An incredibly useful book on how to make better decisions, set more precise goals, and solve problems more effectively. These are my notes just from part 2, "Life Principles".
Embrace Reality and Deal with It
Be a hyperrealist.
There is nothing more important than understanding how reality works and how to deal with it.
a. Dreams + Reality + Determination = A Successful Life.
Truth—or, more precisely, an accurate understanding of reality—is the essential foundation for any good outcome.
Most people fight seeing what’s true when it’s not what they want it to be.
Be radically open-minded and radically transparent.
a. Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change.
- Learning is the product of a continuous real-time feedback loop in which we make decisions, see their outcomes, and improve our understanding of reality as a result.
b. Don’t let fears of what others think of you stand in your way.
c. Embracing radical truth and radical transparency will bring more meaningful work and more meaningful relationships.
Look to nature to learn how reality works.
When trying to understand anything—economies, markets, the weather, whatever—one can approach the subject with two perspectives:
- Top down: By trying to find the one code/law that drives them all.
- Bottom up: By studying each specific case and the codes/laws that are true for them
While mankind is very intelligent in relation to other species, we have the intelligence of moss growing on a rock compared to nature as a whole. We are incapable of designing and building a mosquito, let alone all the species and most of the other things in the universe. Start from the premise that nature is smarter than I am and try to let nature teach me how reality works.
a. Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are.
- I now realise that nature optimises for the whole, not for the individual, but most people judge good and bad based only on how it affects them.
b. To be “good” something must operate consistently with the laws of reality and contribute to the evolution of the whole; that is what is most rewarded.
c. Evolution is the single greatest force in the universe; it is the only thing that is permanent and it drives everything.
d. Evolve or die.
- The key is to fail, learn, and improve quickly.
Evolving is life’s greatest accomplishment and its greatest reward.
a. The individual’s incentives must be aligned with the group’s goals.
b. Reality is optimising for the whole—not for you.
c. Adaptation through rapid trial and error is invaluable.
d. Realise that you are simultaneously everything and nothing—and decide what you want to be.
- It is a reality that each one of us is only one of about seven billion of our species alive today and that our species is only one of about ten million species on our planet. Earth is just one of about 100 billion planets in our galaxy, which is just one of about two trillion galaxies in the universe. And our lifetimes are only about 1/3,000 of humanity’s existence, which itself is only 1/20,000 of the Earth’s existence.
e. What you will be will depend on the perspective you have.
- You will have 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.
Understand nature’s practical lessons.
I realised that most everything that at first seemed “bad” to me—like rainy days, weaknesses, and even death—was because I held preconceived notions of what I personally wanted. With time, I learned that my initial reaction was because I hadn’t put whatever I was reacting to in the context of the fact that reality is built to optimise for the whole rather than for me.
a. Maximise your evolution.
- The need to have meaningful work is connected to man’s innate desire to improve.
- Relationships are the natural connections to others that make us relevant to each other and to society more broadly.
b. Remember “no pain, no gain.”
c. It is a fundamental law of nature that in order to gain strength one has to push one’s limits, which is painful.
Pain + Reflection = Progress.
If you can develop a reflexive reaction to psychic pain that causes you to reflect on it rather than avoid it, it will lead to your rapid learning/evolving.
a. Go to the pain rather than avoid it.
- Every time you confront something painful, you are at a potentially important juncture in your life—you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.
b. Embrace tough love.
- The quality of your life will depend on the choices you make at those painful moments. The faster one appropriately adapts, the better.
- No matter what you want out of life, your ability to adapt and move quickly and efficiently through the process of personal evolution will determine your success and your happiness.
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.
Own your outcomes.
Whatever circumstances life brings you, 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.
Life doesn’t give a damn about what you like. It’s up to you to connect what you want with what you need to do to get it and then find the courage to carry it through.
Look at the machine from the higher level.
Higher-level thinking — rise above your own and others’ circumstances and objectively look down on them.
a. Think of yourself as a machine operating within a machine and know that you have the ability to alter your machines to produce better outcomes.
- I call the way you will operate to achieve your goals your machine. It consists of a design (the things that have to get done) and the people (who will do the things that need getting done).
b. By comparing your outcomes with your goals, you can determine how to modify your machine.
c. Distinguish between you as the designer of your machine and you as a worker with your machine.
d. The biggest mistake most people make is to not see themselves and others objectively, which leads them to bump into their own and others’ weaknesses again and again.
e. Successful people are those who can go above themselves to see things objectively and manage those things to shape change.
