1. Embrace reality and deal with it
- Understand how reality works and how to deal with it
- Think of life as a game in which each problem is a puzzle to solve. By solving the puzzle, I get a gem in the form of a principle that helps me avoid the same sort of problem in the future
- Some people want to change the world and others want to operate in simple harmony with it and savor life. Neither is better. We need to decide what we value most and choose the paths we take to achieve it
- Getting more out of life isn’t just a matter of working harder at it. It is much more a matter of working effectively
- An accurate understanding of reality is the essential foundation for any good outcome
- Two possible perspectives: top down and bottom up
- Seeing things from the top down is the best way to understand ourselves and the laws of reality within the context of overarching universal laws
- By taking a bottom-up perspective that looks at each individual case, we can see how it lines up with our theories about the laws that we expect to govern it
- To be “good” something must operate consistently with the laws of reality and contribute to the evolution of the whole
- Evolution is the greatest force in the universe
- Fail, learn, and improve quickly. Maximize your evolution
- Be constantly learning and improving –> adaptation through rapid trial and error
- Constant drive toward learning and improvement
- Contribute to the whole and you will likely be rewarded
- We are unbelievably tiny and short-lived and no matter what we accomplish, our impact will be insignificant. But we can matter a tiny bit – and it’s all those tiny bits that add up to drive the evolution of the universe –> the question is how we matter and evolve
- Where you go in life will depend on how you see things and who and what you feel connected to. Decide to what extent you will put the interests of others above your own, and which others you will choose to do so for
- Evolve and contribute to evolution in some tiny way
- Look at reality through the perspective of figuring out how it really works, instead of thinking things should be different. Reality is built to optimize for the whole rather than for me
- The need to have meaningful work is connected to man’s innate desire to improve
- Progress = pain + reflection
- “Man needs difficulties. They are necessary for health” (Carl Jung)
- If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential
- Become comfortable always operating with some level of pain, you will evolve at a faster pace. Embracing the pain and learning from it will get you to the “other side”
- Weigh second- and third-order consequences
- People who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals
- First-order consequences often have opposite desirability from second-order consequences, resulting in big mistakes in decision making
- Quite often the first-order consequences are the temptations, and sometimes they are the barriers that stand in our way
- People who choose what they really want, and avoid the temptations and get over the pains that drive them away from what they really want, are much more likely to have successful lives
- Own your outcomes. You will be more likely to succeed and find happiness if you take responsibility for making your decisions well instead of complaining about things being beyond your control –> internal locus of control
- Look at the machine from the higher level
- Goals – machine – outcomes
- Higher-level thinking gives you the ability to study and influence the cause-effect relationships at play in your life and use them to get the outcomes you want
- Distinguish between two roles: designer of the machine and operator of the machine [cnfr. Hábitos 2 y 3 de Covey]: it is much more important that you are a good designer/manager of your life than a good worker in it. The “designer/ manager you” has to be objective about what the “worker you” is really like
- See yourself and others objectively
- If you as the designer/manager discover that you as the worker can’t do something well, you need to fire yourself as the worker and get a good replacement, while staying in the role of designer/ manager of your own life
- Reflect on whether what you are going after is consistent with your nature
- Don’t confuse what you wish were true with what is really true
- Don’t worry about looking good – worry instead about achieving your goals
- Don’t overweight first-order consequences relative to second- and third-order ones
- Don’t let pain stand in the way of progress
- Don’t blame bad outcomes on anyone but yourself
Evolution is the greatest force in the universe
2. Use the 5-step process to get what you want out of life
- The personal evolutionary process takes place in 5 steps
Have clear goals
- Choosing a goal often means rejecting some things you want in order to get other things that you want or need even more
- Afraid to reject a good alternative for a better one, some people try to pursue too many goals at once, achieving few or none of them
- Never rule out a goal because you think it’s unattainable
- What you think is attainable is just a function of what you know at the moment. Once you start your pursuit you will learn a lot, especially if you triangulate with others; paths you never saw before will emerge
- If you limit your goals to what you know you can achieve, you are setting the bar way too low
- Have flexibility and self-accountability [cnfr. autoresponsabilidad, proactividad]
Identify and don’t tolerate problems
- Every problem you encounter is an opportunity
- Don’t avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at
- Make sure you invest time and energy in exploring the problems that, if fixed, will yield you the biggest results
- Develop a fierce intolerance of badness of any kind
Diagnose problems to get at their root causes
- You can only truly solve your problems by removing their root causes –> distinguish the symptoms from the disease
Design a plan
- Designing precedes doing!
