuable to you and rank higher than a role with the same chance of success but a lower salary. A role with 30% chance of success and £50k salary would rank lower in value than one with a 70% chance of success and a £30k salary. On doing this, you see that the three roles you were initially going to apply for have the lowest value rank – based on likelihood of success x salary – and so you change your strategy accordingly.
  • You could also go a step further and add the outcome of not being successful in any your applications  – what would you do then?  Your plan B could be to apply for roles more closely matched to your skill-set or perhaps pursue a course of study to gain the required skills and experience. Even if you are not successful, you can treat your failure as feedbackreality is giving you a message to act upon – and you can decide to act accordingly. For example, you could speak to a recruiter in the field to find out why your applications are unsuccessful – perhaps you have the experience but need help selling yourself more.
  • You could even use this in technique in conversation with others, mapping their possible reactions and exploring how you would respond.
  • Conducting scenario mapping makes us better anticipate, prepare for and respond to range of different outcomes that might result from our decision. Surveying the landscape of the future helps us uncover options we may never have and thought of, and minimise regrets from not pursuing an option because it hadn’t been seen as a possibility. Through this exercise we can uncover the unexpected, and anticipate the curve balls that life likes to throw on our path.

BACKCASTING – LOOK BACK TO THE FUTURE

  • Backcasting is similar in concept to Reverse Engineering outlined in The 1% rule, where you identify a goal and work backwards to figure out the steps needed to achieve it successfully.
  • However, backcasting goes a stage further – to analyse the probabilities of occurrence of the required steps, milestones and events along the way. It focuses on identifying the “low-probability events that must occur to reach the goal” in order to develop strategies to increase the likelihood of these happening, or recognise that the goal is indeed too ambitious.
  • For example, you want to run a marathon in under X hours in two months’ time, and already have some long distance running experience, but haven’t run for some time. Working backwards, you develop a training plan schedule to achieve this. However, you realise that realistically, the likelihood of being able to stick to this exact timescale – with very little slack time to catch up on any missed sessions or for injuries – is presently low. You have recently taken on a new contract which is already making demands of your free time, requiring that you work long evenings regularly. You know you will not be able to continue working, as well as train as per the schedule, but you know you must fulfil the training plan in order to finish the marathon in your target time. So, to increase the likelihood of training successfully, you decide to hire temporary help to relieve time and pressure from work, meaning you can dedicate yourself to the plan. Of course you cannot eliminate the possibility of injuries or other unforeseen circumstances, but you have made it much more likely that you will be successful in meeting the demands of your training plan, and subsequently, achievement of your goal.
  • As mentioned previously, backcasting helps us to improve our decision-making process by “increasing our chances of good outcomes, [but] not guaranteeing them”.

CONDUCT A PREMORTEM – EMBRACE FAILURE BEFORE IT HAPPENS

  • Backcasting and premortems complement each other.
  • Backcasting looks at the positive outcome, premorterms (as opposed to postmortems), look at the worst case scenario before it happens – before the death occurs. Instead of looking at the positive achievement of a goal and working backwards from there, premortems focus on the negative outcome – on failure.
  • The question to look at is “I didn’t achieve my goal, why was this? In the marathon example above, this could be due to a number of reasons – I didn’t eat a nutritious supportive diet, I became injured, the weather was bad so I couldn’t train, I got lazy and lost motivation and skipped training sessions.
  • Incorporating negative visualisation into your planning makes it more likely that you will achieve your goals, far more than just visualising the positive outcome. It helps us consider any downsides of our decisions before we make them. By focusing on any potential obstacles on the pathway to success beforehand, you can adopt strategies to tackle them and minimise their occurrence. For example, you could hire a coach to help keep you motivated and to ensure you keep to your target pace, you could sign up to a gym to allow you to continue training despite bad weather.
  • Of course, some of the issues raised will be revealed in positive visualisation e.g. the need to adopt a schedule made it clear that there was a clash with current work demands, requiring a solution. However focusing on the negative can reveal things we may overlook or assume, like our ability to sustain our motivation without external support. It triggers us into implementing contingency plans. It helps us to see things more objectively, allowing us to address rather than deny negative scenarios, and therefore enhances our ability to be effective in our decision making.
  • The likelihood of all outcomes must add up to 100%. That is the combined probability sum of both positive and negative possibilities should total 100%. “The positive space of backcasting and the negative space of premortem still have to fit in a finite amount of space. When we see how much negative space there really is, we shrink down the positive space to a size that more accurately reflects reality and less reflects our naturally optimistic nature.
  • As above in the discussion of Dissent Channels, organisations that look at possible obstacles to success are much healthier because they include the views of those with a more pessimistic outlook in the planning process. Everyone feels heard, diverse opinions are incorporated, and resentment minimised if things don’t work out as planned.
  • Have positive goals but think about negative futures. Be your own “productive heckler” as well as enthusiastic cheerleader.

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