Category Archives: Books

Genius: The Natural History of Creativity by Hans Eysenck

Summary

  1. Defining genius in a psychological manner. Genius, defined as supreme creative achievement, socially recognized over the centuries, is the product of many different components acting synergistically, i.e., multiplying with each other, rather than simply adding one to the other. Among the components are high intelligence, persistence, and creativity, regarded as a trait. Trait creativity may or may not issue in creative achievement, depending on the presence of the many other qualifications and situational conditions. Prominent among these additional qualifications are certain personality traits, such as ego-strength (the inner strength to function autonomously), to resist popular pressure, and to persist in endeavor in spite of negative reinforcement…Chief among these cognitive features is a tendency to overinclusiveness, an inclination not to limit one’s associations to relevant ideas, memories, images

Key Takeaways

  1. Genius and Psychoticism
    1. Genius is linked to but not full psychosis. Psychoticism may hold key to better understanding of genius
    2. Psychosis not correlated to genius as commonly thought; high pathology short of psychosis is helpful, as is ego-strength (emotional stability)
    3. Schizophrenics have ‘over inclusive’ thinking – filter mechanism breaks down and everything is important and related all at once. This looseness of thinking also found in the most creative, but doesn’t become psychosis
  2. Talent vs. Genius
    1. Talent works, genius creates – argues talent and genius lie on a continuum, not discrete
    2. Talent clusters in families, genius does not
      1. Necessary characteristics needed too are unlikely to cluster
      2. Despite Galton’s hypothesis of ’eminence’ being normally distributed, the evidence from creativity as achievement shows it to be very abnormally distributed
  3. Intelligence vs. Genius
    1. The distinction between a dispositional variable and what we might call an achievement variable (school success, production of a work of genius) is absolutely vital in understanding psychological analyses of abilities and traits. The distinction currently made between trait and state, say of anxiety, embodies the distinction. The dispositional hypothesis states that some people are more likely than others to react with anxiety to situations perceived as dangerous, and to perceive as dangerous situations which to others may not appear to be so. But a state of anxiety may be induced even in non-anxious persons by presenting them with a very real danger, while even those high on trait anxiety may be quire relaxed up on occasion when no trace danger looms
  4. IQ
    1. IQ tests very predictive of success, seems to be about 70% biological
    2. High IQ does not equate to genius, necessary but not sufficient (ambitious, chunking, training, perseverance)
    3. Achievement tends to be higher in nearly every category, contra to the common perception of the idiot savant
    4. Personality correlates with higher achievement as well
    5. We may incorporate Galton’s view as follows: Capacity (intelligence, special abilities) x Zeal (persistence, hard work) x Striving (motivation, fighting spirit) –> Reputation –> Genius
    6. Cognitive variables (intelligence, knowledge, technical skills, special talent) x environmental variables (political-religious, cultural, socioeconomic, education) x personality variables (internal motivation, confidence, non-conformity) –> Creative Achievement
  5. Creativity
    1. Often, the most creative act is the selection of the problem. Such a selection takes into account the importance of the problem, how much is known about it, previous attempts, possible remote sources of information not previously considered, probability that the problem is soluble at the present time, and many more
      1. Poincare – Invention is discernment, choice
    2. All cognitive endeavors require new associations to be made, or old ones to be reviewed. There are marked differences between individuals in the speed with which associations are formed. Speed in the formation of associations is the foundation of individual differences in intelligence. Only a sub-sample of associations is relevant in a given problem. Individuals differ in the range of associations considered in problem-solving. Wideness of range is the foundation of individual differences in creativity. Wideness of range is in principle independent of speed of forming associations suggesting that intelligence and creativity are essentially independent. However, speed of forming associations leads to faster learning, and hence greater number of elements with which to form associations. The range of associations considered for problem-solving is so wide that a critical evaluation is needed to eliminate unsuitable associations. Genuine creativity requires a) a large pool of elements to form associations, b) speed in producing associations, and c) a well-functioning comparator to eliminate false solutions.
    3. Mark Kac on Ramanujan: An ordinary genius is a fellow that you and I would be just as good as, if we were only many times better. There is no mystery as to how his mind works. Once we understand what he has done, we feel certain that we, too, could have done it. It is different with magicians. They are, to use mathematical jargon, in the orthogonal complement of where we are and the working of their minds is for all intents and purposes incomprehensible. Even after we understand what they have done, the process by which they have done it is completely dark.
    4. Key factors for creativity – resourceful, insightful, individualistic, reflective, intelligent, interests (wide), humorous, clever, inventive, self-confident, original, interests (narrow), confident, egotistical, unconventional
    5. Novelty emerges from an individual mind, when it is judged by a committee, orthodoxy will usually prevail
    6. Difficulty in scaling innovation – government entities try to by research and innovation the way they buy potatoes (committee, forms, etc..) and then a top-down approach where they give preference to areas that the government indicates are useful
    7. Fluency – Flexibility – Creativity
      1. Fluency – total number of responses
      2. Flexibility – various categories of response
      3. Originality – unusual, clever, or original responses
      4. Elaboration – how elaborate the response is, in terms of multiple details given
        1. Want originality (unique) + Fluency (number of ideas)
    8. High, but not the highest intelligence, combined with the greatest degree of persistence, will achieve greater eminence than the highest degree of intelligence with somewhat less persistence
    9. Training creativity does little – genetic and synergistic multiplier of right traits
  6. Personality
    1. Independence in attitude and social behavior, dominance, introversion, openness to stimuli, wide interests, self-acceptance, intuitiveness, flexibility, social presence and praise, an asocial attitude, concern for social norms, radicalism, rejection of external constraints
    2. The single trait that rates highest among geniuses is the desire to excel
    3. Some common traits – Middle/upper-middle class, Jewish or Protestant, educated, loss of one or both parents before 15
    4. 20-40 are the peak ages, slow decline after that
    5. It is possible that an excess of dopamine creates work-addicted geniuses that get positive reinforcement through their labors
  7. Intuition
    1. Simonton says that by ‘intuitive’ he means behavioral adaptations to the environment which are unconscious, ineffable (impossible to verbalize), and essentially probabilistic in character
    2. General Intelligence + Associations
    3. Intuition for complex tasks, analysis for the simple
    4. Great genius, the most creative, have the hardest time fitting in – they do not abide by social norms, so typically just get ignored
  8. Other
    1. Major innovations tend to come from outside the given field
    2. Clusters of genius in time may be due to great teachers
    3. Sudden illumination is a manifest sign of long, unconscious prior work
      1. There is the preliminary labor, the incubation period, the sudden integration, owing its existence to inspiration rather than conscious logical thought, and finally the verification or proof, perfectly conscious

