How Playing Poker Teaches Business Skills
If you're in charge of a business, things can get tough. There's lots of hard work, long hours and little payoff--what do players do who are in those situations? Play poker.
To successfully run a company, there is never enough time to devote to everything that needs to get done. Poker teaches you how to prioritize the tasks and focus on the things that really matter--since it's all about managing your capital and making smart investment decisions (or deciding when not to leave your chips on the table).
With this insight into what makes poker players successful businessmen, now every time you play Texas Hold'em or Omaha with friends after work you can say "I'm playing for my business. I'm playing with house money--because poker is a metaphor for life."
Because it's not about the cards themselves. It's what you do with them.
-James Doughton, founder of Global Gaming Business
So you're in charge of a business and have to make decisions every day about how to spend your resources--people, time, money, etc. The people and time are relatively easy to measure, but what about the necessary evil: money? Let's say you have five different projects that need funding but only one of them will really make or break the company. How do you decide which one to pursue?
This is where poker becomes a metaphor for life. The best decisions are made when you have the most information, and the best way to get that information is by figuring out what other people are going to value. You might not be able to predict exactly what they're going to value (because it's dependent on their perception of your company!), but at least you have a good idea of why they're valuing something and what other people will value. This is important because the best way to get your money's worth is to focus on what your company is best at and spend money where it will get the highest return.
To do this, you have to play poker. Businesses that don't understand their strengths and weaknesses are more likely to go out of business than those who do. Just like poker, businesses need to know when they should fold 'em--but only if they don't have anything left in their hand (or bank account).
The best way to find out what your company really is and what it should focus on is by playing poker (or business). The reason you play poker is because it forces you to test your assumptions, and the reason you test your assumptions is because business decisions need to be made under uncertainty. The thing that makes poker such a good metaphor for business is that it forces people to delude themselves--and that's exactly what successful businesses have to do every day.
To succeed in business, you have to focus on your company's strengths and weaknesses and play to them as much as possible.
When you're playing poker, there's always a hand where you think the best play is a bluff--though it seems like a bad move, it has the highest chance of success. These type of hands are the ones that businesses sometimes have to play, but they can be very risky if not done right. Just because poker players use bluffs doesn't mean they are risk-takers; it just means that they are playing optimally given their odds (like investing in one project over another). They're bluffing when they have the best odds, and not bluffing when they don't.
Businesses should do the same thing: focus on what they are good at, to avoid costly mistakes and make the most out of their resources.
The most important skill for a successful businessperson is to have an idea of what your company's priorities should be (the rank order of importance), even if it means having to say no to something you really want. It's hard to let go, but sometimes you have to walk away from something in order to focus on what matters most.
This doesn't mean that you have to be a jerk about it. You can still have your heart in the right place, and still make the right choice--all you need to do is figure out how to do so. In poker, you often suspect that a good move isn't going to come off, downplaying the odds and hoping for a miracle. In business, similarly, sometimes you have to say no in order to get out of something without taking too much of a hit.
And when you play poker for real money, this is exactly what happens all day long: bluffing is prevalent in every situation as part of the game. The best decision you can make is the one that has the highest chance of success, and the best way to find out is by testing your assumptions.
When you're playing poker, there's always a hand where you think the best play is a bluff--though it seems like a bad move, it has the highest chance of success. These types of hands are the ones that businesses sometimes have to play, but they can be very risky if not done right. Just because poker players use bluffs doesn't mean they are risk-takers; it just means that they are playing optimally given their odds (like investing in one project over another). They're bluffing when they have the best odds, and not bluffing when they don't.
Businesses should do the same thing: focus on what they are good at, to avoid costly mistakes and make the most out of their resources.
The most important skill for a successful businessperson is to have an idea of what your company's priorities should be (the rank order of importance), even if it means having to say no to something you really want. It's hard to let go, but sometimes you have to walk away from something in order to focus on what matters most.
This doesn't mean that you have to be a jerk about it. You can still have your heart in the right place, and still make the right choice--all you need to do is figure out how to do so. In poker, you often suspect that a good move isn't going to come off, downplaying the odds and hoping for a miracle. In business, similarly, sometimes you have to say no in order to get out of something without taking too much of a hit.
And when you play poker for real money, this is exactly what happens all day long: bluffing is prevalent in every situation as part of the game. The best decision you can make is the one that has the highest chance of success, and the best way to find out is by testing your assumptions.
Conclusion
Poker is a business game.
Owning a business is like playing poker without a referee, where the cards are always changing.
Anyone who doesn't play the game like it's a business is gambling with someone else's money.
The best businesses invest in what they are good at and focus on them--by doing so, they can be successful without taking as many losses.
Businesses should always be testing their assumptions because there's no guarantee that they'll win, but having an idea of what will work and what won't is the only way to succeed in today's competitive world.