Thinking in Bets, in bytes

The story

In Super Bowl XLIX, Pete Carroll called a pass near the goal line. It was intercepted, and he was savaged. Duke argues the decision was reasonable; the outcome was unlucky.

Spot it

Judging a call only by how it turned out.

The idea

Chess has little hidden information or luck; poker has both. Real decisions are more like poker: we act with incomplete information, and luck affects outcomes.

Example

A sound investment can lose money because of an unexpected market event.

The idea

Resulting is judging a decision by its outcome. Duke cites a much-criticised Super Bowl call: a pass that was intercepted, though the decision had a reasonable rationale.

Example

Praising a reckless gamble that happened to work encourages more reckless gambles.

The idea

A good decision can lead to a bad outcome, and a bad decision can lead to a good one. Learning means separating the two.

Example

Driving home drunk without an accident doesn't make it a good decision.

The idea

Admitting uncertainty is a strength. Expressing confidence levels makes you more accurate and more open to learning.

Example

“I'm about 70% sure this design will work” invites useful input.

The idea

Every choice is a bet on a future outcome, with resources like time and money at stake. Seeing it this way clarifies risks.

Example

Accepting a job offer is a bet that it's better than the alternatives.

The idea

We tend to believe things we hear without checking them, then defend those beliefs.

Example

A rumour about a company's finances spreads and becomes accepted as fact.

The idea

Being smart doesn't protect you from motivated reasoning. Duke cites research suggesting smarter people can be better at justifying what they already believe.

The idea

Asking “Would you bet on that?” makes people examine their confidence and evidence.

Example

A colleague sure of a deadline becomes less certain when asked if they'd bet on it.

The idea

When things go well, we credit skill; when they go badly, we blame luck. This self-serving bias blocks learning.

Example

After a successful pitch, we rarely ask how much luck played a part.

The idea

We credit our wins to skill and blame our losses on luck, and do the opposite for other people.

The idea

We judge others' successes as luck and their failures as poor skill, the reverse of how we judge ourselves.

Example

A competitor's win gets dismissed as luck, so we miss lessons from it.

The idea

Duke recommends a habit of asking what really caused each outcome, rather than reaching for a comfortable explanation.

Example

After each project, a team reviews what was luck and what was skill.

The idea

A group committed to accuracy, open-mindedness and accountability can help you see your blind spots.

Example

A mentor group that challenges your thinking catches errors you'd miss alone.

The idea

Duke adapts sociologist Robert Merton's norms for science: communism (share data), universalism (judge ideas, not people), disinterestedness (watch for conflicts of interest) and organised scepticism.

Example

A team that shares all relevant data and debates ideas, not personalities, decides better.

The idea

We tend to accept ideas from people we like and reject those from people we don't. Universalism means judging ideas on their merits.

Example

A good idea from a junior colleague gets ignored because of who suggested it.

The idea

Imagine your future self looking back on a decision. Duke cites Suzy Welch's 10-10-10 approach: how will I feel in ten minutes, ten months and ten years?

Example

An angry reply feels good in ten minutes, and terrible in ten months.

The idea

Poker players call it tilt: making emotional, reckless decisions after a bad outcome.

Spot it

After a painful loss, you want to win it back immediately.

The idea

Like Ulysses tied to the mast to resist the Sirens, precommit to decisions before temptation strikes.

Example

Setting automatic savings prevents impulse spending later.

The idea

Name the phrases that signal bad thinking, like “I knew it”, “I'm sure” or “that's just bad luck”, and agree to call them out.

The idea

Imagine you've succeeded, then work backwards to figure out how you got there.

Example

Picturing a successful go-live helps identify the steps needed to reach it.

The idea

Imagine you've failed, and list why. This surfaces risks optimism hides.

Example

Before a launch, a team lists reasons it might fail, and prepares for each.

The idea

After a well-made decision, accept that luck will play a part. Don't let one bad outcome make you abandon a good strategy.

Example

A sound investment strategy shouldn't be dropped after one bad year.