- You shouldn’t be upset if you find out that you’re bad at something—you should be happy that you found out, because knowing that and dealing with it will improve your chances of getting what you want.
- Stop seeing struggling as something negative.
- When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 2. You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change). 3. You can accept your weaknesses and find ways around them. 4. Or, you can change what you are going after.
f. Asking others who are strong in areas where you are weak to help you is a great skill that you should develop no matter what, as it will help you develop guardrails that will prevent you from doing what you shouldn’t be doing.
g. Because it is difficult to see oneself objectively, you need to rely on the input of others and the whole body of evidence.
h. If you are open-minded enough and determined, you can get virtually anything you want.
Bad: Worry about appearing good. Good: Worry about achieving the goal.
Bad: Allow pain to stand in the way of progress. Good: Understand how to manage pain to produce progress.
Use the 5-Step Process to Get What You Want Out of Life
These five steps make up a loop—iterative process
You will need to do all five steps well to be successful and you must do them one at a time and in order.
- e.g. when setting goals, just set goals. Don’t think about how you will achieve them or what you will do if something goes wrong. When you are diagnosing problems, don’t think about how you will solve them—just diagnose them.
You will never handle everything perfectly: Mistakes are inevitable and it’s important to recognise and accept this fact of life.
Have clear goals.
a. Prioritise: While you can have virtually anything you want, you can’t have everything you want.
- Don’t get discouraged and don’t let yourself be paralysed by all the choices. You can have much more than what you need to be happy. Make your choice and get on with it.
b. Don’t confuse goals with desires.
- A proper goal is something that you really need to achieve. Desires are things that you want that can prevent you from reaching your goals.
c. Decide what you really want in life by reconciling your goals and your desires.
d. Don’t mistake the trappings of success for success itself.
e. 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.
f. Remember that great expectations create great capabilities. If you limit your goals to what you know you can achieve, you are setting the bar way too low.
g. Almost nothing can stop you from succeeding if you have a) flexibility and b) self-accountability.
h. Knowing how to deal well with your setbacks is as important as knowing how to move forward.
Identify and don’t tolerate problems.
a. View painful problems as potential improvements that are screaming at you. Each and every problem you encounter is an opportunity.
b. Don’t avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at.
- Acknowledging your weaknesses is not the same as surrendering to them. It’s the first step toward overcoming them. The pains you are feeling are “growing pains” that will test your character and reward you as you push through them.
d. Don’t mistake a cause of a problem with the real problem.
e. Distinguish big problems from small ones.
- Tolerating a problem has the same consequences as failing to identify it.
Diagnose problems to get at their root causes.
a. Focus on the “what is” before deciding “what to do about it.”
b. Distinguish proximate causes from root causes.
- Proximate causes — the actions (or lack of actions) that lead to problems, so they are described with verbs (I missed the train because I didn’t check the train schedule).
- Root causes — they are typically described with adjectives (I didn’t check the train schedule because I am forgetful)
- You can only truly solve your problems by removing their root causes, and to do that, you must distinguish the symptoms from the disease.
c. Recognise that knowing what someone (including you) is like will tell you what you can expect from them.
- More than anything else, what differentiates people who live up to their potential from those who don’t is their willingness to look at themselves and others objectively and understand the root causes standing in their way.
Design a plan.
a. Go back before you go forward.
- Replay the story of where you have been (or what you have done) that led up to where you are now, and then visualise what you and others must do in the future so you will reach your goals.
b. Think about your problem as a set of outcomes produced by a machine.
- Practice higher-level thinking by looking down on your machine and thinking about how it can be changed to produce better outcomes.
c. Remember that there are typically many paths to achieving your goals. You only need to find one that works.
d. Think of your plan as being like a movie script in that you visualise who will do what through time.
- Sketch out the plan broadly at first (e.g., “hire great people”) and then refine it. You should go from the big picture and drill down to specific tasks and estimated time lines (e.g., “In the next two weeks, choose the headhunters who will find those great people”).
- Remember, the tasks are what connect the narrative to your goals.
f. Recognise that it doesn’t take a lot of time to design a good plan.
- A plan can be sketched out and refined in just hours or spread out over days or weeks. But the process is essential because it determines what you will have to do to be effective.
- Too many people make the mistake of spending virtually no time on designing because they are preoccupied with execution. Remember: Designing precedes doing!
Push through to completion.
a. Great planners who don’t execute their plans go nowhere.
