Author

Ray Dalio

Summary

A historical account of the rise and fall of empires and the reasons behind them.

Takeaways

History is repeating itself in well-defined cycles that determine the world order and the relationship of countries. Empires and dynasties rise and decline in a Big Cycle that is driven by universal cause and effect relationships that are in turn determined by fundamental characteristics of human nature such as fear, greed, jealousy, and other basic emotions. Each cycle has clear markers that allows us to see where we are in it.

Within each cycle are other cycles. The most important three cycles are the long-term debt and capital markets cycle, the internal order and disorder cycle, and the external order and disorder cycle. Each cycle follows a specific progression. As an example, the internal order cycles typically proceeds in the following way.

1. New internal order and new leadership
2. Resource-allocation systems and government bureaucracies are built and refined
3. Peace and prosperity
4. Excess and widening of wealth and other gaps
5. Bad financial conditions and intense conflicts
6. Civil wars and revolution

As we move through the cycles we will encounter times that are radically different than the past but similar to many times in history. Developing a deeper understanding of the universal principles that govern the development of cycles and new world orders helps to better anticipate what is to come.

Quotes

“Values change from generation to generation during the rise to the top—from those who had to fight to achieve wealth and power to those who inherited it. The new generation is less battle-hardened, steeped in luxuries, and accustomed to the easy life, which makes them more vulnerable to challenges."

“By the way, spending money on investment and infrastructure rather than on consumption tends to lead to greater productivity, so investment is a good leading indicator of prosperity."

“In fact, improvements in education and infrastructure, even those financed by debt, were essential ingredients behind the rises of virtually all empires, and declines in the quality of these investments were almost always ingredients behind empires’ declines. If done well, these interventions can more than counterbalance the classic toxic mix."

“Watch populism and polarization as markers. The more that populism and polarization exist, the further along a nation is in Stage 5, and the closer it is to civil war and revolution. In Stage 5, moderates become the minority. In Stage 6, they cease to exist."

Author

Joseph Buchdahl

Summary

An analysis of the science, psychology and philosophy of gambling.

Takeaway

Gambling is the speculation on the future that can take on different forms such as casino games, sports betting, and financial investing. Outcomes in these areas are hard to predict and it is even harder to make money from it against benchmarks that encapsulate the collective information of large crowds. Gamblers often underestimate the randomness that determine gambling outcomes and attribute positive outcomes to their own ability to predict the future.

Despite the fact that gambling is only lucrative for a negligible number of skilled gamblers, people continue to gamble. This might be related to the human desire to explain and control outcomes to instill a sense of certainy in an uncertain world.

Quotes

“According to this hypothesis, if reward uncertainty was not a source of motivation most predictive behaviours would extinguish because of the high failure rate. In other words, allowing an animal to persevere in a task is only possible if its behavior is motivated by a lack of predictability rather than the reward itself."

“If the purpose of gambling is to achieve authority over uncertainty, to feel in control of one’s destiny, surely everyone who plays sensibly and reasonably is a winner."

“Where luck is dominant, there is very little connection between the process and the outcome. If all you care about is outcomes, you’re liable to draw erroneous conclusions. On the contrary, don’t study winners to see what caused them; study the process to see whether it consistently led to success."

Author

Mike Walsh

Summary

Anecdotes about modern leaders and their approach to decision making.

Takeaways

We experience a time of accelerated change that is unlikely to slow down in the future. With new technologies emerging and more data being available to influence decision making, leaders need to adjust their way of approaching problems. For example, successful leaders in the “algorithmic age” apply first principles thinking to come up with solutions that can be carried out by computers.

Quotes

“If you are simply automating your existing processes, adding a chatbot to your website, or updating your mobile app, then in all probability you are not thinking big enough about your future opportunities. Too often, digital transformation is just digital incrementalism."

“In the future, the most effective computational thinkers will be those who can directly express their ideas and execute their strategies in domain-specific programming languages."

“Dumbing down AI platforms to the extent that we can actually understand them may undermine their effectiveness. It is often more important to know why a particular optimum or target was chosen than to be able to explain the reasoning behind an algorithmic decision."

Author

Timothy Ferris

Summary

Practical tips to develop a richer lifesyle.

Takeaways

Working hard for decades to afford an enjoyable retirement is an outdated concept. It is better to schedule mini-retirements and other exciting activities periodically. A “newly rich” lifestyle can be financed by developing products or ideas that can be sold to generate cash flow outside of established employment patterns.

Quotes

"‘Someday’ is a disease that will take your dreams to the grave with you. Pro and con lists are just as bad. If it’s important to you and you want to do it ‘eventually,’ just do it and correct course along the way."

