RSS Feeds:Understanding business & design
through casino poker
By Dirk Knemeyer
Part 1 - Part 2 - Part 3 - Part 4
Photo courtesy of limowreck666
PART 4
COURAGE: The Essential Ingredient
At the table
While I consider myself a solid tournament player, my best poker comes out when playing in ring games: ongoing cash games without a limit on either how long you can play or how much you are able to win--or lose.
Recently, I played two long sessions of spread limit hold 'em over a weekend at Lucky Chances, a card room just south of San Francisco. While my results on these days were even better than usual, this session of play typifies the approach that allows me to enjoy consistent success at these lower limit games: taking chances, and acting without fear.
After buying in for the $100 maximum my day began modestly: I quickly moved up to $140 total, then moved another player all-in for about $80 but took a savage beat on the hand, with my two pair losing to his inside straight draw on the river. Down to around $60 I tightened up for a while, getting back to about $100 in chips, which is an amount where I can bet enough to do some real damage to the other players. That's when I started making my favorite move, the two-fisted raise.
The hardest thing to do at the poker table is to make a big bet or raise when you're not holding the best cards. It requires a belief in your strategic read of the situation, and having the moxie to put your money where your mouth is in hopes of taking the pot from the other players. Not coincidentally, successful innovation requires similar courage.
It began when I was sitting in the small blind. Even though I was dealt 10 9 unsuited--an extremely marginal hand--I already had a plan: if more than three people limped in without a raise, I was going to significantly overbet the pot. Sure enough, five people limped in and the move was mine. With $24 in chips already in the middle (five bettors, both blinds and $1 on the button), I grabbed two stacks of chips and raised the bet to $40. This meant that in order to call and see the flop, each of my antagonists would need to add at least $36 dollars more. Because they didn't know what I had, and with their almost certainly only having marginal hands, they predictably folded, one after another. Just that quickly, I had increased my equity by about 25%.
I continued to carefully employ similar tactics over the next two hours, and thanks to some good luck and my ever-strengthening table image, before long I was up over $600, an impressive amount given the stakes.
At that point I limped into a hand with the dreaded 7 2 offsuit, the worst starting hand possible. The hand played out passively, and I actually ended up splitting the final pot with one other person--each of us having a pair of sevens and the board negating our kicker cards. The other players took note of this, laughing that I would get into the hand in the first place with those cards. Wouldn't you know, the very next hand I looked down to see 7 2 offsuit once again.
It was time to have some fun.
I was on the big blind and four people came into the pot ahead of me, two committed for the $4 minimum and two others on a $12 raise. So I called out "raise 60". This is an extreme overbet given both the $34 pot and the miserable hand that I would be forced to play with. But one after another--the original raiser taking a bit of time to think before deciding--all four players folded around. I flipped over my 7 2 and the table was electric: no one could believe that I had just risked so much money with such a poor hand. Some were incredulous; others were upset and now keen on "catching me" trying to make a move like that again; two of the other players congratulated me on a great play. But the end result was that because I had the courage to risk so much money relative to the stakes on a terrible position, it dramatically altered the table dynamics. I had already forged a strong table image through my previous play, but now I was the one player everybody had to really pay attention to and think about. Over the next two hours I parlayed that into increased winnings--to the tune of over $1200 total at my high point. While the table eventually adjusted and took a couple hundred of their dollars back, it represented a strong testament to what can happen when you gamble without fear at the poker table.
The iPod clickwheel innovation represented a gamble which, because it was embraced by the market, became an important part of the magic that continues to drive the success of the now-iconic product line. And certainly there are those who view it as a central driver. But it was a gamble that could just as easily have failed, like so many other bold attempts at creating something new.
Successful innovation is difficult
The hardest thing to do at the poker table is to make a big bet or raise when you're not holding the best cards. It requires a belief in your strategic read of the situation, and having the moxie to put your money where your mouth is in hopes of taking the pot from the other players. Not coincidentally, successful innovation requires similar courage.
Innovation is hard, and it is not so simple as having bright people following a smart process in a healthy company culture. Innovation requires enabling technology that you often have little control over. It requires near-perfect timing to take advantage of unique market readiness. And it also requires visionary champions willing to stake their reputation behind ideas that are not necessarily winners.
Cue the iPod--the innovation darling of the decade. There were no guarantees of success with this device. The innovative user interface at the center of its industrial design--the touchwheel--was far from a sure thing. It was very unlike other UI's on competitive products, and if one of Apple's competitors had released a product with such an interface there is every possibility that it would have registered not a blip in the market. But market success was the result of everything that Apple brought to the product: brand passion, strong supporting software, broad media distribution channels. The UI innovation represented a gamble which, because it was embraced by the market, became an important part of the magic that continues to drive the success of the now-iconic product line. And certainly there are those who view it as a central driver. But it was a gamble that could just as easily have failed, like so many other bold attempts at creating something new.
Getting that sort of an gamble through a company can the hardest part, since not everyone is comfortable with "innovative solutions." And research often validates the objections that people have: since many innovations represent a shift from what people are used to, they may not test particularly well with users. Innovation can take a leap of faith--a vision and intuitive understanding of what consumers will embrace--along with a singularity of purpose for seeing the development of that vision. This can be a very lonely place, and can represent a weak position unless occupied by the CEO or someone otherwise empowered to go against the grain of an organization.