What I got out of it

  1. An incredibly fun and deep dive into genius. Love the multiplier analogy – Capacity (intelligence, special abilities) x Zeal (persistence, hard work) x Striving (motivation, fighting spirit) –> Reputation –> Genius

The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time by Jim McElvey

Summary

  1. An innovation stack is a series of interconnected skills, competencies, products, services, that allow you to solve a problem in a way nobody else has and few others can.

Key Takeaways

  1. An innovation stack is at the core of the most successful companies of history. They solve problems that nobody has been able to solve before. It forces you to be creative even if you don’t want to be
  2. Words matter and in this case the author considers an entrepreneur somebody who is a crazy explorer. The perfect problem for the entrepreneur is one that can be solved but whose solution is not yet known
  3. It is difficult to get feedback so try to parse through where there could be feedback failure and what that means for your product or service.
  4. Making things a little bit difficult so the user really has to pay attention and struggle a little bit really helps damn remember and process what they’ve learned ( ikea effect)
  5. There is a subtle yet profound difference between having low prices and the lowest prices. Low means always giving value to the consumer whereas the west is always relative where are you always have to keep an eye out on the competition and what they’re doing. Your prices should arise out of your innovation stack. You should seek low prices in order to build customer trust, corporate alignment, and competitive advantage. Every company the author studied sought out low prices
  6. Disruption is an overused word today. The author found that the vast majority of successful companies brought new people into the market rather than simply stealing from the incumbents. The focus should be on building and not destroying. Copy when you can, but come up with new solutions when needed
  7. VC’s fund expansion, not exploration
  8. If you’re going to do something brand new, you will be afraid. You can’t get rid of this, but you can learn to effectively deal with it. There is no expertise for those who are truly innovative but these people share stubbornness and perseverance. They care deeply about the perfect problem they are solving for. When you solve a problem you care about, it brings you energy
  9. Business people survive by copying what already exists and do so successfully. We survive because we can replicate. This is natures solution to entropy
  10. Timing is everything m. Right feels early. It a critical component of your innovation stack doesn’t exist yet, work on other things until that step becomes feasible
  11. The world is a series of interdependent innovation stacks. When something new is presented, a whole new world of possibilities is unlocked
  12. You need to have every element in the stack for it to truly work. You can’t pick and choose and this is why copying a truly innovative company is quite hard l. Each element impacts every other element,/8 this quickly becomes an exercise in mathematics where the likelihood of copying 10 things correctly is really low
  13. History is the best place to learn about innovation stocks. These are the truly world changing companies
  14. Stay laser focused on your key customers and the innovation stack that serves them. This is much better than focusing on what the competition is doing
  15. Getting statistics on a market that doesn’t exist yet is difficult if not impossible. Remembered that invisible does not mean not interested
  16. Customers who trust you is more valuable than customers who love you.
  17. There are no answers for the new. We all start at square zero when trying to solve something that hasn’t been done before

