By Rainer Vollmar
The desire to maximize profit does not only apply to poker players. It is also present in economy, politics and hundreds of other fields.
Everywhere and in every business people tend to reach, and sometimes breach, their limits.
The End of the Cul-de-Sac
More than 40 years ago Canadian scientists Laurence J. Peter and William Hull developed what's now called “The Peter Principle."
The principle states that in company hierarchies good employees tend to be promoted until they reach their “level of incompetence."
Once they've reached that level above where their talents/competence might be best suited, that's where they stay even though they are "not valuable" anymore.
As you can’t be downgraded in modern hierarchies that employee now remains in a position where he can’t fulfill his tasks. The high point of his career is also the end of a cul-de-sac.
This whole system can only stay operable because employees reach that last stage at different times. The work of the company is done by the employees who haven’t reached their incompetence level yet.
We can see examples of this everywhere in the public sphere -- sometimes even in our direct environment.
High-Limit Games Strewn With Overwhelmed Players
Management people all over the world consider the Peter Principle as highly valuable tool and theory. The book itself has been translated into numerous languages and is still published today.
Now what does all this have to do with poker? Transfer the principle to poker and what you get is higher-limit games strewn with overwhelmed players.
Let’s take an example. Player A is young, ambitious and talented. He practices a lot on lower limits and he climbs up slowly but surely.
He also practices strict bankroll management because he is smart and he wants to make it to the nosebleed stakes.
His win rate of BB/100 hands sinks the higher he plays, but that doesn’t deter him at all.
Finally he turns the high-stakes corner and he finds it hard to get by. He’s not a quitter, though, so he keeps working on his game with plans to eventually beat the current level.
After about 200,000 hands he realizes the competition is too strong and he's not competent enough to beat it. He cashes out his greatly diminished bankroll and quits poker.
There are thousands of (ex-)players like this. In modern Western civilization faster, higher, further is a prevalent slogan and they stagnation is often equated with regression.
This is why our hero tried to climb up to the highest stakes possible. When he finally noticed where he’d ended up, it was too late.
As opposed to high-profile managers, however, a poker player can always call it quits without losing his reputation.
Some people might have noticed our Player A if he’d returned to the lower limits, but this would all have happened within the anonymity of the internet.
Our hero became a victim of the Peter Principle.
Is This the Story of Viktor Blom?
Does this example not remind you of Viktor “Isildur1” Blom?
His promotional value for the industry is indisputable but his results are ultimately negative. Since the beginning of 2013 Blom is down over $5 million on Full Tilt Poker despite several notable upswings mixed in.
Before he became famous Blom worked his way up the limits several times until he reached his breaking point and lost all his money (as much as $7m in just a few months of play).
Every poker player should be aware of the Peter Principle. Even if doesn’t match up with poker 100% it still provides valuable insight.
Everybody has a limit. But to know your limit in poker is is particularly hard because of the additional factor of variance, as it can lead you to become overly self-confident.
If you go on a run you might think you’re stronger than you really are. If you lose you might tend to call it just bad luck.
Apart from that there are new, hungry youngsters every day and the game is constantly changing. Even players who stayed afloat at a high level for a long time might one day be overwhelmed because they are overtaken by new players.
To admit to yourself that you can’t keep up with certain players is essential to keep you from going broke in poker.
If you don’t succeed in avoiding the pitfalls of the Peter Principle, you might end up just like our anonymous hero.