Making a strong play in poker is very similar: it is all about taking a risk to win something that is far from certain. When I overplay weak cards I'm taking a chance, hoping that my read on the situation is true. In order for a bluff to be successful it typically requires a very aggressive bet that inherently represents significant risk. Bluffing allows you to be a much more successful player, because you are winning hands even when you do not have the best cards. But it takes courage, and is rarely a sure thing. Still, when it works at the highest levels, bluffing often represents the difference between modest success and really making things happen. So it is with innovation.
Invention by its very nature is disruptive and unpredictable, and ultimately every bit as risky as even the most correct and considered play at the poker table. Achieving success takes the courage to recognize those risks and commit yourself to what you know is right.
Invention is even harder
In 1999, the media went ga-ga over a forthcoming invention that would revolutionize the transportation industry and completely change the way we lived. It was the brainchild of serial inventor and entrepreneur Dean Kamen, the founder of DEKA Research and Development Corporation whose inventions span everything from mobile dialysis units to robotics technologies. Despite all of the buzz and fanfare that preceded and accompanied the debut of his Segway HT, however, the product flopped, and with steady-if-sporadic growth and adoption notwithstanding, it remains a financial flop six years later. Bold proclamations from very credible business and government leaders around the world proved to be the very antithesis of visionary.
But why did the Segway HT flop? It certainly seemed to have all of the components for success in place: there was incredible anticipation and positive media attention paid to it for more than two years before its actual debut; there was a who's who of credible celebrity endorsers recommending broad adoption; the technology was visionary, practical and effective; the inventor and company behind it had plenty of experience with production and distribution, and had a proven track record of success. So what went wrong?
Well, one of the tradeoffs with "vision" is that it is often incompatible with the reality of the moment--perhaps by definition. And the Segway HT simply did not fit into the lifestyle and community structures in place at the time it was introduced. Indeed, it was so different--and potentially destabilizing--that many municipalities proactively passed laws banning its use. There were also questions around the actual vision itself: Kamen (in)famously said that "Walking is a remnant of the dark ages, an unpleasant time-waster that technology need eradicate." Yet most people enjoy some degree of walking, and many even count on it as a primary form of exercise. So while the product and its technology promised a "better way of personal transport" in the future, that future seemed out of touch with reality--or what most people felt was appropriate or reasonable for the future. Perhaps that is why, "in reality," the Segway HT didn't catch on.
Of course there were other problems: the exorbitant price point; the fact that a transport that goes 10 miles per hour would not truly replace automobiles or public transportation for the daily commuting needs of most people; the need to change the battery pack on medium-length journeys; and the need to convince civic leaders of the safety and desirability of the invention. But the net result was a total failure for an invention that seemed almost assured of success prior to and immediately after its launch.
Remember how, at the beginning of my poker session, I made the correct move with two pair to grab a nice pot but lost when my opponent hit an improbable inside straight on the river? Making things happen takes more than smarts and courage and follow-through. It also takes luck and timing and really understanding what is at stake. My two pair was an excellent hand in position, and I knew when I played it that I was ahead in the hand. But I didn't spend enough time thinking about what my opponent had, and wasn't really prepared for the possibility that I might lose. I had the best cards, and thus took for granted my success. But my antagonist had to be playing the hand with something, and odds were that there were certain cards left in the deck that would beat me. While I would have played it the same way even knowing exactly the cards that he held, it should not have been such a surprise when one of the seven cards that could beat me actually did. That's just part of the game, and what makes poker so different from other pure strategy games, such as chess.
So it is with business in general, but particularly with areas of invention such as the new product category that the Segway HT attempted to create. Regardless of how smart, or well prepared, or well positioned, or even well intentioned something might be, there are myriad factors outside of the control--and often even the understanding--of the person or organization that planned it. Invention by its very nature is disruptive and unpredictable, and ultimately every bit as risky as even the most correct and considered play at the poker table. Achieving success takes the courage to recognize those risks and commit yourself to what you know is right, knowing that while you won't succeed every time, you will do well for yourself in the long run.
Summing up: Poker lessons for business and design
Poker has provided me with valuable lessons toward success in business and design. While some of these insights were earned through my professional experience, the juxtaposition of these dynamics, refracted in my leisure activities, only makes the lessons more crisp.
The beauty of poker is that there are so many styles and approaches. But the beauty of design is that the marriage of form and function can be strengthened through the deliberate application of strategy and will. Certainly the lessons I've shared reflect my personal style of card play, but I believe that they can have deep resonance in the enterprise of design:
- The importance of deeply understanding customers and users, and paying careful attention to them in real life--not through reports and personas
- The role and use of power as a tool for negotiation and leverage, making the difference between success and failure in many different contexts
- How the stakes that people have--or simply perceive to have--dramatically impact their behavior and provide a baseline for establishing healthier and more successful teams
- The fact that the greatest successes take an unusual amount of courage...and resilience when that courage does not produce the hoped-for result
I hope you've found this series helpful, and I look forward to seeing you in either--or all of--the boardroom, the design studio, or the poker table.
Part 1 - Part 2 - Part 3 - Part 4
Dirk Knemeyer is a Founding Principal of Involution Studios LLC, a digital product design firm located in Silicon Valley. His diverse professional background includes time as a management consultant, advertising executive, and an on-air television and radio personality. Dirk earned a Master of Arts in Popular Culture from Bowling Green State University and is a voracious cultural observer. He regularly publishes insights on culture, business, and design at his website, www.knemeyer.com.
