In 2015, Tim Ferriss bet 3 semi-professional players that he could beat at least one of them in a game of Texas Hold-em Poker.
The catch here was that Tim was a complete Poker newbie – and he only had 4 days to learn the game.
By the end of day four, not only did he beat one – but he ended up beating all 3.
How did he do it?
Firstly, Tim Ferriss is probably one of the world’s foremost practitioners of the Pareto Principle – otherwise known as ‘the 8020 rule‘.
The 8020 Rule states that for most complex systems, 80% of the outcome is caused by only 20% of the factors. Rather than trying to work on the ‘Trivial many’ things, focus on the ‘Vital Few’ (top 20% of) things that truly affect the outcome.
In the past, Tim Ferriss has used the 8020 rule to deconstruct then selectively learn the Vital Few elements required to master everything from learning languages to martial arts to latin dancing.
Coached by Poker master Phil Gordon, Tim used his four days to relentlessly focus on the Vital Few elements required for him to beat trained Poker players to the detriment of everything else.
Narrowing down to a key strategy called “Selective Aggression” – that stacked the odds slightly in favour of the beginner, Tim went from being a gambler at the Poker table to being a ‘strategic investor’. At the core of this ‘8020’ lesson that Phil passed on to Tim was one central truth.
In Tim’s own words:
The question isn’t: Did I make money on this hand?
The question is: Did I make the right decision?
In Phil’s words the secret was focussing on:
Process over outcome
Luck can help you win (or lose) a hand, but process is what keeps you winning – over time.
Odds are (pun intended!), none of us are going to be professional poker players – but the lesson from Phil has its parallels in digital advertising.
Just like in Texas Hold-em Poker, digital advertising is a game of decision-making with incomplete information.
We know our ‘hand’ – our creative, our targeting, our ad structure, our media buys.
But we don’t know our competitors’ hand.
Further, in an age of algorithms, we also don’t know what an algorithm is going to do with the combination of our hand and our competitor’s hand.
So given this incomplete information, the best thing we can do is make what we think to be the right decision – according to our process.
In some cases (‘hands’), the right decision may lead to a low ROI outcome – but if the process is correct, then over time this decision will pay off. We don’t abandon the decision based on the outcome. We evaluate whether the decision was the right decision to make with the incomplete information we have, despite the outcome not being what we anticipated.
For example, let’s say we launched a purchase based Decision campaign that ‘didn’t work’ – perhaps the reason was that we just timed the campaign to coincide with a competitor who had a more aggressive offer? In this case, the decision was the right decision according to our process, just wrong timing. In time, continuing to execute this decision will correct itself and so therefore we can stay the course. The wrong thing to do would be to abandon the campaign because it ‘didn’t work’.
And just like in Poker, the worst outcome might be if we somehow ‘lucked’ into a high ROI outcome – but had no idea why it worked, and thus couldn’t put a process around this to capitalise on learnings and therefore be unable to repeat the outcome in future campaigns.
We’ll have a lot more to say about both the ‘8020 rule’ and ‘Process over Outcome’ in 2020 – but for now…
We wish you a Merry Christmas and a refreshing holiday with family, friends, significant loved ones and maybe a card game or two! 😉
See you in 2020!
The team at Intentional