- It’s important to remember the connections between your tasks and the goals that they are meant to achieve.
b. Good work habits are vastly underrated. People who push through successfully have to-do lists that are reasonably prioritised, and they make certain each item is ticked off in order.
c. Establish clear metrics to make certain that you are following your plan.
If the process is working, your goals will change more slowly than your designs, which will change more slowly than your tasks.
One last important point: You will need to synthesise and shape well.
- Synthesising — knowing where you want to go and what’s really going on
- The first three steps—setting goals, identifying problems, and then diagnosing them—are synthesising.
- Designing solutions and making sure that the designs are implemented are shaping.
Remember that weaknesses don’t matter if you find solutions.
Each step requires different thinking: (virtually nobody has them all)
- Goal setting (such as determining what you want your life to be) — requires higher-level thinking like visualisation and prioritisation.
- Identifying and not tolerating problems — requires you to be perceptive and good at synthesis and maintaining high standards
- Diagnosis — requires you to be logical, able to see multiple possibilities, and willing to have hard conversations with others
- Designing — requires visualisation and practicality
- Doing what you set out to do — requires self-discipline, good work habits, and a results orientation.
a. Look at the patterns of your mistakes and identify at which step in the 5-Step Process you typically fail.
b. Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.
Understand your own and others’ mental maps and humility.
Humility can be even more valuable than having good mental maps if it leads you to seek out better answers than you could come up with on your own. Having both open-mindedness and good mental maps is most powerful of all.
You can improve by either going up on the mental-maps axis (by learning how to do things better) or out on the open-mindedness axis.
Be Radically Open-Minded
Recognise your two barriers.
The two biggest barriers to good decision making are your ego and your blind spots.
a. Understand your ego barrier.
- Ego barrier — your subliminal defence mechanisms that make it hard for you to accept your mistakes and weaknesses.
b. Your two “yous” fight to control you.
- Prefrontal cortex (upper brain) vs. Amygdala (lower brain)
- e.g. When someone asks, “Why did I let myself eat all that cake?” the answer is “Because the lower-level you won out over the thoughtful, higher-level you.”
- To be effective you must not let your need to be right be more important than your need to find out what’s true.
c. Understand your blind spot barrier.
- Blind spot — areas where your way of thinking prevents you from seeing things accurately.
- Closed-mindedness is terribly costly; it causes you to miss out on all sorts of wonderful possibilities and dangerous threats that other people might be showing you—and it blocks criticism that could be constructive and even lifesaving.
- Those who adapt do so by a) teaching their brains to work in a way that doesn’t come naturally (the creative person learns to become organised through discipline and practice, for instance), b) using compensating mechanisms (such as programmed reminders), and/or c) relying on the help of others who are strong where they are weak.
Practice radical open-mindedness.
Radical open-mindedness is motivated by the genuine worry that you might not be seeing your choices optimally.
It requires you to replace your attachment to always being right with the joy of learning what’s true.
To be radically open-minded you must:
a. Sincerely believe that you might not know the best possible path and recognise that your ability to deal well with “not knowing” is more important than whatever it is you do know.
b. Recognise that decision making is a two-step process: First take in all the relevant information, then decide.
- Taking in others’ perspectives in order to consider them in no way reduces your freedom to think independently and make your own decisions. It will just broaden your perspective as you make them.
c. Don’t worry about looking good; worry about achieving your goal.
d. Realise that you can’t put out (convey their thinking and be productive) without taking in (learn).
e. Recognise that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—only by empathising can you properly evaluate another point of view.
f. Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.
g. Be clear on whether you are arguing or seeking to understand, and think about which is most appropriate based on your and others’ believability.
- But if one person is clearly more knowledgeable than the other, it is preferable for the less knowledgeable person to approach the more knowledgeable one as a student and for the more knowledgeable one to act as a teacher.
- Understand the concept of believability — someone who has repeatedly and successfully accomplished the thing in question—who have a strong track record with at least three successes—and have great explanations of their approach when probed.
Appreciate the art of thoughtful disagreement.
Use questions rather than make statements
Be open-minded and assertive at the same time—you should hold and explore conflicting possibilities in your mind while moving fluidly toward whatever is likely to be true based on what you learn.
Being able to thoughtfully disagree would so easily lead to radically improved decision making in all areas
Triangulate your view with believable people who are willing to disagree.
a. Plan for the worst-case scenario to make it as good as possible.
