This will make you a better decision maker | Annie Duke (Thinking In Bets, former pro poker player)

Annie’s background (00:00:00)

• Making implicit things explicit improves decision quality.
• Intuition is sometimes right, but without making it explicit, you won't know when it's wrong.
• The purpose of a meeting should only be for discussion.
• Premortem is effective only if kill criteria are set and actions are committed to when signals are seen.
• There's no such thing as a long feedback loop.
• Shorten the feedback loop by identifying things correlated with the desired outcome.
• Kahneman taught Annie to think in bets, which means considering the probabilities and potential outcomes of decisions.
• This approach helps avoid overconfidence and make more objective decisions.
• The most impactful change for better decisions is to make thinking explicit.
• This involves writing down thoughts, assumptions, and reasoning behind decisions.
• Long feedback loops don't exist; you can shorten them by identifying correlated factors.
• For example, in product development, you can use OKRs (Objectives and Key Results) to track progress towards long-term goals.
• Annie introduced a "pre-mortem" process where partners discuss what could go wrong before making a decision.
• This helps identify potential risks and make more informed decisions.
• When you're thinking about quitting, it's often a sign that you should have done it sooner.
• Don't wait too long to make the decision to quit if you're unhappy or unfulfilled.

Lessons from Daniel Kahneman: humility, curiosity, and open-mindedness (00:03:53)

• Daniel Kahneman, despite his immense influence and intellect, remained humble and open-minded, willing to change his views based on new evidence.
• Kahneman pioneered "adversarial collaboration," working with those who strongly disagreed with him to resolve issues through research.
• Kahneman's curiosity extended to others' work, and he made time for everyone, showing kindness and love for those around him.
• Annie Duke, a former professional poker player and author, emphasizes the importance of basing decisions on probabilities and expected value rather than emotions or gut feelings.
• Duke suggests approaching decisions scientifically, gathering information, and analyzing it objectively to make informed choices.
• Duke also stresses the significance of recognizing and understanding one's own biases and preconceptions to avoid clouded judgment and poor decision-making.

The importance of unconditional love in parenting (00:09:15)

• The most important aspect of parenting is ensuring your children feel deeply loved.
• Mistakes are inevitable, and parents should not be overly critical of themselves.
• Babies are resilient and may experience minor injuries, which are not indicative of poor parenting.
• While parents have limited influence on their child's personality, they can instill basic manners such as saying please and thank you.
• Babies are naturally adapted to a harsher environment than the one they typically grow up in.
• Parents should avoid feeling smug about their parenting skills, as all children are unique and will develop differently.

Mental time travel and “nevertheless” (00:15:15)

• To gain perspective and reduce negative emotions, imagine how a situation will seem in the future.
• Use "nevertheless" to acknowledge others' input while asserting your decisions, balancing listening and enforcing boundaries.
• Consider the long-term impact of decisions rather than being swayed by immediate emotions.
• When someone is upset, start by saying "I believe you" to acknowledge their feelings, then follow up with "Nevertheless, here's what I think" to express your perspective.

The extent of improvement possible in decision-making (00:20:06)

• Active implementation of decision-making frameworks and strategies, rather than relying solely on theoretical knowledge, leads to better decision-making.
• Daniel Kahneman's research demonstrated a significant improvement in hiring accuracy from 50% to 65% by employing structured decision-making processes.
• Humans often overvalue their intuition and insights while undervaluing the perspectives of others, hindering effective decision-making.
• Despite the potential for substantial improvement in decision-making, the challenge lies in persuading individuals to adopt effective methods.
• Those who embrace and implement decision-making frameworks gain a significant advantage over those who do not.

Independent brainstorming for better decisions (00:24:54)

• To improve decision-making, gather opinions independently before group discussions and focus meetings on discussing different perspectives.
• Before meetings, participants should brainstorm and rank their ideas with rationales, minimizing the influence of dominant individuals and encouraging focused discussions.
• Share everyone's opinions with the group before the meeting, allowing for asynchronous collaboration, and use a private voting system to gather input.
• Leadership should consider all viewpoints and make decisions based on overall goals and the decision space.
• LinkedIn ads provide a cost-efficient way for B2B businesses to build relationships, drive results, and reach customers in a respectful environment.
• LinkedIn offers direct access to decision-makers, including 950 million members, 180 million senior executives, and over 10 million C-level executives.
• LinkedIn's targeting and measurement tools are specifically designed for B2B in tech, generating a 2 to 5x higher return on ad spend than other social media platforms.
• Audiences on LinkedIn have twice the buying power of the average web audience.
• To claim a $100 credit on the next LinkedIn ad campaign, visit linkedin.com/slod/Lenny.

