THE BLOG
04/03/2012 01:32 pm ET Updated Jun 03, 2012

Where's the Free Lunch?

A lot of our decision making stems from the need to protect ourselves emotionally. It is really hard to admit when you made a mistake, that you might have done something wrong to lead you to a bad outcome. Accepting the possibility that you might be at least in part responsible for a bad outcome is hard. Just listen to any poker player after they lose a hand. "I got so unlucky." If luck causes bad outcomes, then it is not our fault. We don't need to examine our bad choices. And we protect our fragile psyche.

Of course, in taking the route of short-run protection, we sacrifice the long-run upside to honest assessment of ourselves. Learning from mistakes is what makes us better decision makers and, ultimately, ensures better outcomes in the future. And nowhere is this more evident than in our assessment of others. Honesty assess your reaction to other people's successes. We all know the phrase "failing upward." When someone gets a promotion it seems we never allow that perhaps they earned it. The knee-jerk reaction is that they schmoozed the right people, that you deserved it more. Rarely do we allow that perhaps someone else might have actually done things better than you, deserved the job more. That you didn't just get unlucky to not have the success of someone else. That they didn't just get lucky to have succeeded.

At the poker tables, this tendency is so clear. One of the most memorable moments in poker television is when Phil Hellmuth lost a hand in the World Series of Poker Main Event and then declared, "If it weren't for luck I'd win every one." Hellmuth was just saying out loud what pretty much every poker player thinks. If they lose a hand the other player got lucky. It is rare to see a poker player admit that perhaps they got outplayed, that their opponent is actually better than they are. When others have success, it emotionally protects us to attribute it to luck because then we don't have to admit that maybe they are doing something better than we are. That would be hard. That might be honest. That might mean that maybe we aren't as smart as we like to think we are.

This dismissal of others' successes to avoid cognitive dissonance might have short term psychological benefits but in the long run is disastrous because assessing and learning from others is generally free. At the poker table, if I get in a hand and make a mistake, I might lose my whole chip stack. There is a high cost to learning from your own missteps. But if I watch other people play and honestly assess what they do better than I do, I get that information at no cost because I get to watch them play hands that I am not in, where I am risking zero dollars. But I only get this no cost feedback if I am willing to honestly and properly assess my opponents' actions.

Business is no different than the poker table. Watching other people fail and, more important, watching other people succeed and learning from those success and failure is almost always free. But it is on you to not assume that every failure means the person played poorly or that every success means the person got lucky. Sometimes the best learning experiences come from understanding outcomes that have absolutely nothing to do with you because those don't cost you anything. But if you dismiss a success as just luck then you are rejecting the free gift that comes with purchase.

Yes, there is a free lunch. You just have to be willing to pay attention to when it is offered.