5 Decision-Making Frameworks I Learned Playing Poker

5 Decision-Making Frameworks I Learned Playing Poker

The principles I’ve learned playing poker for the past 20 years have taught me a lot about decision making. Over time, I’ve come to realize the same process I use in reasoning through a poker hand can be applied off the felt across a wide range of disciplines, from investing and taking risks to life decisions self-improvement.

My goal is to share these principles with you in hopes they will help you make better decisions on your journey, wherever that may lead.

The following principles are part of our new course, 10 Minute Decision Maker. Click here to learn more.

Framework #1: The Four-Step Process for Decision Making

Poker has taught me a structured approach to decision-making that can be translated into business and life. The essence is to evaluate each decision by using a four-step process which involves:

1. Identifying the problem clearly: What exactly are you trying to solve?

In poker, this means identifying the types of hands your opponent can hold, often referred to as a “hand range”.

In life it’s determining which metric you are trying to optimize for.

2. Discover information:What information do you need to make an informed decision?

In poker, I assess the types of hands I can beat and weight it against the hands that beat me.

In life, I’m evaluating my risk and worst case scenario, then ensuring I’m comfortable with it.

3. Evaluate the options: What are the potential outcomes for each choice?

Here’s where you calculate your pot odds and breakeven point, or the price you need to justify continuing to play the hand.

In the real world, you weigh your risk vs. your reward and determine the probability of each, coming up with an expected value (EV) of your bet.

Recall that life, like poker, is really just a game of making decisions, or bets, with incomplete information.

4. Act on the decision: I always remind myself and clients that information without action is useless. It’s time to choose the path that offers the best balance of risk and reward based on the information at hand.

In poker, you continue with the hand if your chance of winning is greater than your breakeven point.

In life, you move forward if the opportunity is worth pursuing, meaning it has a positive expectation (EV) outcome.

This final step is both an art and science. It’s here where you’ll strike a balance between your logical mind and intuition. Finding harmony between your head and heart requires the finesses of self-awareness, a deeper understanding of the big picture, context and your ultimate goals and needs.

This eternal optimization, and never ending quest for perfection is what makes both the game of poker and life so captivating.

To help you memorize and implement the Four Step Process, I’ve created an acronym. If you noticed, the first letter of each word in the process spells the word “IDEA”.

The Four-Step Process ensures that decisions are not just reactive but rather the result of deliberate analytical thought, as well as in alignment with your spirit.

Watch the video version of this post.

Framework #2: Asymmetry in Decision Making

  • In poker, just as in investing or leading a company, the concept of asymmetry —managing downside while maximizing upside — is crucial.
  • Asymmetry is about making decisions where the potential rewards significantly outweigh the risks. This means not shying away from decisions that might have a high degree of uncertainty if the potential payoff is substantial enough to justify the risk.
  • I learned this principle when I was still in high school after winning my first poker tournament. In just a few hours, I turned $30 into $2,600, a near 100x return. Since then, I’ve become obsessed with finding the hidden asymmetries in life.
  • This principle helps in focusing efforts on opportunities that can lead to significant growth, even if they come with risks.

Framework #3: Evaluate and Refine Your Strategy

Continuous improvement is a key takeaway from the poker table.

In business, as in poker, the adage “what gets measured, gets managed” is profoundly true. Implementing a feedback loop into your decision-making process where outcomes are analyzed, and strategies are refined is critical.

This iterative process often involves the 80/20 rule or “Pareto Principle”, focusing on the 20% of efforts that yield 80% of the results.

“Kaizen,” a Japanese term meaning “continuous improvement,” is a concept that first emerged in the manufacturing industry. It advocates for making small, incremental changes routinely, which cumulatively lead to significant enhancements in quality, efficiency, and overall success.

Regular reviews with your team or people you trust, much like studying past poker games, can highlight what adjustments are needed to improve performance. Using ruthless honesty and being your own harshest critic are integral to achieve the best results.

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Framework #4: Selective Aggression

  • Poker teaches you to be selective; it’s about choosing the right times to be aggressive and when to hold back.
  • In business, this translates to knowing when to push for a market expansion or invest in a new venture and when to conserve resources.
  • In poker the biggest mistake most players make is they play too many hands. Steve Jobs observed the same thing about business when he said, ‘People think focus means saying yes to the thing you’ve got to focus on. But it’s not. It means saying no to the hundred other good ideas that there are. Innovation is saying no to 1,000 things.
  • Most importantly, when you decide to proceed, do so with full commitment—like going all-in at the poker table. It’s precisely this laser focus and decisiveness that allow for profits in both poker and business.

Framework #5: Play The Long Game

  • Playing poker professionally has reinforced the importance of the long game, both in mindset and practice.
  • Business leaders and investors, like poker players, must accept the role of luck and variance but focus on making consistently good decisions. Too many people measure progress on a daily basis, leading to stress and over optimization.
  • You can’t control the cards you’re dealt, only how you choose to play the hand. In poker the only thing that matters is the current hand you’re playing, the present decision at hand. That said, results are measured in the aggregate, when a large enough sample size leads to a statistically significant outcome.
  • Business works the same way. While the best operators act in moments, they think in decades. Warren Buffett, widely renown as the greatest value investor of all time, exemplifies the long game in investing.
  • His approach of buying and holding stocks over decades, rather than capitalizing on short-term market fluctuations, has led to extraordinary, compounded returns. Buffett’s philosophy, “Our favorite holding period is forever,” underscores the power of patience and long-term thinking in achieving substantial success.

Decision Making in Action

By applying these frameworks from the poker table to the boardroom, leaders can enhance their decision-making processes, resulting in more strategic thinking and better outcomes.

Whether you’re a CEO, an investor, or an athlete, integrating these principles can provide a competitive edge in your field.

For more poker decision making frameworks that apply to life, business and investing, check out our brand new course “10 Minute Decision Maker”.

Each module is 10 minutes long and focuses on a key principle that one can apply to everyday life. All lessons leave you with practical ways to implement the principle and conclude with an action item for you to experiment with.

I hope these frameworks serve you as much as they have helped me. Which one was your favorite? For the poker players out there, what has the game taught you? Would love to hear your thoughts.

Alec Torelli
Welcome! I'm Alec Torelli, founder of Conscious Poker, a training site dedicated to transforming good players into great ones by providing the best poker strategy and mindset content. I've been a professional poker player for 15 years and have over $1,500,000 in tournament winnings and millions more in both live and online cash games. On this site, I share the lessons I learned during my poker career to help you crush the games, optimize your bankroll, make winning decisions and achieve your poker goals.

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