“Uncertainty is a good thing” says Britain’s Caspar Berry, Professional Poker Player and Risk Taking & Decision Making expert. Risk has become a subject very close to all of us. How much risk are we willing to assume? Berry says that whenever we make a decision in a world of uncertainty, where we do not know the outcome of that decision, we are effectively taking a risk.
Caspar’s frenetic energy is just what the audience needed to kick off Day 2 of the Media Insights & Engagement Conference this morning. He has an infectious, engaging stage presence and humor to boot.
Berry asks the following: What is risk? What causes it? What do we do about it? Humans often fear the unknown. No one knows what the future holds. Predicting the future is impossible. So what can we do to reduce risk and increase certainty? These are just some of the many key concepts Berry shared during his Keynote Speech.
Lets talk poker for a minute…..Caspar loves to talk Poker. I had a chance to take a poker lesson from Mr. Berry last evening with several other conference attendees. Casper is an amazing teacher and I appreciated his statistical poker metaphors utilizing poker strategy as a way to gauge risk and reward in our day-to-day lives. Today he fleshed out those critical concepts in greater detail.
Let’s take a look at the following Poker analogy as it relates to risk taking.
How Poker Players Use Data and Analyze Risk
Berry says in poker, your hand could be a Jack and 10 of Hearts (not great cards). The three cards presented “the flop”, were a 4 and 8 of Hearts and a 3 of Spades. 33% of the time we will make that flush. But we still need more information before we make a decision on how to proceed next. According to Berry, here is the probability factor of winning or getting a flush:
Pot=$4,000. Cost of call + $400 (1000% return=10:1). There is a 25% chance of success.
25%of the time one will win $4,000=an expectation of $1000. 75% of the time one will lost $400=an expectation of $300. It’s not as great as 10000 but not terrible either. Thus creating an expectation of $700, thus offering an ROI of $700/$400=175%. We are always making decisions based on uncertainty and factors out of our control. So we look at probability using statistical data? What is the probability that one will win the poker game or be successful at their new career choice? Caspar urges careful evaluation of calculated risk and emphasizes following intuition.
The Butterfly Effect
Berry also eluded to the The Butterfly Effect. The Butterfly Effect is dependence on initial conditions in which a small change in one state, can result in large differences in a later state. The Butterfly Effect is exhibited by very simple systems: the randomness of the outcomes of throwing dice for example, depends on the characteristics to amplify small differences in initial conditions, into different dice paths and outcomes, which makes it impossible to throw dice exactly the same way twice. Since we can’t control the dice (or the poker cards for that matter) one needs to realize that we have certain limitations and therefore things can and will be unpredictable.
Are we prepared to lose and fail along the way in order to have greater gains in the future? This was Barry’s primary ethos of this morning talk. Everyone would like to have great success in life. Unfortunately many give up after their first or second failure. According to Berry, repeated failure and learning from our mistakes, is what allows us to grow, flourish and eventually leads to greater opportunities. Case in point: Berry sites Abraham Lincoln-he was defeated over 9 times before he became President of the United States. The movie Moneyball, based on the true story of the Oakland A’s baseball organization using sophisticated algorithims to figure out how to win games. It worked. Exploring calculated risks is a good thing.
At the conclusion of Berry’s hour-long discussion, I took away 4 key points:
- Let’s work towards becoming less risk averse and accept that risk is part of life
- Most of us learn from our mistakes, from our failures, but also from our successes.
- We feel pain from our losses, and therefore often avoid this from happening in the future
- Face Fear
Kerry Inserra is Managing Partner and Co-Founder of Zip2Media, a media planning and buying agency located in the San Francisco Bay Area. Zip2Media focuses on social media, SEO, SEM, traditional media, sports marketing and blogging. Kerry has worked for CBS Radio/Television, ABC Radio/Television and Disney. Follow her @kinserra or email her at Kerry@Zip2Media.com.