What I got out of it

  1. Very helpful book to help frame different types of businesses, questions, answers, innovations. Creating interdependent, interlocking innovations makes you nearly impossible to compete with, especially when you are solving a problem that hasn’t been solved before

The Strategy of Conflict by Thomas Schelling

Summary

  1. On the strategy of pure conflict – the zero-sum games – game theory has yielded important insight and advice. But on the strategy of action where conflict is mixed with mutual dependence – the non-zero sum games involved in wars and threats of war, strikes, negotiations, criminal deterrence, class war, race war, price war, and blackmail; maneuvering in bureaucracy or in a traffic jam; and the coercion of one’s own children – traditional game theory has not yielded comparable insight or advice. These are the “games” in which, though the element of conflict provides the dramatic interest, mutual dependence is part of the logical structure and demands some kind of collaboration or mutual accommodation – tacit, if not explicit – even if only in the avoidance of mutual disaster…This independence of expectations is precisely what distinguishes a game of strategy from a game of chance or a game of skill. In the pure-coordination game the interests are convergent; in a pure-conflict game the interests are divergent; but in neither case can a choice of action be made wisely without regard to the dependence of the outcome on the mutual expectations of the players.

Key Takeaways

  1. Aka the theory of interdependent decisions. How do your decisions and the decisions of those you are working, competing, coordinating with impact each other?
  2. Sometimes it is rational to be irrational
  3. Bargaining – each party is guided by what they expect the other party will accept. The coordination of expectations is analogues to the coordination of behavior when communication is cut off
    1. All about knowing, setting, understanding expectations.  Coordination of expectations is the name of the game
    2. Tit for tat with forgiveness, quick retaliation, clear expectations
  4. The voluntary surrender of freedom is very powerful
  5. Transfer of power to a third party is powerful – “I’m sorry, the board said I can only go up to $50,000. My hands are tied.”
  6. Prediction with shared interests – finding some clue, some focal point, some key that is mutually recognized as the key becomes the key. The chance of this happening are greater than the bare logic of abstract random probabilities would ever suggest.
  7. Early steps to increase success – keep lines of communication open, find mediators with prior understanding, a competitor who is willing to partake in these steps
  8. Trust is often achieved simply by the continuity of the relation between parties and the recognition by each that what he might gain by cheating in a given instance is outweighed by the value of the tradition of trust that makes possible a long sequence of future agreement. By the same token, “trust” may be achieved for a single discontinuous instance, if it can be divided into a succession of increments
    1. Play iterated games whenever possible. If one-off, find a way to try to divide it into a succession of increments
  9. Many interesting game tactics and game situations depend on the structure of communication, particularly asymmetries in communication and unilateral options to initiate communication or to destroy it. Threats are no good if they cannot be communicated to the persons for whom they are intended; extortion requires a means of conveying the alternatives to the intended victims
  10. If the essence of a game o strategy is the dependence of each person’s proper choice of action on what he expects the other to do, it may be useful to define a “strategic move” as follows: A strategic move is one that influences the other person’s choice, in a manner favorable to oneself, by affecting the other person’s expectations on how one’s self will behave. One constrains the partner’s choice by constraining one’s own behavior. The object is to set up for one’s self and communicate persuasively to the other player a mode of behavior (including conditional responses to the other’s behavior) that leaves the other a simple maximization problem whose solution for him is the optimum for one’s self, and to destroy the other’s ability to do the same…Hardly anything epitomizes strategic behavior in the mixed-motive game so much as the advantage of being able to adopt a mode of behavior that the other party will take for granted…In the mixed-motive game, one is interested in conveying the truth about his own behavior – if, indeed, he has succeeded in constraining his own behavior along lines that, when anticipated, win.

