Thinking in Bets: Embracing Uncertainty and Probabilistic Thinking

I just finished an interesting book titled “Thinking in Bets: Making Smarter Decisions when you Don’t have all the Facts” by Annie Duke, a world champion poker player.

There are lots of parallels to Scientific Thinking and Continuous Improvement in general. Here are a few take aways from the book:

1. Life as Poker, Not Chess: Unlike chess, where outcomes are directly tied to decisions due to complete information, life is more like poker. Outcomes in poker (and life) are influenced by a combination of skill and luck, and often we make decisions with incomplete information.
2. Quality of Decisions vs. Quality of Outcomes: Duke emphasizes that good outcomes can result from bad decisions and vice versa. Therefore, evaluating decisions should not be solely based on their outcomes, since luck plays a role. It’s important to focus on the quality of decisions made with the information available at the time.
3. Embracing Uncertainty: The book encourages embracing uncertainty and thinking in probabilities. Rather than seeing things as certain or impossible, it’s more accurate to assign probabilities to potential outcomes, which can lead to better decision-making. As the Toyota Kata community is fond of saying…”Don’t be so sure!”
4. Resulting and Hindsight Bias: Duke discusses the concept of “resulting,” where people judge a decision based on its outcome rather than its quality. Similarly, hindsight bias leads people to believe they knew the outcome was going to happen. The book suggests avoiding these biases for better decision evaluation.
5. Learning from Experience: Learning from experience is vital, but it requires an accurate analysis of decisions and outcomes. Duke advises creating learning groups or engaging in discussions where people can analyze decisions without judgment.
6. Bet-sizing and Risk Management: In poker, as in life, managing risks is crucial. Duke talks about bet-sizing – how much to risk in a decision – as a crucial skill. This involves considering the odds, potential outcomes, and the stakes involved. I see a lot of parallels to how we CI folks often aim to take small, incremental, steps forward as we learn what does and doesn’t work.

As I worked my way through the book I couldn’t help but see the parallels and similarities to the whole idea of experimenting your way forward. So, if you’re looking for something new to read…I highly recommend this book.

---