Every decision you make, no matter how small, is going to have an outcome.

The problem is that we oftentimes don’t know what the outcome of a certain decision is going to be. If we did, we’d never make bad decisions. Unfortunately that’s just not the reality we live in.

We often have to make decisions when we have a limited amount of information to evaluate and little control over the factors affecting the outcome.

So what exactly is a good decision? Is that different than a good outcome?

We sat down with professional decision strategist and best-selling author of Thinking In Bets: Making Smart Decisions When You Don’t Have All The Facts, Annie Duke to examine this key question and more.

Annie has leveraged her expertise in the science of smart decision making throughout her life. Her expertise has served her well and for two decades she was one of the top poker players in the world. Her work led to her being granted the National Science Foundation Fellowship and she studied Cognitive Psychology at The University of Pennsylvania.

Annie demonstrates how loose the relationship is between outcome quality and decision quality, which is highlighted extremely well in poker…

I can play the best hand and I can actually play it very well. On the turn of a card, because I don’t have and control over the cards that come, I can lose. So I can make a really good decision and have a very poor outcome, or I can play a really bad hand. Actually play it pretty poorly, and because I get lucky with the cards that are still to come, I could win. So I can also make a really poor decision and have a really good outcome. - Annie Duke on The Science of Success.

When a football coach calls a play on the goal line he doesn’t know what play the other team is going to run, he doesn’t know that his quarterback’s calves are about to cramp up. All he can do is use the limited amount of information he has to make what appears to be the right decision.

The same applies in business. Let’s say an executive is thinking of joining the advisory board of a young startup. She’s already facing a full plate with her current projects, but the startup does have an interesting idea. All she can do is evaluate the opportunity with her knowledge of the market and make a decision. She may not know that an expert will be joining the team a week later and lead the company to a huge breakthrough.

The point is, we oftentimes have to make decisions with a limited amount of information and zero control over factors affecting the outcome. This loose relationship between decision quality and outcome quality can begin to create a lot of problems for us.

What you see people do when they are evaluating their outcomes out in the world is this thing called resulting. They are looking too deeply at other people’s results. Resulting is tying too tightly the quality and the outcome back to the quality of the decision. In other words, thinking that it’s a reasonable thing for you to be able to work backwards from whether the outcome was good or bad to whether the decision was good or bad. An example would be thinking that if I win a hand of poker, I must have played it well, or if I lose a hand I must have played it poorly. It’s not that black and white. - Annie Duke on The Science of Success

So how can we make smart decisions when we don’t have all the facts? What can we do to avoid resulting and experience more positive outcomes than we do negative outcomes?

Annie has spent her career testing, experimenting, and researching this question in extremely high pressure environments. Her work has led her to pinpointing three strategies that will help keep you in the black when it comes to the quality of your own outcomes.

Frame Your Decisions as Bets

When you begin to tie a certain decision to a certain outcome, stop and ask yourself, “Well would I want to bet on that?” - Annie Duke on The Science of Success

When we start to make these broad statements and begin to evaluate our decisions solely on the outcomes we need to slow down. By asking yourself mentally “Do you want to bet?” you take on the role usually played by a friend trying to make a quick buck who disagrees.

What this does mentally is it raises doubt and uncertainty in your mind. Which in this case, is a good thing!

It reminds us that this relationship between decision and outcome is not so simple and can be hard to evaluate. According to Annie, there are two types of uncertainty that are always present and worth evaluating. First, there is always an amount of luck that affects how things turn out. Second, there is information asymmetry or hidden information we may not be aware of.

Asking yourself “want to bet” sheds light on these ever present uncertainties.

So when I challenge you to “want to bet”, what it does is it reminds you that while you might have been so certain about the connection between the quality of the outcome and the quality of the decision, that there is, of course, uncertainty there from hidden information and luck. - Annie Duke on The Science of Success

Another benefit of asking this question is that it spurs you to try to start examining this uncertainty. You begin to ask yourself questions about your evaluation such as…

Why do I think this?

What research have I done?

What are the real probabilities?

What would someone challenging me to bet on this know that I don’t?

Asking these questions not only allows you to look at the situation more concretely but also to consider other perspectives might be. Which is critically important!

One of the best ways to be a good decision-maker is not just to imagine things from your perspective, but to also try to imagine things from other people’s perspectives… other people’s perspectives offer valuable insights that you might not have yourself. - Annie Duke on The Science of Success

Asking yourself “Want to bet?” causes you to be very, very information hungry. The idea is that we have to acknowledge the uncertainty that is in play between our decisions and their outcomes. Once the uncertainty has come to the forefront of your mind you begin to examine it and narrow down and reduce the uncertainty.