“What we fear doing most is usually what we most need to do. As I have heard said, a person’s success in life can usually be measured by the number of uncomfortable conversations he or she is willing to have."

“It’s lonely at the top. Ninety-nine percent of people in the world are convinced they are incapable of achieving great things, so they aim for the mediocre. The level of competition is thus fiercest for ‘realistic’ goals, paradoxically making them the most time- and energy-consuming."

“The question you should be asking isn’t, ‘What do I want?’ or ‘What are my goals?’ but ‘What would excite me?'"

Author

Stephen J. Dubner und Steven Levitt

Summary

A collection of stories that illustrate how to think more productively, creatively, and rationally.

Takeaways

People have difficulties thinking rationally. They have biases that leads them to seek evidence that confirms what they already think, or are tempted to adopt views of friends, families, and colleagues.

“Thinking like a freak” means to get comfortable with admiting to not know the answer to a question. A “freak” re-defines the problem to answer the right questions, identifies the root cause, and thinks small to avoid intractable problems.

Quotes

“Incentives are the cornerstone of modern life. And understanding them—or, often, deciphering them—is the key to understanding a problem, and how it might be solved. Knowing what to measure, and how to measure it, can make a complicated world less so."

“A growing body of research suggests that even the smartest people tend to seek out evidence that confirms what they already think, rather than new information that would give them a more robust view of reality."

“Thinking like a Freak may sometimes sound like an exercise in using clever means to get exactly what you want, and there’s nothing wrong with that. But if there is one thing we’ve learned from a lifetime of designing and analyzing incentives, the best way to get what you want is to treat other people with decency."

Author

Ray Dalio

Summary

The life and work principles of Ray Dalio, founder of investment firm Bridgewater Associates.

Takeaways

An idea meritocracy is the best way to make decisions in a company. An idea meritocracy requires a commitment to truth and transparency. It can be achieved if people are open minded and ideas are evaluated based on the track record of the people who contribute them. The process can be supported by writing down and refining principles that support decision making and reflect learnings from the past.

Quotes

“In 1966, asset prices reflected investors' optimism about the future. But between 1967 and 1979, bad economic surprises led to big and unexpected price declines. Not just the economy and the markets but social sentiment deteriorated as well. Living through that taught me that whilst almost everyone expects the future to be a slightly modified version of the present, it is usually very different."

“People still make the most important decisions better than computers do. To see this, you need look no further than at the kinds of people who are uniquely successful. Software developers, mathematicians, and game-theory modelers aren’t running away with all the rewards; it is the people who have the most common sense, imagination, and determination."

“Be especially wary of those who comment from the stands without having played on the field themselves and who don’t have good logic, as they are dangerous to themselves and others."

“Good metrics come about by first thinking of what information you need to answer your pressing questions and then figuring out how to get it. They do not come about by gathering information and putting it together to see what it tells you."

Author

Brendan Reid

Summary

Advice for a more strategic approach to career planning.

Takeaways

Corporations typically don’t operate rationally as they consist of people who have their own benefits in mind. Career progression requires a strategic approach and tactical steps contrary to commonly accepted practices.

1. Don’t be overly passionate about your ideas and rather be objective in providing optionality
2. Embrace the changes everyone else hates
3. Learn to promote your ideas instead of refining them without feedback
4. Avoid a too strong focus on result orientation and instead spend time expanding your skill set
5. Don’t be a part of the heard, and don’t gossip about peers and superiors
6. Find big problems to solve
7. Don’t hold peers accountable and mentor them wherever possible

Quotes

“People inherently want to work with people similar to themselves and who they like. Any strategy for managing a career that includes not being liked by others is flawed."

“Isn’t passion what will make people want to follow you? That is only partially correct. Passion for the best path, irrespective of whose idea it was, is a virtue that endears people. Passion for your path, because you know it to be right, is just a bullying tactic disguised as innovativeness."

“Results have a short shelf life. Skills have value over many years and roles."

“Avoid the herd mentality at all costs. Start promoting your projects. Be at your best when difficult change is afoot and everyone around you is rebelling. Stop holding people accountable and start helping them to succeed. Choose to be objective over passionate when presenting ideas and strategies. And favor high-scoring projects over reliable performance of everyday tasks."

Author

Carl Anderson

Summary

A blueprint to create a data-driven and analytics focused organization.

Takeaways

Data-driven organizations are more successful and generate more value through better decision making.

For a company to be data-driven it must have the right culture and talent in place to use data effctively along the so called analytics value chain. Sponsorship from high profile positions in the organization is needed to implement a culture that values testing and experimentation to derive insights that can give a competitive advantage.

