IOD Dispatch: Jeff Ma "brings down the house" with analytics
Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  information-insights ibmsoftware
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Both were embodied within the figure of Jeff Ma, the blackjack whiz kid-turned-analytics strategist. In a funny, engaging and at times highly personal presentation, Ma explored the parallels between blackjack table and boardroom and imparted important lessons to succeed in a data-driven world.
Originally an MIT engineering graduate and member of the MIT BlackJack Team, Ma parlayed his experiences devising analytically driven blackjack strategies into the success recounted in the book, Bringing Down The House. The book served as the inspiration for the film “21,” starring Kevin Spacey, Laurence Fishburne and Kate Bosworth.
Ma appears in the film as well – for two minutes, as a blackjack dealer.
“Only true Hollywood magic could transform an average-looking asian guy into a dashingly handsome white guy,” he joked.
According to Ma, there are three main reasons why blackjack is a perfect vehicle to hone your analytics strategy:
First, it's a closed system. Unlike poker, where the rules can change from dealer to dealer, blackjack features fixed and fast rules. A face card is always 10. No cards are ever wild. As such, it's a system that can be modeled and analyzed, and your decisions can be optimized.
Second, the past matters. With a fixed number of cards in each hand, each can be played only once. As such, the odds of landing a “21” will change with each turn. Savvy card counters know to keep tabs on the number of high and low cards that have been played and adjust their tactics accordingly.
Third, there already exist proven strategies to win. Counting cards can cut a casino's advantage by a factor of two, said Ma. A basic strategy can reduce a casino's advantage by a factor of six.
Despite these advantages, Ma said, most blackjack players lose more than they win. Here are the reasons why, and how to avoid them. Business leaders take note: these lessons apply to you as well.
Eschew loss aversion. The fear of losing what they have prevents people from moving forward to greater reward. In a moving personal anecdote, Many people will “stay” on 15, despite basic strategy telling them to hit. Ma recounted how his mother, having suffered a massive debilitating stroke, convinced doctors to operate to remove the blood clot in her brain despite the risks. For him - and eventually for his family – a 22% chance of survival by doing nothing was not good enough. The operation was successful, his mother recovered, and the two danced together at his wedding a few months later.
Focus on the long game. Data-driven decisions don't always pay off. If you hit on 15, for example, you will sometimes go bust. Yet, said Ma, an analytics strategy, consistently executed, will yield better outcomes over the long term.
Decision points are everywhere, You must approach each one from a zero-point frame of reference. Don't ask yourself which decision will prevent a loss; ask yourself which decision will help you win.
Avoid groupthink. In a game that Ma said became his "defining moment," his decision to split a pair of 10s into two different hands – again risking a strong position for a potentially bigger upside – went against the expectations of everyone around him, including the dealer. Yet the move paid off. “You can't make everyone around you happy,” he said. “If you try to you'll never innovate.”
“You have to believe in an analytically driven strategy," said Ma. “Analytics can take the risk out of gambling. They can take the risk out of business as well."
Image courtesy of Wikimedia Commons