Thursday, February 08, 2007

Texas Holdem Marketing part 3: Research

Sklansky's Fundamental Theorem of Poker:
Every time you play a hand differently from the way you would have played it if you could see all your opponents' cards, they gain; and every time you play your hand the same way you would have played it if you could see all their cards, they lose. Conversely, every time opponents play their hands differently from the way they would have if they could see all your cards, you gain; and every time they play their hands the same way they would have played if they could see all your cards, you lose.

Information, or the lack thereof, is they key ingredient in poker. I know what my cards are and as the community cards are dealt I get a little bit more information but there is always a gap in what I know. I will never during play know exactly what cards my opponents hold. If I did the game would be simple, because I don’t, the more information I have on my opponents cards the more I am to be able to maximise my wins and, as importantly, minimise my losses. Poker professionals are masters at extracting information (although not the sort of information extraction that involves bright lights and heavy blunt objects Vegas used to be famous for), they will scrutinise each hand and remember details of how it was played that may be useful later on in the game. Each bet and raise provides data. When the way a player behaves is matched to the opportunity to see his cards at the end of a hand (when there is a showdown) a good poker player takes notice.

This is where marketing differs from other professions where there is always a way to calculate the best possible move (or a close approximation thereof). In finance or engineering or any of a variety of other professions the answer to a problem is solved by looking at all the information and assessing it from a variety of angles and going through a number of permutations until you come up with a solution that fits the situation given all the information.

If scientific reasoning were limited to the logical processes of arithmetic, we should not get very far in our understanding of the physical world. One might as well attempt to grasp the game of poker entirely by the use of the mathematics of probability.
- Vannevar Bush

In chess given enough computing power you can find a way to beat almost any human player because chess is deterministic. You merely (sorry Bobby Fisher) go through all the possible permutations and possible results and come up with the best move in the circumstances. Marketing is not completely deterministic if it was ads would merely list features and specifications for comparison. We don’t always know why we buy the products we buy let alone why our customers buy the products we sell. In Marketing there will always be a lack of complete information. You will never know exactly what your competitors are up to, you will also never know with absolute certainty how your target market will react to your marketing proposition. This does not mean however that cooking up the campaign in a vacuum send it out the door and praying is the best strategy. The use of, the gathering of and the procesing of information are key to maximising profitable campaigns and minimising losing or negative ones.

Tuesday, February 06, 2007

Occam’s razor and the Business Corollary:

I was thinking of a solution to a business problem recently when Occam’s Razor popped into my head (In Layman’s terms Occam’s Razor states: "All things being equal, the simplest solution tends to be the best one.") And that got me thinking about the opposing forces of logic and self interest in business.

In business more is better; more hours, more product features, more ideas no one ever gets told off for putting in extra effort. In Science, Mathematics and even in Art the simplicity of the solution is often as praiseworthy as the solution itself.

In Business I often come across the opposite the complexity and the input are praised often above the outcome. In a corporate environment the hours you are seen at your desk are more measurable than the simple solutions to complex problems that might even reduce your own workload. A reduced workload that might even highlight you as a non productive employee

So with that I give you:
Occam’s Business self interest Corollary: "All things being equal, the solution that improves personal self interest tends to be the implemented."