What I got out of it

  1. In non-zero sum games, the name of the game is to coordinate expectations, tit for tat with forgiveness, quick retaliation when expectations are broken

Dear Father, Dear Son: Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. – Edited by Joseph Ernst

Summary

  1. Some personal and professional letters between father and son 

Key Takeaways

  1. Every right implies responsibility, every opportunity an obligation, every possession a duty
  2. “We receive our pay from you as we go, ten fold. Confidence is a plant of slow growth, but in your case it was a sturdy plant long years ago. We are grateful beyond measure that we can trust, and do trust you in every place without reserve,” – Sr. to Jr. 
  3. “When I try, although ever so weakly, to express my appreciation of all these things to you, I mean to include Mother as well, for are not you and Mother one? So you see, as I reflect upon my blessings on this birthday, I find, as I constantly do when I take inventory, that my cup is always more than running over and my heart goes up in a prayer of thanksgiving to the Heavenly Father for His great and wonderful goodness to me.” – Jr. to Sr. 
  4. “Remember that you have much work to do in the world and it cannot all be done in a day. Be patient and be moderate. Allow other people to bear some of their share of the burdens of life, and in the end you will accomplish more, live longer and be happier.” – Sr. to Jr.
  5. “I feel very strongly that one of the best ways in which to avoid uprisings and disturbances in this country during the next few months is to see to it that the men returning from the War are re-employed, preferably in the positions which they left, as rapidly as possible.” – sr.
  6. I need not repeat what I have so often said, that the question of health and strength and vigor has so much to do with an active, useful, religious life, that everything else must bend to securing and maintaining it. The slow eating, the discrimination in diet, the sleep, and the independent rejection of many of the numerous social demands are of supreme importance. I attribute my good condition to my almost reckless independence in determining for myself what to do and the rigid adhering to regulations which give me the maximum of rest and quiet and leisure, and I am being richly paid for it every day, and believe I have accomplished more for the benefit of others than could have been done otherwise.”
    1. Junior made some bad bets (losing hundreds of thousands of dollars early in his career to the Wolf of Wall St.)
    2. Junior shared his yearly expenditures with his father for a very long time, down to the dollar!
    3. Senior transferred over $450m to his son
    4. Senior preferred cash to a Rolls Royce so that he could donate it to others
    5. Junior helped make reality the dreams of his father through philanthropy and other ventures

What I got out of it

  1. The letters were warm and affection. It was clear they were close and that junior wanted to do the most good he could while being of service to his father

The Revolt of the Public by Martin Gurri

Summary

  1. I have 3 main hypotheses: 1) Information influences politics because it is indigestible by a government’s justifying story; 2) the greater the diffusion of information to the public, the more illegitimate any political status quo will appear; 3) Homo informaticus, networked builder and wielder of the information sphere, poses an existential challenge to the legitimacy of every government he encounters

