Thinking in Bets

I’ve said it before and I’ll say it again. Most business books ever written could have been a (long) blog post instead. That’s how I felt about Thinking in Bets by Annie Duke, the next book on my list after The Mom Test.

The premise of the book is “Making Smarter Decisions When You Don't Have All the Facts”. The actual contents of the book meander a bit around the central theme... which isn’t to say I didn’t learn a ton—only that I had to distill my own learnings, the main one being treat decisions as bets.

Here are my takeaways.

Takeaway 1: Making decisions is about the journey not the destination.

Good decision making can lead to bad outcomes and bad decision making can lead to good outcomes. There’s elements of circumstance, luck, and other external factors that make this an imperfect correlation.

The thing to remember is to care less about the outcome and more about how you got there. The lizard part of my brain is like “well, does it matter how amazing your process was if the outcome was crap?” and the answer is yes, it does matter because in most situations, that’s the only thing we do have control over.

Takeaway 2: Put your beliefs on a spectrum. Try not to be binary.

Many commonly held beliefs are untrue. So it is important to question the status quo, especially when you join a new company or team.

Our belief systems also tend to be rigid. We don’t alter our beliefs when confronted with evidence, instead we alter our interpretation of the evidence to fit our beliefs. This can be dangerous. Instead, the author recommends thinking of beliefs not as binary, but on a spectrum.

An example of this would be to think and say “I’m 80% sure this idea won’t work.” It leaves room for the other party to change your belief since a) changing your mind doesn’t make you wrong, you’re just adjusting a numeric value and b) it’s easier to make someone go from 80 to 40 than it is to go from 100 to 0.

Takeaway 3: Improving decision making requires active learning.

Having a lot of experience doesn’t automatically make you an expert. You need to actively learn every time you make a decision and see the outcome. Part of the outcome could be driven by luck, but the part that is driven by skill is what you want to use as input for your next decision.

Takeaway 4: Use CUDOS when making decisions in groups.

Duke proposes the CUDOS framework for better decision making, especially in group settings. New products, programs, and initiatives naturally fit into this. I found the original terminology to be vague so here’s my reframing.

When trying to make a decision as a group, think CUDOS.

• Candor: Be open and transparent. Don’t hide evidence or facts that might hurt your cause. Call out reasons why you might fail. This makes decision making transparent and allows for mitigation of possible failure modes.

• Unbiased: Separate the idea from the person who it came from. Often times we throw out the baby with the bath water because we don’t like the person who suggested something, even if the idea itself has merit.

• Disinterested: Evaluate decisions with disinterest, i.e. don’t be too invested in the outcome. Particularly relevant for senior executives — don’t ask for a decision having stated or hinted the outcome you want upfront.

• Organized Skepticism: A fancy way of saying be nice while disagreeing. You can question someone without being abrasive. Trying to play devil’s advocate is a good way to make a counter point. Using “and” instead of “but” will help move the discussion forward. This is big for me, I say “but” way more than I should.

Takeaway 5: Projecting to the future can help make decisions now.

Imagine yourself five years from now. What would you have to do to get there? This scenario planning should help guide the decisions you make now. Temporal discounting or time discounting, which is when we value the present more than we value the future makes this hard to do!

Duke proposes the 10-10-10 framework, which forces you to think about the consequences of your decision 10 minutes, 10 months, and 10 years from now. The time scale helps put things into perspective. Techniques like pre-mortems (thinking about everything that could go wrong before it does), backcasting (what actions should we take now to achieve our vision for the future), pre-committing (limit options now to prevent making the wrong choice later) help make decisions that stand the test of time.