Thinking In Bets: Lessons in Leadership

Last week, I was chatting with a friend at my gym about reflections from 2022. About the oscillation of the market, the introduction of major uncertainty, and decisions we have made that we may have called differently these past few years. I found myself telling stories about those experiences in mostly binary terms: “rights” and “wrongs”.?

He recommended a book called, "Thinking in Bets - Making Better Decisions When You Don't Have All the Facts" by Annie Duke, that can apply to leadership. At first glance,? I thought he was kidding. It was seemingly a book about poker.? However, I trusted his suggestion. I especially needed a new read after an emotionally heavy Colleen Hoover novel.? Side note: I use the word 'read' lightly since I primarily Audible ;).

I'm glad I did.

Chapter one begins with an analogy of the concept throughout the book. One that literally hits close to home.

One of the most controversial decisions in Super Bowl history took place in the closing seconds of Super Bowl XLIX in 2015. The Seattle Seahawks, with twenty-six seconds remaining and trailing by four points, had the ball on second down at the New England Patriots' one-yard line. Everybody expected Seahawks coach Pete Carroll to call for a handoff to running back Marshawn Lynch. Why wouldn't you expect that call? It was a short-yardage situation and Lynch was one of the best running backs in the NFL.

Instead, Carroll called for quarterback Russell Wilson to pass. New England intercepted the ball, winning the Super Bowl moments later. The headlines the next day were brutal:

Washington Post: "'Worst Play-Call in Super Bowl History' Will Forever Alter Perception of Seahawks, Patriots"

Seattle Times: "Seahawks Lost Because of the Worst Call in Super Bowl History"

The New Yorker: "A Coach's Terrible Super Bowl Mistake"

Although the matter was considered by nearly every pundit as beyond debate, a few outlying voices argued that the play choice was sound, if not brilliant. Benjamin Morris's analysis on FiveThirtyEight.com and Brian Burke's on Slate.com convincingly argued that the decision to throw the ball was totally defensible, invoking clock-management and end-of-game considerations. They also pointed out that an interception was an extremely unlikely outcome. (Out of sixty-six passes attempted from an opponent's one-yard line during the season, zero had been intercepted. In the previous fifteen seasons, the interception rate in that situation was about 2%.)

Those dissenting voices didn't make a dent in the avalanche of criticism directed at Pete Carroll. Whether or not you buy into the contrarian analysis, most people didn't want to give Carroll the credit for having thought it through, or having any reason at all for his call. That raises the question: Why did so many people so strongly believe that Pete Carroll got it so wrong?

We can sum it up in four words: the play didn't work.

Take a moment to imagine that Wilson completed the pass for a game-winning touchdown. Wouldn't the headlines change to "Brilliant Call" or "Seahawks Win Super Bowl on Surprise Play" or "Carroll Outsmarts Belichick"? Or imagine the pass had been incomplete and the Seahawks scored (or didn't) on a third- or fourth-down running play. The headlines would be about those other plays. What Pete Carroll called on second down would have been ignored.

Carroll got unlucky. He had control over the quality of the play-call decision, but not over how it turned out. It was exactly because he didn't get a favorable result that he took the heat. He called a play that had a high percentage of ending in a game-winning touchdown or an incomplete pass (which would have allowed two more plays for the Seahawks to hand off the ball to Marshawn Lynch). He made a good-quality decision that got a bad result.

Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: "resulting."?

Most of us evaluate the quality of our decisions based on the outcomes we achieve. But we can make a bad decision that turns out favorably and a good decision that turns out poorly. Equating outcomes solely with the quality of our decisions is one way in which we fail to improve our thinking and understanding of the world. This challenges us to think beyond the boundaries of “right” and “wrong”.

“If we aren’t wrong just because things didn’t work out, then we aren’t right just because things worked out well.”

Being wrong is not always a bad thing. If we reframe the way we think about decisions we've made, it’s an opportunity to learn and grow. We can consider the information we had at the time, the external factors, the dependencies, the information withheld from us, etc.

It requires humility, an open mind, and a willingness to study our actions. As a leader, it also means we must ask more questions and unpack situations more diligently. As my Peloton instructor often says, "your ego is not your amigo".

Once we are comfortable not being “right” or “wrong" and realize we live in shades of gray, we start to learn more from our decisions and the outcomes we experience. We can assess patterns and probabilities to apply to decisions in the future. This also has added emotional benefits of passing premature judgements, while making the highs less high and the lows less low.

Redefining wrong helps us let go of the anguish of what happens when we have a bad result. The same goes for shedding the ego of being right, allowing us to elevate our understanding.

Everything in life is a bet of some kind. In poker, decisions made in a high stakes game could equate to buying a new home. In life, you can make decisions about where to send your child to school, or otherwise and bet that it will lead to the outcomes you want for your child in life. If you have two job offers, you make a decision to take one based on the information available to you that matches your belief system. We can also alter our belief systems over time based on the evaluation of our bets.

The best players find ways to harmonize reflexes, delineate luck from skill, focus on signals vs noise, and of course create boundaries to "resulting". They solve the problem on how to execute. This ultimately causes an ability to learn from results in a rational way. Some of the best poker players that have been recognized in academics share the ability to execute in the face of limitations.

So here's to 2023; where we might apply learnings and practice thoughtful execution in the face of limitation.