Key Takeaways

  1. There is a deep connection between online universities and democratized information that increases unrest and insurgencies
  2. I found strong demographic and behavioral affinities: they are young, middle class, university educated and predominantly white, disproportionately anarchists
  3. The most profound consequence of all the uprisings in 2011 was the sowing of the seeds of distrust in the democratic process
  4. In information scarcity, those who have it become authoritarian, as information increases, authoritativeness decreases. Hierarchy, as a structure, has proven transcendentally inept in dealing with digital platforms…Tremendous energies have been released by people from nowhere, networked, self-assembled, from below. That is the structural destiny of the Fifth Wave – the central theme of my story. Democratic government in societies of distrust can choose to ride the tsunami or to be swamped by it. The latter choice will leave government mired in failure and drained of legitimacy. It will leave democracy, I fear, at the mercy of the first persuasive political alternative. 
    1. Clash of two modes of life: hierarchical/top down and networked/bottom-up
  5. Center can’t hold and the border has no clue how to handle it
  6. Crisis of authority coming from public awareness of incompetence. The authorities now lack control of the narrative and there are now alternative authorities. At some point around the turn of the new millennium, elites lost control of information, and power arrangements began to flip. Assured of the public’s wrath, elected governments have acted, or failed to act, motivated by a terror of consequences. Legitimacy was equated with the deflection of blame, and the aim of governing became to exhibit a lack of culpability.
  7. Difference between companies and governments: The difference is that failing companies go out of business and are replaced by new companies, while government accumulates failure, making it, systemically , much more fragile
  8. There is a democrat’s dilemma that is no less perilous than the dictator’s. Politicians must promise the impossible to get elected. Elected officials must avoid meaningful action at all costs. 
  9. The rise of nihilism 
    1. The nihilist is merely reacting to the pressures applied by his environment: which means, in this case, that he is acting to destroy the environment in which democratic governments are burdened with failure, democratic politics are removed from reality, and democratic programs drained of creative energy, and thus hope
    2. I believe here’s a relationship between our fractured reality and the rise of the nihilist – persons and groups that consider destruction and mass murder to be a form of progress. The nihilist lurks in a broken sliver of truth that is impossible to debate or refute. There, he experiences absolute grievance and the absolute negation of the system, the repudiation of everything that stands and of everyone he encounters. Not just politics, but all of humanity, he holds, must be purified and made new. As the last righteous person, the nihilist aims to bring this about in the blood of random strangers. He acts out the violence that so many others perpetrate verbally and virtually on the web: he is, in that sense, the avenging angel of post-truth, and the rant made flesh
    3. The distance between top and bottom is very great. The chasm of distrust will be difficult to bridge. And as elite fear and loathing of the public has increased, so has the craving for distance and isolation. Elites today have no idea how to speak to the public or what to say to it. They have shown little interest in trying. The hyper-educated individuals who ran the Clinton campaign were utterly indifferent to public opinion: they believed in big data
  10. If structure is destiny, then the personal will trump the political. This is far more robust – personal success can be emulated and replicated. Personal failure will not implicate the entire system…Control, however tenuous, and satisfaction, however fleeting, can be found in the personal sphere, not in telescopic numbers reported by the government. 
  11. So I come to the abiding paradox that defines our predicament. An affluent, well-educated, hyper-connected public is in revolt against the system that has bestowed all this county upon it. The great motive power of the revolt isn’t economic resentment but outrage over distance and failure. Everyday life is increasingly digital and networked.
  12. In the right relation between elites and the public, the former acts as exemplars to the latter. They embody and live out the master narratives. We can think of George Washington returning to his farm after the Revolution as a striking example…The quality that sets the true elites apart – that bestows authority on their actions and expressions – isn’t power, or wealth, or education, or even peruasiveness. It’s integrity in life and work. A healthy society is one in which such exemplary types draw the public toward them purely by the force of their example. Without compulsion, ordinary persons aspire to resemble the extraordinary, not superficially but fundamentally, because they wish to partake of superior models of being or doing. The good society, Ortega concluded, was an “engine of perfection”…Many are called, few will be chosen
  13. The qualities I would look for among elites to get politics off this treadmill are honesty and humility: old-school virtues, long accepted by the living spirit behind the machinery of the democratic republic, though now almost lost from sight. The reformers of democracy must learn to say, out loud for all to hear, “This is a process of trial and error,” and even, “I was wrong.” Elected officials must approximate the ability of scientists and businessmen – and, for that matter, ordinary households – to identify failure and move on. Honesty means that the relationship to truth, as truth is perceived, matters more than ambition or partisan advantage. Humility means that the top of the pyramid looks to the public as a home it will return to rather than a carnivorous species from which to hide. Truth must be spoken even when it hurts the speaker or the audience. Distance must be reduced to a minimum, even at the risk of physical danger…The crucial move if we are to surmount our predicament isn’t transformation but reorientation, a turn in direction away from top-down control, bureaucratic power, and the high valuation of distance as a reward for political success. Such a reorientation strikes me as perfectly possible. 

What I got out of it

  1. Gurri is a prescient and beautiful writer. He makes really important points and will be fascinating to see how networks vs. hierarchies continue playing out

How to Develop Your Thinking Ability by Kenneth Keyes

Summary

  1. Practical techniques to improve your ability to think clearly, creating accurate “verbal maps.” To be happy and successful, we must base our plans on maps that fit the territory. Only an adequate map will have the necessary predictability that will allow us to plan, to choose, to decide what is best for us to do. Clear thinking help you to predict the future. It enables you to make plans that will get you what you want out of life. We can think of all the knowledge and memories we have filed away in our heads as “mental maps.” Truth simply equals a verbal map that represents the territory. However, truth is an elusive sprite that is hard to keep penned up

