Smart Leaders Make Small Bets That Win Big
The gist: Smart leaders build their visions by making small and repeated bets when the odds are in their favor and avoiding big failures.
It doesn’t come up often, but I have a bit of an unsavory habit. I like to gamble. More precisely, I like to play blackjack.
Why blackjack? It’s one of the only table games with reasonable odds. If you play perfectly, you gain a sliver of an advantage over the house.1
That doesn’t mean you’ll win every game. In fact, you might face an epic losing streak taking you down to your last chips. But, in time, the odds say you’ll win.
When I sit down at a blackjack table, I get a little anxious. My senses perk up, and, without thinking, I become hyper-focused on making the right move.
I’m far from a perfect blackjack player and the stakes I set for myself are low, but I’ve always wondered if the anxiety I feel makes me a smarter, more careful player. If that bit of uncertainty about which cards will come next keeps me from stepping outside my bounds and making dumb decisions.
Psychological research says it does. A little anxiety makes smart gamblers use good judgment.
But the benefits of a touch of anxiety aren’t just for card players. Smart leaders can get the same effect at work and within their organizations. This is particularly true for introverts who are predisposed to carry a touch more anxiety than the average person.
How Your Emotions Hijack Your Decision-Making Skills
Psychologists have always known your decisions change—often wildly—according to your mood. Positive? You’ll make one choice. Negative? You’ll make another.2 For a long time, though, that’s all we knew.
Until recently, the best advice was to make decisions in a neutral mood. That way, your choices aren’t colored by blind optimism or pessimism. You can make decisions with pure logic and rationality.
But, in the late 90s, two researchers from Columbia and NYU tested a new hypothesis. They wanted to know if different states of emotion could lead to different decisions in certain scenarios.
So, they did what any good researcher would do and rounded up a bunch of broke college students to experiment on.
They gave their subjects stories to read to subconsciously prime them into one of three moods: neutral, sad, or anxious.
Then they made them gamble.3
The subjects were given $10 and asked to make one of two different wagers with the same expected return:
- One with 60% odds of winning $5.
- One with 30% odds of winning $10.
Which would they choose? The results were clear as day. While all the participants skewed towards the less risky gamble—the one that paid just $5—the anxious gamblers were more likely to choose it over the riskier option. And, to be noted, the sad ones were more likely to choose the risky gamble.
The experiment was repeated with the object of the gamble being a new job. One job had a higher salary, but was less stable. The other was more stable but had a lower salary.
What does that mean for you?
It means you should be aware of the mood you’re in when you’re making decisions and be prepared to adjust accordingly to make the best one for you and your team.
Expected Value: How Low Risk / Reward Gambles Create Success
Sometimes the right move is to make a big bet. Put all your chips on the table, work hard, and hope for the best.
But, more often, success is built over time by making small wins that compound while avoiding big mistakes that would put you out of the game.
Let’s consider a personal example.
Which decisions have brought the best results to you in your life?
Have you gotten more long-lasting, positive results from the small choices you repeat every day or from the big ones you make sporadically?
We all remember the big ones, but when you think critically, you’ll see it’s actually the small ones that made the biggest difference.
It’s the decisions you make over and over—the habits you build over time—that lead to the big accomplishments.
Even when those accomplishments are sometimes punctuated by a big gamble, it’s often the foundation of small bets—repeated over time—that put you in the position to make that big gamble in the first place.
In your personal life, exercise could be an example. Committing to taking care of yourself every day has likely made you a lot healthier and happier than, say, maxing out a lift at the gym or hitting a new PR during a weekend race.
You might have gone all-in to hit those new highs, but it was the daily routine behind it that gave you the strength to actually come out on top.
What about your team at work? Regular and repeated communication with them is what keeps the wheel greased and everyone operating at their best.
You might have delivered a powerful speech at some point when times were tough and you needed a big win. And it might have worked. But it was that daily practice of relationship building and open communication with your team that created the foundation making it possible for them to operate at that new level.
None of those small, every day bets you placed required much risk. And, in the moment, the winnings didn’t add up to much either.
But over time, they compounded to make much bigger things possible. They were the driving force behind your biggest wins.
If you hold your own successes up and compare them against a smart gambler at a card table, you’ll see the mechanics are quite similar. Continuously making small, advantageous bets—and avoiding big losses—is what eventually created the giant pile of chips on the table.
Do This In The Next 10 Minutes
You can force yourself to make the smaller, smarter bets just by keeping yourself in an ever-so-slight state of anxiety. Just enough to keep your senses keen and focused on gradually winning over the long-term than hitting it big in the short.
How do you engineer this?
The prescription is to take something important to you and make a small but meaningful stride toward it each day rather than an epic swing-for-the-fences gesture every once in a while.
Use the concept of “goal division” to break a big goal down into the small, daily actions that will lead to achieving it.
And to keep yourself in a slightly anxious state—one that will make sure your eye is on ball—try connecting those actions to two visions you can see in the future.
In the first, picture your life vastly improved by putting in the work, day in and day out. See the good results you earned for yourself. In the other, picture the disappointment that comes if you don’t.
The difference should make you a little anxious. And that touch of anxiety will keep you hungry to keep making progress.
- Most people do not play perfectly, thus losing their advantage. That’s how blackjack remains a profitable game for casinos.
- Source: The Influence of Positive Affect on Decision-Making Strategy
- Source: All Negative Moods Are Not Equal: Motivational Influences of Anxiety and Sadness on Decision Making