What We Can Learn From Jeopardy’s James Holzhauer

By Pavan Muzumdar
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The other day while listening to the Planet Money podcast, Kenny Malone attempted to dissect how James Holzhauer won more than $1.5 million in just twenty-two appearances on the game show Jeopardy.

As I heard him tell the story, it became very clear that James, although a professional sports better, was hardly gambling his way into winning. I took three takeaways from his approach that would apply to any business.

    1. It’s more than core competencies that will get you ahead.
      As James describes it, by the time you appear on Jeopardy, you’re pretty good at trivia. In other words, all contestants have generally the same level of competency. However, what gives James the edge is his ability to use the buzzer. He consistently scopes his opponents in answering questions and retaining control of the board. Similarly, in business, two companies might have the same quality of product or service, but one will outperform the other by delivering an exceptional customer experience.
    2. Accumulate resources before making the big bets.
      James is particularly good at landing on the Daily Doubles, clues that give the contestant the opportunity to double their score by betting all their earnings to that point. But James doesn’t look for the Daily Doubles in the beginning; he amasses a large pot by going for the high-value clues before hunting the Daily Doubles. Companies also must manage their balance sheets in the same way. A company with a weak balance sheet with a lot of debt and not much cash will not be able to convert a great business idea into a windfall. On the other hand, a moderately good idea supported by a strong balance sheet will likely deliver greater profits.
    3. Manage risk in response to the stage of the game.
      Finally, James is particularly good at managing risk. In the early stages of the game, when there’s an opportunity to make up for losses, James is much likely to take greater risks. As the game draws to a close, he is much more risk-averse and likely to move to cement his position so as to let him appear on the next game where the “risk-clock” resets. Business leaders must similarly be cognizant of the state of the market in their industries and calibrate their bets suitably to minimize downside risk and maximize upside potential.

The above strategy was brilliant, executed flawlessly, and the results spoke for themselves. The way James played the game captures many elements of icube™, described in the book Venture Perfect. Grab your copy to learn repeatable tools to objectively evaluate and mitigate business risk, making you the winner of your business.

Pavan Muzumdar Managing Director