Key Takeaways

  1. Steps / Tools for clearer thinking
    1. Think in terms of verbal maps – ineffective people attempt to project onto the territory the verbal maps they cook up in their heads. They are unable to open their minds and observe clearly what is before them. They think they know what things are like without checking. What they think they know blocks them from evaluating sanely
      1. Survey the territory for yourself – one look is worth 1,000 reports
        1. Scientific Method – This is what scientists tell us to do – surveying the territory provides predictability that characterize accurate verbal maps. This is the essence of the scientific method. When a scientist tries to find out which verbal map is the most adequate, he looks at the territory. He observes; he uses his sense; he opens his mind and his eyes
    2. Best way to understand/learn is to teach others
    3. Practice in small ways every day
    4. “So far as I know” – nobody knows everything, be open, humble
      1. Those who learn most, fastest are honest of their ignorance
    5. Up to a point – think in terms of degrees
      1. Think along a spectrum, avoid either/or, all/none, binary – “the narrower the mind, the broader the statement”
    6. “To me” – look who’s talking
      1. We see reality through a mirror that partially transmits and partially reflects. We see things that are outside of us, but we see them bathed in “reflections” from our own minds 
    7. The What Index – differences that make a difference
      1. Don’t think in groups, but in individuals
      2. Distance makes for seeing similarities: nearness helps us to see differences (Galilean Relativity)
    8. The When Index – keeping up to date
      1. When was the territory surveyed?
      2. Knowledge keeps no better than fish – Alfred North Whitehead
      3. Old age plants more wrinkles in the mind than in the face – Montaigne 
    9. The Where Index – when environment changes, expect other things to change to
  2. Other
    1. Men are apt to be much more influenced by words than by the actual facts of the surrounding reality – Pavlov
    2. All truly wise thoughts have been thought already thousands of times; but to make them truly ours, we must think them over again honestly, till they take root in our personal experience. – Goethe
    3. Little babies cannot fight as well as grownups. A new, baby idea coming into our head cannot compete with the old grown-up ones we have been embracing all our lives. We have to let the new ideas come in, grow, and mature. Frequently, it is necessary to try to understand new ideas for days, weeks, or even years. When we feel we have done our best to understand a new point of view, we should then unleash our old ideas and have a real battle royal…A closed mind is not a mind – it is a machine. It automatically spouts what is already in it

What I got out of it

  1. Really practical book that I’ll reference often as I’m making decisions 

The Natural Laws of Business by Richard Koch

Summary

  1. The author walks us through some of the key ideas in various disciplines and how we can better understand how to apply them in a business context.