In a data-driven organization, relevant data of high quality feeds reports and stimulates deeper analyses that are presented to decision makers who incorporate them in their decision making to influence the direction of the company.

Quotes

“A data-driven organization will almost certainly be choosing among future options or actions using a suite of weighted variables. Resources are always finite, and there are always pros and cons for different reasonable courses of action. One should gather data for each of the set of variables that are of concern or interest and determine weights among those to generate a final leading decision."

“Data is the raw, unprocessed facts about the world. Information is captured, processed data, while knowledge is a set of mental models and beliefs about the world built from information over time."

“This pseudo-progression is often labeled as analytics maturity. If you do a Google image search for ‘analytics maturity’, you will see what I mean; that many BI vendors and practitioners present this as set of stepping stones with unidirectional arrows pointing from one level to the next. Analytics is not like that: it cuts across levels within an analysis, and different parts of the organization can be engaged in analyses of differing degrees of sophistication at any one time."

“The key here is to start with the question to be answered—be question and decision focused rather than data focused. By setting out the objective clearly and unambiguously, you stand a better chance of defining which questions need to be answered and consequently which data should be collected, which experiments should be run, and what metrics you are trying to drive."

Author

Reed Hastings, Erin Meyer

Summary

The story of establishing a culture of freedom and resonsponsibility at Netflix.

Takeaways

Netflix leadership has identified two key ingredients for a creative and innovative culture: candor and talent density. Employees are empowered to contribute their opinions and ideas. They need to get enough context about the business priorities to take ownership and make informed decisions without the burden of a buerocratic approval process. Netflix aims to attract top talent and rather pays for one highly capable employee than for ten mediocre ones.

Quotes

“If you can’t afford to pay your best employees top of market, then let go of some of the less fabulous people in order to do so. That way, the talent will become even denser."

“When you succeed, speak about it softly or let others mention it for you. But when you make a mistake say it clearly and loudly, so that everyone can learn and profit from your errors. In other words, ‘Whisper wins and shout mistakes.'"

“These are all ways of controlling people rather than inspiring them. It’s not easy to avoid chaos and anarchy as you remove these controls, but if you develop every employee’s sense of self-discipline and responsibility, help them develop enough knowledge to make good decisions, and develop a feedback culture to stimulate learning, you’ll be amazed at how effective your organization can be."

“What we’ve learned is that in order to integrate your corporate culture around the world, above all you have to be humble, you have to be curious, and you have to remember to listen before you speak and to learn before you teach. With this approach, you can’t help but become more effective every day in this ever-fascinating multicultural world."

Author

Daniel Kahneman, Olivier Sibony, Cass R. Sunstein

Summary

A summary of decision hygiene practices to reduce noise in judgments.

Takeaways

Noise is ubiquitous in situations that require judgment and leads to unwanted and costly variability and unfairness in decisions. The reasons for noise in judgments are manifold. People have cognitive biases and a natural preference for causal thinking that finds comfort in finding coherent explanations even if the reality is more complex and less predictable.

Adherence to decision hygiene principles reduces noise. The goal of the principles is to delay premature intuition and to limit the influence of cognitive biases. For example, averaging independent judgments, or relying on formulas and simple models that are noise free allows for consistent judgment in situations that are similar to each other.

Quotes

“In summary, what people usually claim to strive for in verifiable judgments is a prediction that matches the outcome. What they are effectively trying to achieve, regardless of verifiability, is the internal signal of completion provided by the coherence between the facts of the case and the judgment. And what they should be trying to achieve, normatively speaking, is the judgment process that would produce the best judgment over an ensemble of similar cases."

“The illusion of validity is found wherever predictive judgments are made, because of a common failure to distinguish between two stages of the prediction task: evaluating cases on the evidence available and predicting actual outcomes. You can often be quite confident in your assessment of which of two candidates looks better, but guessing which of them will actually be better is an altogether different kettle of fish."

“Causal thinking helps us make sense of a world that is far less predictable than we think. It also explains why we view the world as far more predictable than it really is. In the valley of the normal, there are no surprises and no inconsistencies. The future seems as predictable as the past. And noise is neither heard nor seen."

“Most people are surprised to hear that the accuracy of their predictive judgments is not only low but also inferior to that of formulas. Even simple linear models built on limited data, or simple rules that can be sketched on the back of an envelope, consistently outperform human judges. The critical advantage of rules and models is that they are noise-free. As we subjectively experience it, judgment is a subtle and complex process; we have no indication that the subtlety may be mostly noise. It is difficult for us to imagine that mindless adherence to simple rules will often achieve higher accuracy than we can—but this is by now a well-established fact."