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Episode 29: Wanna Make a Bet? Why RevOps Needs a Probabilistic Mindset

by Hannah Rose | Jun 30, 2022 12:00:00 PM

If you’re in need of a pick-me-up, listen to Don’t Stop Me Now by Queen because, according to Doug, you can’t be in a bad mood after listening to this song. It’s scientifically proven. You’re welcome! 😄

Jess wants to get into our third principle from our 7 Principles of Radical Execution that we utilize internally here at Imagine. The third principle is probabilistic not deterministic.




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Show Notes:

For more context, let’s define the terms. What is probabilistic? What is deterministic? 

Deterministic is a binary mindset. It’s right/wrong; yes/no; succeed/fail. Probabilistic is a probability. It’s like a weather forecast - there’s a 70% chance of rain. When we hear this we think it’s going to rain. But if there’s a 70% chance it’s going to rain, there’s a 30%chance it’s not going to rain. What deterministic does is bring in certainty versus uncertainty.

A French philosopher, Voltaire, said uncertainty is an uncomfortable position, but certainty is an absurd one. The challenge that we have as humans is that we don’t do well with uncertainty. We seek certainty. We have a bias for certainty. Anyone that calls themselves a RevOps professional, anyone that is serious about RevOps needs to read and consume the book Thinking in Bets by Annie Duke.

People have told Doug that he’s wrong sometimes, but never in doubt. It’s true. The funny thing is, he’s filled with doubt, but doesn’t communicate that doubt. When someone makes a statement, especially about the future, Doug loves what Annie Duke says in the book - follow up with asking them if they want to make a bet. The moment you call out making a bet, aspects of uncertainty come in. In the world of sales and marketing, when we talk about growth or complex systems, we have to understand that we do not live in a world of certainty. What worked yesterday, there is no promise of it working tomorrow. We don’t control the end result.

If you don’t have a hypothesis, you can’t assess any gaps between what happened and what you thought was going to happen. Doug sees a lot of people who were at places where really good things happened and they were involved in those good things happening, but they weren’t necessarily involved in what went into those. They have the experience that what was done worked, but they don’t know why. There’s two things that impact the outcomes of your life. Those two decisions are the quality of the decisions you’re making and the quality of the execution. The other is luck. The only thing you have any influence on is decision quality, so if you want to improve your outcomes, then you want to improve your ability to make decisions.

If you don’t accept that you live in a world of uncertainty then you can’t learn because you’re not understanding a core element of what’s contributing to your outcomes.

When you’re playing deterministic games, when you’re jumping at certainty, you’re playing whack a mole because it’s all random. If you go through life with a deterministic outlook, life will be random.

Is calling out what you feel the probability is a way to manage the fear of uncertainty?

Doug thinks that’s how you deal with not falling into the trap of certainty. He doesn’t think that necessarily makes you any less fearful or uncomfortable with certainty. When you deal with uncertainty frequently enough, you learn to accept it. Predictability has become a trite word and isn’t valued to the level that it should be. We have to learn to accept that we’re making decisions in complex systems.

If you think about chess, chess is a game of complexity so you can’t predict the outcomes of a chess match because if someone in the third move does something you weren’t expecting, the number of variations that happen with each additional move increases. But chess doesn’t have the element of chance because you have perfect information, so chess is not a game of luck. That’s why chess is a horrible metaphor for business and life.

Poker on the other hand is a game of imperfect information. You lack information, everyone else lacks information, and the information that you have is different from what everyone else has. To top it all off the conditions change. Here you have to make decisions based on probabilities.

These two examples connect back to what is called Game Theory in economics. John Nash won a Nobel prize in economics for his theory: in business, the thing that’s different about the game is in the game of business, the dumbest player sets the rules. (An oversimplification.) If you’re playing UNO there are rules to the game. If you’re playing UNO with your three year old, there are rules, but those rules will change to whatever works for the three year old.

Part of evolution is that something completely unexpected happens. The first thing people miss is whatever data people are using, whatever AI is being used and whatever machine learning is happening at its core. This is making people meaningless. The moment that there’s an unexpected adjustment, everything is lost. That’s an example of where we fall into deterministic elements. 

How do you shift from a deterministic mindset? How do you get out of wanting everything to be certain?

Doug doesn’t think you ever get out of it. One of the things Doug would do is pay attention to context. The first question he would ask anyone when he was a financial advisor that was coming in to tell him about their investment product, the very first question he would ask is - when do I get hurt? If you have an understanding of when something will work, when it won’t work, what causes it to be ineffective, you’re able to come up with a better strategy. How confident are you?

In sales, when we do our pipelines here at Imagine, we add a forecast confidence - 1, 2, 3, 4, or 5. Each has a specific probability associated with it. If you say an opportunity is a four and it closes, great. If you say it’s a four and you lose, what made you think it was going to close? (A 4 is saying there’s an 80% success rate.) If one has a 20% confidence rate and you win it the same questions apply. Why did you put that at 20%? Where were we wrong?

To become more comfortable with a lack of certainty, you need to change your objective. Your goal should be to increase your confidence levels. Realize some of what’s going to drive your confidence level is how complex the situation is. When it comes to quick adjustments, Jess thinks if you have complete certainty and are in a deterministic mindset, it isn’t possible for those quick adjustments to happen. Because you’ll stay on one path and that’s where you can get hurt.

Here’s another example. Say you have a $10,000 opportunity with a 90% chance of winning it. You also have a million dollar opportunity with a 10% chance you’ll win it. Which do you allocate more time, energy and effort to? The million dollar one. (In reality there’s not a right or wrong answer here.) But let’s change the situation. You’re not going to have money to pay for groceries if you don’t win something. Which do you focus on? The $10,000 one. Now let’s say you have a 10% confidence level in a tactic and it’s not looking good. You have a 60% confidence level in a tactic and now it’s not looking good either. When do you adjust? Which one do you stick with longer? You’ll want to measure and stick with the one with 10% confidence because you don’t want to measure super fast with the other one. It’s easier to look more closely at the 10% confidence opportunity and make quick adjustments over the other.

We don’t live in a world that is zero to one. We live between zero and one. That’s what probabilistic thinking is. We’d all be better off if we lived in accordance with that. Between zero and one is nuance. What’s missing from every large discussion that’s taking place in the world is nuance.

Jess’s big takeaways from today: 

  • You’re making decisions on complex systems. 
  • The objective should be to learn.
  • You only have influence on your decision quality, you don’t have influence on the situation.

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