Key Takeaways

  1. Natural Selection
    1. Darwin coined the phrase “natural selection” as the “preservation of favorable variations and the rejection of injurious variations…The slight advantage in one being…over those with which it comes into competition or better adaptation in however slight a degree to the surrounding physical conditions, will turn the balance.”
    2. Creatures systematically overproduce their young, all creatures vary, the sum of that variation is inherited
    3. Success means fitting the conditions of life
    4. Darwin is a better guide to competition than economists
    5. Scatter new breeds around your core product – fill up the potential product spaces so that newcomers can’t move into these niches
    6. Fisher found that the larger the variance in fitness, the faster the average growth of the population. Greater variation implies greater improvement and therefore faster growth
  2. Learning = doing better things with fewer resources
  3. Competitive Exclusion – each separate niche sustains just one specialized type of plant or animal
    1. Your firm needs unique niches, places where no one else can go because they aren’t exactly like you
    2. “Competitors who prosper will have unique advantages over any and all competitors in specific combinations of time, place, products, and customers. Difference between competitors is the prerequisite for survival in natural competition. These differences may not be obvious. But competitors who make their living in exactly the same place at the same time own’t prosper.” – Bruce Henderson
      1. Goes to Porter’s point about being unique
    3. If you can invade your competitor’s niche and the competitor can’t, you should
  4. Humans are wired for fairness above efficiency
    1. “It is a  rule of evolution..that the more cooperative societies are, the more violent the battles between them. Humans may be among the most collaborative social creatures on the planet, but we are also the mos belligerent.” – Matt Ridley
  5. Game Theory
    1. The main lesson is how to cooperate effectively in pursuit of entirely selfish ends. Game theory started when von Neumann published his mathematical Theory of Parlor Games in 1928. Game theory deals with games where your chances of winning depend no what your opponent does, and vice versa; it attempts to simplify the world and produce the best mathematically derived outcome for any particular situation. Along with Morgenstern, they invented the concept of the non-zero-sum game, where it pays to collaborate and form coalitions
    2. Cooperation is about comprehending how to make the pie bigger, on the understanding that when we have to divide it, we will behave reasonably, within the context of a long-term relationship
    3. What accounts for tit-for-tat’s robust success is its combination of being nice, forgiving, and clear. Its niceness prevents it from getting into unnecessary trouble. Its retaliation discourages the other side from persisting whenever defection is tried. Its forgiveness helps restore mutual cooperation. And its clarity makes it intelligible to the other player, thereby eliciting long-term cooperation. – Anatol Rappoport
    4. The currency of cooperation is commitment, trust, and love
    5. Cooperate with the best cooperators, build a reputation as someone who is totally trustworthy, always cooperate first, be willing to take turns in extracting advantage, cooperate daily (cooperation is the highest form of self-interest)
  6. Newton
    1. From Newton’s 3 laws (inertia, F=ma, reciprocation), and Galileo’s law of uniform acceleration, Newton arrived at the concept of gravity
    2. Competition is the economic equivalent of gravity. Just as gravity depresses objects and stops stars from moving in a straight line, so competition depresses returns on capital. “Margin gravity” depresses managers and investors. The extent of margin gravity is proportional to the proximity and power of competitors. Weak gravity indicates to distant or tangential competitors. Strong gravity implies close, in-your-face-challengers…If we increase the distance between us and our competitors or increase relative size, the impact on profits will be non-linear. Increase the differences in your stages of value added and in the customer types, product types, and geographic regions that you serve
  7. Time
    1. Einstein’s challenge is this: think of time, or the reduction of time, as part of what you offer customers. Think product-time. Think service-time. It’s all part of the same thing. Never think “product” or “service” independent of time. Time is a key dimension that must be embraced to achieve success
      1. Velocity
  8. Recursion
    1. Godel demonstrated that, even in a very simple system like arithmetic, statements could be written down that could neither be proved nor disproved within the rules of that system. Any consistent numerical system generates formulas – like “a number is equal to itself” or “zero is a number” – that cannot be proved, except by importing axioms from outside the system. Godel’s proof was not confined to mathematics. Reality, he demonstrated, is a construct, not a given. One implication is that the very process of thinking adds to what we think about…so the process can never be completed. No finite language or system can capture all truth
  9. Complexity
    1. Discovering causes of poor performance may be less productive than trying a whole new experiment as there may be too many variables to isolate, initial conditions will always vary, etc…
  10. 80/20
    1. Most things have negative value. Best way to become more effective, rich, efficient, etc. is to stop thees negative activities – achieve more with less, apply the 50/5 principle and then move onto the 80/20, make things as simple as possible, identify the scarcest, most valuable resource in your organization, think about and measure value subtracted as well as value added
    2. Alliances > Acquisitions
    3. Own less, do less, but more profitably – always consider “Return on Time and Effort Employed”
  11. Path of Least Resistance –> Principle of Least time
  12. Often the easiest and simplest innovation opportunity lies in the unexpected. The unexpected is often a tremendous clue to developments that are reaching their tipping point. It is very much cheaper and more effective to latch onto social trends that are already developing, rather than to try to create them from scratch. If something unexpected is happening, this means that an unplanned trend is at work. Exploit it to the fullest!
  13. Arbitrage – consistently seek to move resources to where they can be most productive. This type of arbitrage is easier than innovation. Everyone should be capable of something that could benefit from economic arbitrage, or identifying resources that could be used more effectively
  14. Increasing returns
    1. Typically appear when a system has high up-front costs, network effects, customer groove-in
    2. Two long-standing rules of business strategy have only become more important: do whatever is necessary to move ahead of competitors, and cut your losses when someone else has reached that point. To these we may add 2 new rules: 1) identify and dominate the industry sweet spots by establishing new standards there, orchestrating others to do the donkey work in the bulk of the industry, and 2) defend the dominance by dividing and ruling the orchestrated, and by continual innovation to find the next industry sweet spot
    3. Aim to create the new standard, the standard of value
    4. Don’t play in network markets unless you can win
  15. The theory of second best
    1. Reaching an optimal outcome in individual markets may lead to a suboptimal overall outcome. For example, if free markets led to an optimal position in all individual product markets, but left an economy with 40% unemployment, this would not really be optimal. The theory therefore says that instead of seeking optimality in each part of the economy, we should go for the best overall solution, which may imply “second best” solutions in individual markets. Stripped of economists’ usual obsession with equilibrium and optimality, two very elusive goals, the theory of the second best is really just saying that the economy is a system, and that actions in one area may have unintended consequences in another. It is a useful idea because it tells us that we may have to compromise, and that pursuit of one objective may be myopic, like the speed bumps.
  16. Set clear, explicit, positive, and multiple goals. Pursue several goals at once
  17. Microsoft is an ideal model for any type of business: a dictatorship of ends, a meritocracy of execution, and a collegiate “democratic” style that respects intelligence and insight at every level, so long as it does not challenge the basic strategy

What I got out of it

  1. A true “latticework” of a book. Love how Koch was able to tie together disparate ideas into a business context. The “how to apply” section at the end of every chapter was great too!

