Lessons From Poker

The object of poker is to make good decisions. Like business. It's winning over the long term with the best hand all the while losing as little as possible with the worst hands. If you don't see how this screams "business continuity", you've not been following me for very long.

Imagine having a high straight flush. How'd you get the straight flush? You were dealt the cards by a business continuity expert. You'd be pretty safe making bets with the straight flush (the second highest hand) and very likely to win a lot. You can only be beat by a royal flush. There is still a chance to be beat, but you've been set up pretty well.

Having been dealt good cards in one thing, another key aspect of playing good poker (or any gambling, for that matter): probability and chance. You think you play with skill when actually you are playing on chance. And probability has no memory or preference. Look at roulette wheels: the easiest and safest bet is to bet on red or black. Odds are that half of them will be red, half will be black in 10 spins. But it's been black the last seven bets. Probability didn't know it's been seven already or that you were there to bet; it starts at one every single time.

This also lends to the psychology of decision-making and biases. Optimism bias is thinking you are in the percentage of only good things, not bad things happening. You expect good streaks to continue and expect bad ones to end.

If you lose a hand at the start, you get a chance at objectivity. If you win at the start, you will operate under an illusion of control. The illusion of control leads to failure. It makes you believe 99% is a certainty even though it isn't; 100% is a certainty. It causes you to ignore what environment says. That could be missing body language clues of others' bluffing (or not). It could be thinking that since one Cat 4 hurricane hit you, you won't see another for a while (try a 2-week difference between Helene and Milton for Florida residents and businesses).

Doctors have a degree of certainty in order to deliver a diagnosis even though it's a guess. If doctors were asked to bet money on the diagnosis, it would give them pause and perhaps even revise what they said. When the consequences of improper certainty hits your bank account, it leaves you as the only one to blame. You can't put it on anyone else.

Business owners think the bad won't happen to them. They've been on a streak where nothing bad has happened yet so there is no reason to think it will soon. The can gets kicked down the street for six months. And another six months after that. Kind of like the doctor, I'd love to ask these prospective clients how [insert name of their world-famous client] would react to knowing the major service they provide is not resilient: the threat to the bank account on that end would cause them to gamble a little more cautiously and do business continuity now. (I didn't make up that example; I did not ask the question about the famous client but I really, really wanted to.)

Every action done for preparation and mitigation is more expensive after something bad has already happened, both for direct and indirect costs. Remember how it's like poker: winning over the long term with the best hand all the while losing as little as possible with the worst hands. You can only lose as little as possible with affirmative, offensive plays, not ignoring it, hoping for the best, or throwing up a go-fund-me when all else fails.