As it turns out, betting on decisions can improve the quality of the choices a leader makes.
Most major decisions are fraught with uncertainty, hidden information, risks, and unintended consequences. Luck plays a bigger part in most decisions than leaders are generally comfortable to admit. But coming to grips with luck and uncertainty is exactly how the best leaders become better decision-makers.
Decision-making author and professional poker player Annie Duke suggests most decisions are bets on the future and leaders should begin thinking about them in that way. The decisions leaders make aren’t right or wrong, Duke insists, as much as they represent the shades of gray of the beliefs that underlie them. Without a thorough examination of those beliefs, leaders succumb to making assumptions, many of which are faulty.
Whenever a leader is challenged to bet on a decision by stating the probability of a good outcome, it’s a trigger to explore their level of conviction and to take a full inventory of the evidence that led them there. Why is that the probability? What makes us think so? By thinking in bets, leaders are forced to validate their beliefs and come face-to-face with their biases.
Framing a decision as a bet encourages a more honest assessment of alternatives, tradeoffs, and the probabilities of different outcomes. By stating how confident they are about a given fact, leaders invite others to challenge them and add to their thinking rather than simply confirm their assumptions.
For instance, saying, “I’m 80 percent sure our primary competitor will not match our new product price,” encourages others to explore what makes the leader think so. On what basis do they reach such a conclusion? What facts would give them even more or less confidence?
The best decision-makers identify their key beliefs and give them a probability of certainty. They then explore the underlying reasons and assumptions they depend on to make such a guess. That is what it means to think in bets. Are you 50 percent likely to begin assigning probabilities to your critical beliefs when making a major decision? How come? Now, you’re thinking in bets.
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