Recognise the signs of closed-mindedness and open-mindedness that you should watch out for.
Close minded people:
- Don’t want their ideas challenged
- Focus much more on being understood than on understanding others.
- say things like “I could be wrong . . . but here’s my opinion.” This is a classic cue I hear all the time. It’s often a perfunctory gesture that allows people to hold their own opinion while convincing themselves that they are being open-minded.
- Have trouble holding two thoughts simultaneously in their minds.
- Lack a deep sense of humility. Humility typically comes from an experience of crashing, which leads to an enlightened focus on knowing what one doesn’t know.
Open minded people:
- Are more curious about why there is disagreement.
- Genuinely believe they could be wrong; the questions that they ask are genuine.
- Feel compelled to see things through others’ eyes.
- Know when to make statements and when to ask questions.
- Approach everything with a deep-seated fear that they may be wrong.
Understand how you can become radically open-minded.
a. Regularly use pain as your guide toward quality reflection.
b. Make being open-minded a habit.
c. Get to know your blind spots.
- Take some time to record the circumstances in which you’ve consistently made bad decisions because you failed to see what others saw.
d. If a number of different believable people say you are doing something wrong and you are the only one who doesn’t see it that way, assume that you are probably biased.
f. Be evidence-based and encourage others to be the same.
- When you’re approaching a decision, ask yourself: Can you point to clear facts (i.e., facts believable people wouldn’t dispute) leading to your view?
g. Do everything in your power to help others also be open-minded.
h. Use evidence-based decision-making tools.
- What if you could unplug that lower part of your brain entirely and instead connect with a decision-making computer that gives you logically derived instructions, as we do with our investment systems? - read more here...
i. Know when it’s best to stop fighting and have faith in your decision-making process.
Do you deeply believe that finding out what is true is essential to your well-being?
Understand That People Are Wired Very Differently
Because of the different ways that our brains are wired, we all experience reality in different ways and any single way is essentially distorted.
Understand the power that comes from knowing how you and others are wired.
Everyone is like a Lego set of attributes, with each piece reflecting the workings of a different part of their brain. All these pieces come together to determine what each person is like, and if you know what a person is like, you’ll have a pretty good idea of what you can expect from them.
a. We are born with attributes that can both help us and hurt us, depending on their application.
Meaningful work and meaningful relationships aren’t just nice things we chose for ourselves—they are genetically programmed into us.
Man is perpetually suspended between the two extreme forces that created us:
- Individual selection which prompted
- Group selection which promoted virtue
Which of these forces (self-interest or collective interest) wins out in any organisation is a function of that organisation’s culture, which is a function of the people who shape it.
Understand the great brain battles and how to control them to get what “you” want.
a. Realise that the conscious mind is in a battle with the subconscious mind.
- Our greatest moments of inspiration often “pop” up from our subconscious.
b. Know that the most constant struggle is between feeling and thinking.
- Feelings (primarily controlled by our amygdala, which operates subconsciously)
- Rational thinking (primarily controlled by our prefrontal cortex, which operates consciously).
c. Reconcile your feelings and your thinking.
- Those who make progress reflect on what causes their amygdala hijackings.
d. Choose your habits well.
e. Train your “lower-level you” with kindness and persistence to build the right habits.
f. Understand the differences between right-brained and left-brained thinking.
- The left hemisphere reasons sequentially, analyses details, and excels at linear analysis.
- The right hemisphere thinks across categories, recognises themes, and synthesises the big picture.
g. Understand how much the brain can and cannot change.
Find out what you and others are like.
The four main assessments we use are the Myers-Briggs Type Indicator (MBTI), the Workplace Personality Inventory, the Team Dimensions Profile, and Stratified Systems Theory.
a. Introversion vs. extroversion. — I’ve found that it is important to help each communicate in the way that they feel most comfortable.
b. Intuiting vs. sensing. — Intuitive thinker’s attention is focused on the context first and the details second.
h. Shapers are people who can go from visualisation to actualisation.
- Someone who comes up with unique and valuable visions and builds them out beautifully, typically over the doubts of others.
- Shaper = Visionary + Practical Thinker + Determined.
Getting the right people in the right roles in support of your goal is the key to succeeding at whatever you choose to accomplish.
a. Manage yourself and orchestrate others to get what you want.
- Your greatest challenge will be having your thoughtful higher-level you manage your emotional lower-level you.