Making sure people feel heard (00:35:36)

• To improve decision-making, shift from a coercive to a curious model where people share information rather than trying to convince others.
• Avoid interrupting, silencing, or labeling others as wrong, as these actions create a tribalistic environment that hinders open-mindedness.
• Use the nominal group technique to gather individual estimates and rationales before discussing them in a group setting.
• Encourage respectful and clarifying discussions by asking questions and reflecting back what others have said to ensure understanding.
• Involve others in decision-making by asking for their opinions and reflecting back what they say without offering your own opinion. This approach makes people feel more invested in the decision and more likely to accept it, even if it's not exactly what they wanted.

The “3Ds” framework to make better decisions (00:42:41)

• Discover: Brainstorm ideas independently.
• Discuss: Bring people together to discuss ideas, especially where they disagree.
• Decide: Have one person make the decision after considering all the input.
• The "3Ds" framework can be used for more than just brainstorming, such as forecasting, project planning, and budgeting.
• It is important to elicit opinions from others in a structured way to avoid bias.
• You can still discover information independently even when you are in the same room with others.

Decision quality (00:44:49)

• Annie Duke discusses decision-making, particularly in long-term situations, and challenges the idea that "good founders" can be recognized without explicit frameworks.
• Despite immediate feedback, poker is noisy as players often don't know why they win or lose.
• Venture investing feedback loops are not as long as believed, with key milestones like securing Series A funding and achieving product-market fit.
• Decision-making involves predicting future outcomes and tracking progress, and shortening the feedback loop allows for faster learning and improvement.
• Psychological safety can lead to avoiding feedback and maintaining a positive self-narrative, hindering decision quality.
• Humans prioritize short-term gratification over long-term benefits, and the speaker prefers immediate comfort over facing uncertainty.
• The speaker finds solace in the idea of living under the influence of power law, which confirms their beliefs.
• The speaker expresses a desire to know if they are making good decisions and fears being unaware of their mistakes.
• The speaker appreciates the honesty and directness of the Renegade and First Round podcasts in addressing these concerns.

Improving decision-making at First Round Capital (00:55:46)

• First Round Capital, a venture capital firm, uses data analysis to improve its investment decision-making process.
• They implemented a system to precisely measure and record various factors such as market strength, team quality, and founder potential.
• They created "mediating judgments" to ensure shared definitions and understanding among partners when evaluating investment opportunities.
• By analyzing historical data, First Round Capital can now identify patterns and correlations between partners' judgments and the actual performance of companies, providing valuable insights into their decision-making accuracy.
• This data-driven approach enables partners to receive personalized feedback on their decision-making tendencies and identify areas for improvement, ultimately leading to better investment decisions.

Using pre-mortems and kill criteria (01:05:05)

• Premortem analysis involves identifying potential problems and signals that indicate a project may not be viable.
• Premortem is effective when combined with pre-commitment, which involves specifying how the plan will change in light of the identified potential problems.
• Kill criteria are a set of signals that indicate when it's time to pivot or stop a project.
• Sunk cost bias is the tendency to continue investing in a project due to the time and effort already put into it, even when it's no longer viable.
• Examples of kill criteria from a sales team include identifying early signals that a lead is unlikely to convert, such as the RFI/RFP being written with a competitor in mind, the customer only wanting to talk about price, and the inability to get a decision-maker in the room.
• Rather than relying on hope, it's important to create a structured plan of action to address these signals when they arise.
• This approach helps individuals make more rational decisions and avoid potentially disastrous outcomes.

Making explicit what’s implicit (01:10:15)

• Making implicit assumptions explicit allows for examination, discussion, and evaluation of their validity.
• Intuition can be valuable, but it should be made explicit to enable critical analysis.

The challenges of quitting and knowing when to walk away (01:10:55)

• Quitting is often past the ideal time due to uncertainty, hidden information, and biases like sunk cost and endowment.
• People tend to avoid quitting until they feel they have no other choice.
• Stuart Butterfield, the creator of Glitch, faced a customer acquisition problem despite positive critical reception and a dedicated user base.
• After analyzing the data, Butterfield realized that the cost of customer acquisition would continue to rise, making it unsustainable as a venture-scale business.
• He made the difficult decision to shut down Glitch to focus on a new opportunity, which eventually led to the creation of Slack.
• Sometimes it's necessary to let go of current endeavors to pursue more promising opportunities.

Where to find Annie (01:19:23)

• Annie Duke can be found online at aniedu.com.
• For those interested in working with her, she has a subscription service called Thinking in Bets.
• She also teaches a class on effective decision-making on Maven.com twice a year.
• The next cohort starts in September, with a possible one in May.
• Annie Duke co-founded an organization called The Alliance for Decision Education.
• The organization aims to bring knowledge about improving human decision-making to K-12 education.
• Annie would appreciate it if people could visit the organization's website and spread the word about its mission.