Management Information

By Douglas Katz

Poker, the little game that took hold in the 1800’s, has grown into a global phenomenon. From card rooms to house games, from the World Series of Poker to the Internet, people are smitten with this game and as with most games, poker parallels life. We can, in turn, learn a lot from poker.

On the surface, poker is a game of card hands, bluffs and strategic betting. Beneath the surface, however, poker is an intricate dance of risk management, resource management, and psychology. It is a great opportunity to improve your ability to navigate the tricky world of leadership.

Know the table and know your hand:

You cannot win, if you do not know the rules. Converting your hand to the best possible payoff within these rules is the only way to win. The hierarchy of hands, wild cards, the number of players, betting order, and card exchanges all affect your play and your decision to hold ‘em or fold ‘em. In one hand, for example, a deuce may be worthless. In another hand, a deuce may be a wild card that can provide the crucial piece in making three of a kind. In short, the rules define how you manage your resources.

As a leader, you need to practice this same insight in your day-to-day operations that you would at the card table. You must define what defines success and how your resources will allow you to reach your objectives. When you lack the sufficient resources to compete effectively, get out. If you decide to compete, you must constantly assess and re-assess of your operating environment and how your resources enable you to accomplish your objectives within the environment.

Odds influence decisions:

In poker, the decisions are seemingly simple – check, bet, call or fold. Behind each one of these decisions, however, an intricate analysis takes place. As a player you must decide whether the risk associated with a decision has a sufficient payout to offset the assumed risk. This is called pot odds and it is a basic tenet of poker strategy. Basically, whenever faced with a decision, you evaluate the hand you hold, the ability to make a future hand and the likelihood that your opponents have a better or will make a better hand. If the odds are favorable or if there is a payout large enough to reward a risky move, you stay in. If not, you get out.

Good leaders must understand and embrace effective risk management to succeed. Rarely, if ever, will a decision be devoid of risk and certain decisions will have significant risk. It is those leaders who can quickly determine the return-on-investment for a decision or commitment of resources, therefore, who succeed. This insight allows them to choose to act or not act with courage of conviction and confidence in their decisions.

Respect Luck:

There is a poker term called the bad beat. In these situations, one player is the odds on favor to win a hand and their opponent draws, against the odds, the card that they need. I can say from experience that this is no fun. I can also say that this is a fact of poker. Many times, no matter how well you are positioned, there are several cards still in the deck that can ruin your day and deplete your chip stack. The best players put the hand and the urge to get emotional behind them and move on with grace, dignity and continued disciplined play. In short, they do not let bad luck effect future play.

You will as a leader have real life bad beats. You will do everything right. You will identify an opportunity, you will formulate a plan, you will request and acquire the right opportunities and you will execute well. In these cases, however, you will fail. It happens to everybody and it will happen to you. When it happens, move on, learn lessons, and continue to execute. Keep up your morale and that of your team by putting the failure behind you.

Play the man:

Poker is a game of cards, but the truly exceptional players engage the opponent. They hone their skills of perception and psychology to identify behavioral trends as a window the their opponents hands. Everybody has tells or small idiosyncrasies that telescope their moves or the cards in their hand. Additionally, betting patterns can tell you a great deal of the personality type of your opponent, the strength of their hand and their potential reaction to your moves. Identifying and using this information allows you to mitigate risk and make more informed decisions.

To lead, you must understand people and react to their needs, wants, fears, desires and behavior. Unfortunately, most of the time, your team members and colleagues will not necessarily openly share these aspects of their psyche. To be honest, they might not even know these things about themselves. You must, therefore, observe the behaviors of those with whom you work, analyze how this should affect your behavior and alter your style to most effectively work with them.

Short-stacked is down, but not out:

In poker, when you are short stacked, you have less chips that your opponents. This is an obvious disadvantage, but a good player knows that things can change quickly with skill and luck. In fact, there is a poker saying that state, “To win, all that you need is a chip and a chair.” Players in this situation, play more conservatively a bit, pick the hands they play more carefully and often engage opponents who have less of a chance to bully them out of the hand. In short, they make every chip count.

Leadership is no different and the truly gifted leader looks at resource issues as constraints and not insurmountable obstacles. They assess how these constraints affect their business and alter their decision making to take the full advantage of their limited resources.

Douglas Katz is a Co-Founder and Vice-President of LEADINGSCHOOL LLC (http://www.leadingschool.com). He is a 1993 graduate of the United States Military Academy and a 2001 graduate of Loyola University Chicago. He has sucessfully served in a wide variety of leadership positions across a diverse range of organizations, industries and environments to include the United States Army, Tellabs, and Citigroup.