Learn How to Make Decisions Effectively
Think about the challenge of making all of your decisions well, in a systematic, repeatable way, and then being able to describe the processes so clearly and precisely that anyone else can make the same quality decisions under the same circumstances.
Recognise that 1) the biggest threat to good decision making is harmful emotions, and 2) decision making is a two-step process (first learning and then deciding).
Learning must come before deciding.
what’s most important is that what you know paints a true and rich picture of the realities that will affect your decision.
Failing to consider second and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases.
For me, getting an accurate picture of reality ultimately comes down to two things: being able to synthesise accurately and knowing how to navigate levels.
- Synthesis — the process of converting a lot of data into an accurate picture. The quality of your synthesis will determine the quality of your decision making.
- No sensible person should reject a believable person’s views without great fear of being wrong.
Synthesise the situation at hand.
The key is having the higher-level perspective to make fast and accurate judgments on what the real risks are without getting bogged down in details.
a. One of the most important decisions you can make is who you ask questions of.
b. Don’t believe everything you hear. Opinions are a dime a dozen and nearly everyone will share theirs with you.
c. Everything looks bigger up close.
- That’s why it helps to step back to gain perspective and sometimes defer a decision until some time passes.
d. New is overvalued relative to great.
e. Don’t oversqueeze dots.
Synthesise the situation through time.
a. Keep in mind both the rates of change and the levels of things, and the relationships between them.
- Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace.
b. Be imprecise. Understand the concept of “by-and-large” and use approximations.
c. Remember the 80/20 Rule and know what the key 20 percent is.
d. Be an imperfectionist.
- There are typically just five to ten important factors to consider when making a decision.
Navigate levels effectively.
a. Use the terms “above the line” and “below the line” to establish which level a conversation is on.
- Above-the-line conversation — addresses the main points
- Below-the-line conversation — focuses on the sub-points.
b. Remember that decisions need to be made at the appropriate level, but they should also be consistent across levels.
- In other words, you need to constantly connect and reconcile the data you’re gathering at different levels in order to draw a complete picture of what’s going on.
- Remember that multiple levels exist for all subjects.
- Be aware on what level you’re examining a given subject.
- Consciously navigate levels rather than see subjects as undifferentiated piles of facts that can be browsed randomly.
- Diagram the flow of your thought processes using the outline template shown on the previous page.
Logic, reason, and common sense are your best tools for synthesising reality and understanding what to do about it.
“Until you make the unconscious conscious, it will direct your life and you will call it fate.” — Carl Jung
Make your decisions as expected value calculations.
Once you understand expected value, you also understand that it’s not always best to bet on what’s most probable.
a. Raising the probability of being right is valuable no matter what your probability of being right already is.
b. Knowing when not to bet is as important as knowing what bets are probably worth making.
c. The best choices are the ones that have more pros than cons, not those that don’t have any cons at all.
Prioritise by weighing the value of additional information against the cost of not deciding.
a. All of your “must-dos” must be above the bar before you do your “like-to-dos.” Separate your “must-dos” from your “like-to-dos” and don’t mistakenly slip any “like-to-dos” onto the first list.
b. Chances are you won’t have time to deal with the unimportant things, which is better than not having time to deal with the important things.
Shortcuts for Becoming a Great Decision Maker
Get rid of irrelevant details so that the essential things and the relationships between them stand out.
all “cases at hand” are just “another one of those,” identifying which “one of those” it is, and then applying well-thought-out principles for dealing with it
- Slow down your thinking so you can note the criteria you are using to make your decision.
- Write the criteria down as a principle.
- Think about those criteria when you have an outcome to assess, and refine them before the next “one of those” comes along.
Believability weight your decision making
Avoid the common perils of: 1) valuing your own believability more than is logical and 2) not distinguishing between who is more or less credible.
Convert your principles into algorithms and have the computer make decisions alongside you.
You can express the relationship between these criteria in a simple decision-making formula: if-then, if-then-else statements.
Be cautious about trusting AI without having deep understanding.
I categorise what is going on in the world of computer-aided decision making under three broad types:
- Expert systems — designers specify criteria based on their logical understandings of a set of cause-effect relationships, and then see how different scenarios would emerge under different circumstances.
- Mimicking — computers can observe patterns and apply them in their decision making without having any understanding of the logic behind them.
- Data Mining — powerful computers ingest massive amounts of data and look for patterns.
In order to have the best life possible, you have to: 1) know what the best decisions are and 2) have the courage to make them.
Image credits: Principles by Ray Dalio