Push through to completion
- Self-discipline to follow your script <– a great plan without execution goes nowhere
- Work habits and clear metrics
3. Be radically open-minded
- The two biggest barriers to good decision making are your ego and your blind spots
- Ego barrier: defense mechanisms that make it hard for you to accept your mistakes and weaknesses
- Blind spots barrier: areas where your way of thinking prevents you from seeing things accurately
- Ego and blind spots are the fatal flaws that keep intelligent, hardworking people from living up to their potential
- Practice radical open-mindedness <– worry that you might not be seeing your choices optimally –> explore different points of view and different possibilities without letting your ego or your blind spots get in your way; replace your attachment to always being right with the joy of learning what’s true
- Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important
- Most people make bad decisions because they are so certain that they’re right that they don’t allow themselves to see the better alternatives that exist
- Decision making is a two-step process: first take in all the relevant information, then decide
- Don’t worry about looking good; worry about achieving your goal
- See things through another’s eyes –> suspend judgement
- Thoughtful disagreement: your goal is not to convince the other party that you are right; it is to find out which view is true and decide what to do about it –> be motivated by the fear of missing important perspectives
- You can significantly raise your probabilities of making the right decisions by open-mindedly triangulating with believable people
4. Understand that people are wired very differently
- Work with independent thinkers who were creative, conceptual, and had a lot of common sense
- Many of our mental differences are physiological: our brains are innately different in ways that set the parameters of what we are able to do mentally
- Find out what you and others are like
- Introverts focus on the inner world and get their energy from ideas, memories, and experiences while extroverts are externally focused and get their energy from being with people
- Some people see big pictures (forests) and others see details (trees) –> intuiting vs. sensing
- Some people like to live in a planned, orderly way and others prefer flexibility and spontaneity; perceivers work from the outside in, planners work from the inside out
- “Shaper”: sb who comes up with unique and valuable visions and builds them out beautifully, typically over the doubts of others; they can navigate back and forth between the big picture and the granular details, counting both as equally important
- Knowing how one is wired is a necessary first step on any life journey. Do what is consistent with your nature and your aspirations. Have the courage to be true to your truest self
I attribute as much of my success to what I’ve learned about the brain as I do to my understanding of economics and investing
5. Learn how to make decisions effectively
- Most of the processes that go into everyday decision making are subconscious and complex
- Decision making is a two-step process: first learning, then deciding
- Weigh first-order consequences against second- and third-order consequences –> long-term vs. short-term
- First pitfall of bad decision making: subconsciously make the decision first and then cherry-pick the data that supports it
Learn well
- Synthesis: converting a lot of data into an accurate picture. The quality of your synthesis will determine the quality of your decision making
- Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace –> consider both the current level and the rate of change
- “By-and-large” is the level at which you need to understand most things in order to make effective decisions –> be imprecise, use approximations
- Remember the 80/20 rule and know what the key 20% is
- Be an imperfectionist. Perfectionists spend too much time on little differences at the margins at the expense of the important things
Decide well
- Two broad approaches to decision making: evidence/logic-based (which comes from the higher-level brain) and subconscious/emotion-based (which comes from the lower-level animal brain)
- Base decisions on logic, reason and common sense
- “Until you make the unconscious conscious, it will direct your life and you will call it fate” (Carl Jung)
- Successful organizations have cultures in which evidence-based decision making is the norm
- Make your decisions as expected value calculations: think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong
- Once you understand expected value, you also understand that it’s not always best to bet on what’s most probable
- Sometimes it’s smart to take a chance even when the odds are overwhelmingly against you if the cost of being wrong is negligible relative to the reward that comes with the slim chance of being right [cnfr. Nassim Taleb: estrategia convexa]
- Try to raise your probability of being right
- Some decisions are best made after acquiring more information; some are best made immediately –> evaluate the marginal benefit of gathering more information against the marginal cost of waiting to decide
- Separate your “must-dos” from your “like-to-dos” and don’t mistakenly slip any “like-to-dos” onto the first list –> have your “must-dos” above the bar first
- Get rid of irrelevant details so that the essential things and the relationships between them stand out – simplify!
- Almost all “cases at hand” are just “another one of those”; identify which “one of those” it is, and then apply well-thought-out principles for dealing with it –> systemized / computerized / algorithm decision making
Thinking –> Principles –> Algorithms
- People who have common sense, imagination and determination, who know what they value and what they want, and who also use computers, math, and game theory, are the best decision makers
Basado en Principles. Ray Dalio. Editorial Simon & Schuster (2017)