In order to do that, we have to start seeking additional information and consider other perspectives, which is always a good thing.

Get Others Involved In The Process

But make sure they’re the right people!

It can be hard for us to get our brains to begin working this way. Thinking in Bets, like any adjustment to your internal process, takes time and effort.

Annie recommends forming your own group or tribe to help you adjust and to further challenge your assessment of your decisions. By forming a group you are able to not only bring in more information from outside your own knowledge base but additional perspectives as well…

So we can use that to our advantage and we can get some people together and say “Listen. I’m going to watch your back and you’re going to watch my back.” But the key is that you want to form this group through this idea of we’re going to approach the world through thinking in bets. What that means is that we’re going to approach the world through the frame of trying to be accurate, versus trying to be right. - Annie Duke on The Science of Success

That last line warrants repeating. Approach the world through the frame of trying to be accurate, versus trying to be right.

Sadly, oftentimes when people get together in a group, they end up forming a tribe where everyone’s goal is to prove that they are better than everybody else in the group. The problem becomes compounded because what ends up happening is instead of de-biasing the individuals in the group the group causes people to become even more biased. If we’re all looking to be smart and right all the time we are just trying to have our prior beliefs affirmed.

This comes back to another important point around the importance of a growth mindset. We have to be able to adjust our long held beliefs and accept reality as it is. We may not always be right, but that’s a good thing. If we’re stuck in a fixed mindset and always trying to appear smart and appear to have all the answers we shut ourselves away from other opinions. Not one has all the answers and without other opinions we cannot expect to grow and learn.

It’s absolutely critical that your group share this mindset.

What we care about is not being right. What we care about is being accurate. So I’m agreeing that because my goal is accuracy, that I’m going to have to take some short-term pain sometimes. It means that sometimes I’m going to find out that something I believed is not actually accurate. Now, that’s okay, because my goal is accuracy. - Annie Duke on The Science of Success

It feels good to be right but that’s not where growth happens. In order to expand our horizons we need to be confronted with new information and points of view that may end up proving us wrong.

As Annie notes, this may be painful at first. However, in the end, being able to confront new truths we ultimately build up our knowledge base which will lead to us being right more often than we would have been prior.

So find yourself a group of people willing to commit to challenging one another in the right way. Committed to accuracy and helping one another find the truth based in nothing but facts and the sharing of perspectives, not pride and the desire to look smart.

Quarantine Yourself From Experience

The best way to ensure that you’re learning well from experience is to actually try to quarantine yourself from experience. - Annie Duke on The Science of Success

This may sound a bit strange but let’s explain.

When you have an outcome, good or bad, the quality of the outcome casts such a strong shadow over your ability to evaluate the decision quality it’s almost better to not have the outcome known at all.

We’re usually dealing with just a handful of outcomes, limited and biases data, and we’re trying to evaluate the decision making. We know the outcome quality and it casts a very big cognitive shadow and we want to try to get out from under that.

According to Annie, one somewhat uncomfortable exercise can help us get a sense of how good our decision making was without the bias of the outcome.

As much as possible, try to evaluate the decision prior to getting the outcome. Think about what the outcomes could be in advance. Think about what the probabilities of these outcomes are and actually write them down. Don’t be afraid to write down what you think the probabilities will be. Many people will try to avoid this by saying there’s just no way to know the probability of an outcome but give it your best shot.

For most things, you’re going to be guessing. It’s going to be a range. You’re going to be like “It’s somewhere between 30 and 55%”, and that doesn’t feel good to most people because it feels like a wrong answer. But it’s not. It’s better than not trying at all. Then, when you’ve made your guess, just like the “want to bet” question it causes you to try to seek out information to narrow that range. - Annie Duke on The Science of Success

Again, it’s all about resisting your knee jerk judgment of your decisions and letting the outcomes color your thought process.

Look, we’re all faced with decisions we have to make in the face of uncertainty. That’s part of what makes life so exhilarating.

Becoming a better decision maker is not something that happens overnight. It takes a lot of practice, searching, learning, and evaluation. Just as important as the desire to become a better decision maker is ensuring you’re evaluating yourself the right way and asking the right questions.

Next time you’re evaluating a decision stop and ask yourself…

Wanna Bet?