Using emergence to win at poker

The most popular game in the London poker clubs of the 1960's was a variation known as "five card stud poker with a short deck" This was the game preferred by most professionals because of its high skill to luck ratio. It was played with a regular deck of cards but with the twos to sixes removed. This gives a thirty-two card deck: ace high with the lowest card a seven.

The game starts by all players putting a small amount of money (the ante) into a central kitty (the pot). The first card is dealt face down to each player followed by a card face up. Then there is a round of betting where players can call, drop out or raise. In this round, if a player doesn't like the first two card they are dealt they can drop out without contributing any more to the pot. For those who stay in, another card is dealt face up and there is another round of betting. Two more rounds of face up cards with betting sees the final betting taking place with each player left displaying one card face down (the card in the hole) and four cards with their faces exposed.

The strategies of players vary immensely, but they can be grouped into two broad categories: the carabino strategy and the open strategy. The carabino strategy is a safe and steady style which relies upon playing from strength. At its extreme, it can mean only staying in to play a hand if the first two cards dealt are aces (one showing the other hidden). In other words, the carabino strategy allows the players to play only if their cards cannot be beaten by any other hand on the table.

At first thoughts, the carabino strategy seems unbeatable. Always playing from strength and only playing or continuing if the odds are heavily in your favor. However, the professional poker players don't play this way, they play what is called "an open game"; a strategy which allows them to prey on the novices who adopted the more careful carabino strategy. They play with the anticipation of an emergence giving them the initiative and a winning advantage.

Let's take the case of the really cautious player who will only bet in the first round if he has been dealt two aces back to back. A professional poker player will have very quickly recognised the players style of play and be aware of the near certainty that the careful player has aces back to back. The professional might have, say, a nine showing and a seven in the hole. He'll look around at all the other cards and if there are no seven or nines showing he'll call the bet.

On the second round, say neither the careful player nor the professional improve, perhaps the careful player gets a king and the professional gets a queen. If no other player shows any improvement the careful player can be confident in making a large bet because he knows he has the highest cards on the table. At this stage the professional will assess the chances of each of the players improving in the next round. If another ace or king has come out he'll know that the chances of the careful player's hand improving is lessened. If there are still no nines or queens showing, the professional will know that with the short deck there is a very good chance of an improvement to his own hand. He will then call the bet, perhaps even raising the stakes even though he knows he has an inferior hand.

When the next card is dealt to each player, if the professional player improves and the careful player with the two aces doesn't, the professional will be in an advantageous position: even though he has an inferior hand. To see why, let's say the professional has drawn a nine (likely, because there are three left to come) and the careful player has drawn a jack. The careful player must assume that there is a strong possibility of the professional having more than just the two nines: probably three nines. Especially if the professional had raised into the ace in the round before.

As soon as the professional has a showing advantage, he'll make an extremely high bet. This places the careful player in a dilemma. He'll know the professional might be bluffing but can he risk taking a chance? Its not only this bet he must call, he knows that there will be a further card to come and another round of betting which could force him into taking an even costlier risk.. Invariably, the cautious player will fold his cards and drop out, even though he has the winning hand.

In this way a professional poker player can win more hands than the normal run of luck would allow. He will not win every time, as the careful player can get lucky, but ,the open play will ensure that over a series of several hands the professional will nearly always come out on a winner.

Now, if we abstract away from this poker game scenario the principle essence, we find that the strategy of the professional poker player is to anticipate a sudden unpredictable change. The professional poker player isn't calculating the odds of his hand against the opponents hand, he's counting on an emergence which will provide an opportunity to engineer an advantage.

This is just the kind of strategy which is needed for success in e-commerce: getting into a position to take advantage of any new developments before knowing what they will be and when they are likely to occur. Such a strategy need not rely on prediction or guesswork, it can be logically calculated using special conceptual tools based upon probabilities.

Such strategies are not intuitive. To see why such a strategy cannot be envisaged by conventional business thinking, try to create a business plan for this approach. See if you can draw up a projected cash flow. Imagine the expression on a bank manager's face if you went into a bank to ask for a loan to finance a potentially winning strategy for a game of poker.

Yet, this is the only kind of strategy which is appropriate for e-commerce businesses in the Information Age. Everything is changing so rapidly: the technology, the software the hardware. All is enhanced by the speed with which information moves around the Internet. This is not a stable environment in any sense and any strategy based upon prediction or forward planning is bound to be inferior to a strategy which is taking advantage of unpredictable change and emergence.

(Note: Although the game of poker illustrates rather neatly the principle of using the anticipation of emergence as part of a winning strategy, the reader must not think that the game of poker itself has any relevance to e-business or e-commerce. As we shall be seeing later, poker is a zero sum game where winners win only what losers lose. E-business is a game where everyone can be winners. It is in seeking out these win-win situations that is the key to entrepreneurial success; it is also the key for successful business activity in the Information Age).