Let’s make one thing clear: Everyone makes mistakes. It’s a simple fact of life, and to deny it is to bring about a lot of suffering to yourself. You cannot avoid mistakes completely. It is how you deal with them that matters the most.
Serious poker players sit for long hours at the tables examining incomplete data and making fast decisions based on what they know and feel in the moment. During this time, they will make mistakes. It’s only a matter of volume. What’s happening is like a condensed version of investment or business management.
Given that mistakes are inevitable, how can we best approach our decision-making?
What is a mistake?
It’s crucial to understand what a mistake is and isn’t. Not every undesirable outcome is a mistake. That’s because not everything in the world is within your control. Let that sink in for a moment. You may be the boss of your company, but do you have a say in all the political and economic factors that affect your industry?
Poker players have to learn this fast due to a concept known as a statistical variance. For instance, flip a coin 10 times, and you might expect the outcome to be five heads and five tails. That would be the correct bet to make, yet in reality, the coin could fall on tails seven times. Poker players can make a bet on a profitable hand, yet the outcome happens to fall out of their favor, much like how a stock market investor could do the same.
Even more paradoxically, what we label as a negative outcome can turn out to be what we needed later on.
In any given situation, the correct decision does not always equate to the best outcome. What the optimal decision should do is lead to the best outcome more of the time given the information available when made.
Events can happen beyond your control, even when you make a great decision. Conversely, mistakes occur as a direct result of your input (or failure to have an input, which is also a choice). You may have been inaccurate, misguided or misdirected or let your desires and emotions overshadow the data.
Mistakes can be subtle, or they can be vulgar and obvious. They can cost your company money, or they can be disruptive to the work environment. Whatever the case, you have to know how to identify and deal with your mistakes in a positive way.
Two Types of Mistakes and Why You Make Them
Mistakes are a guarantee in life. Sometimes, it’s only a matter of volume. The more decisions you have to make, however, the more likely it is that you will have a lag of attention, come across a situation that you find difficult or have a bad day at the office. Poker players who play multiple tables for long hours are aware of this, as they can make thousands of decisions in a night.
Mistakes, whether in poker, business or life, usually occur for two reasons.
Strategical Errors – The result of not having the right knowledge or expertise to make the best possible decision. In this case, you quite literally don’t know how to make the optimal decision, or you don’t have the resources available that you need. These mistakes may appear more obvious to others who have more technical expertise, or you may notice a lack of confidence during your decision-making process that leads to doubt and reflection.
Mental Errors – In this case, you have all the knowledge and technical expertise needed to come to the correct decision, but you don’t apply what you know in the correct way, usually because of a mental flaw in the way you think or approach the task. Mental errors can occur for many different reasons, including fear and self-doubt, frustration and anger, overconfidence, tiredness and burnout. In poker, a set of mental errors is “tilt.” Mental errors are usually more obvious, as you will know upon reflection that your decision did not match up with your knowledge.
Any mistake that you make will usually be a result of one or both of these types of error. Advanced poker tips say that you should become aware of your mental and technical flaws, identify when they are likely to happen and come up with ways to improve your decision-making process as a result of such knowledge.
Making Better Decisions
A “good” decision, then, is one in which you have the knowledge to deal with the situation and use this knowledge to the best of your ability with a clear and healthy mind. Easier said than done! Instead of focusing on your mistakes and beating yourself up all the time, switch the focus to making better decisions and learning from the mistakes you make along the way.
Strategical errors come from gaps in your knowledge. They are, therefore, solved by learning and becoming more of an expert in your field. Read, study, take courses, look to those who can teach you. The more technical you become, the more well-equipped you are to deal with decisions. Poker players constantly evaluate their game after a session, and so, should you analyze your business decisions to see if they were optimal.
Mental errors are highly individualized behaviors. So, it’s critical to work out what your mental flaws are. What is it that leads to regular mistakes? Are you always tired at the office, or is it anger that causes impulsive errors? You may need to eliminate distractions to optimize your decision-making or work on your confidence so that you begin to trust your choices. Psychologists have established more complex mental errors such as loss aversion and availability heuristic, which can help you pinpoint and address the nature of your problem.
Ultimately, it is a combination of relevant knowledge and a strong mental game that lead to sound decision-making. There are always elements of business that are out of your control, so focus on what you do have control over and learn from your mistakes.