Learning to Learn and the Navigation of Moods by Gloria Flores

Summary

  1. Emotional engagement is essential to progressing up the ladder of skill acquisition. Handling negative emotions that come with failure is hard and this book sets out to provide a guide for how to cope in these tough times

Key Takeaways

  1. Moods & Learning to Learn
    1. Outline a taxonomy of moods to build a self-awareness and know how you are progressing, where you are, and how to overcome obstacles. This process helps develop the meta-skill of acquiring skills, the art of learning to learn
    2. Learning how to recognize moods, then shift to productive moods is the skill you ultimately want to develop
    3. We can begin developing the skill of learning to learn at a very young age by encouraging children to experiment, to take risks, and to make mistakes. School can play an important role in cultivating this ability
    4. A mood of defensiveness often shows up when we hear what we interpret as criticism
    5. In a world where uncertainty and rapid change are the norm, where we cannot control changes in technology, regulations, or the environment, but where we need to cope and navigate with these on an ongoing basis, learning to learn appears all the more as an essential skill we are called to cultivate 
    6. Learning to learn requires that we be in a mood that is conducive to learning. Often we are not. Moods are “attunements” to the situation we find ourselves in at any given moment which predispose us to certain actions. Moods are windows to our assessments and to the standards that support them. If we become sensitive to our moods, we may be able to open the curtains and observe how we see things, and discover whether our automatic predispositions help us achieve our learning objectives or block us. 
    7. Moods that get in the way of learning (pg 25) – confusion, resignation, frustration, arrogance, impatience, boredom, fear/anxiety, overwhelm, lack of confidence, distrust or skepticism 
    8. Moods that are conducive to learning (29) – wonder, perplexity, serenity/acceptance, patience, ambition, resolution, confidence, trust
      1. Learning to shift from unproductive to productive moods is a critical aspect of learning to learn. As we learn to become aware of our moods, and are able to observe ourselves in a negative mood that blocks us from achieving what we want to achieve, such as resignation, we can choose not to remain hostages to this mood, and take action to cultivate an alternative mood that is more conducive to achieving what we set out to achieve (reflect on your learning objectives and why that gives you energy)
    9. List of learning to learn resources on page 149
  2. Contrast in handling mistakes! Comparing healthcare vs. aviation and the difference that learning from your mistakes makes
    1. Every time an plane accident occurs, there is a deep dive into what happened. However, in healthcare, any sort of feedback loop seems lacking. Consequently, in contrast to the 400,000-500,000 premature deaths per year in healthcare, in 2013, 210 people died as a result of plane crashes
  3. Others’ expectations and what we ‘should’ know serve as roadblocks
    1. Common categories of assessment that get in the way of learning – important to be competent, efficient, independent, self-reliant, useful, prepared at all times
    2. Moods indicate which assessments we’re making
  4. Dreyfus Skill Acquisition model
    1. Beginner – advanced beginner – competent – proficient – expert – master
      1. A master reinvents the rules; generates new discourses and disciplines from anomalies in the domain. A master is willing to override the perspective that they intuitively experience and choose a new one for the sake of learning and contributing to their field. A master is willing to regress to earlier stages in the learning scale for the sake of taking risks and learning
      2. Masters deal with wonder, resolution, ambition and need to concern themselves with arrogance and resignation
  5. Education
    1. Education is not simply about the transfer of knowledge and the ability to apply concepts. When it comes to acquiring skills, particularly communication and relationship skills, education is about enabling others to take new actions that they weren’t able to take before. Second, as the Drefyus brothers argue, in order for someone to acquire new skills successfully, they must be emotionally engaged. A person must be involved
  6. The essential elements of an offer
    1. Speaker
    2. listener
    3. Conditions of fulfillment
    4. Background of obviousness
    5. Offer/Promise – action to be performed in the future by person making the offer/promise
    6. Specified time for fulfillment of the offer 
  7. Trust = combination of sincerity, competence, reliability, engagement/care
  8. Galilean Relativity
    1. Easterners perceive things holistically, viewing objects as they are related to each other or in a context, whereas Westerners perceive them analytically in isolation; Easterners use wide-angle lens; Westerners use a narrow one with a sharper focus. 

What I got out of it

  1. This book should be better known. The idea of matching not only time and energy, but also mood, seems like a superpower to learning effectively. This book helps you understand why and how to do this

Purple on the Inside by Kirk Thompson

Summary

  1. The “purple cow” concept is at the core of JB Hunt’s culture and way of thinking. Essential products and services that can’t be copied, unique,, doing things differently, earning above the cost of capital, an intense focus on solving the customer’s problems , embrace the more difficult business, do stuff that other people have trouble doing, be adaptable

Key Takeaways

  1. Beware overcrowded spaces – have an intense desire to offer specialized and unique services that allow you to do what others wouldn’t or couldn’t
  2. Differentiation, better customer service, a refusal to stand still, natural expansion with homegrown talent
  3. Boring things – even if excellent – quickly become invisible
  4. JB Hunt’s founder was impatient, wanted to maintain frantic growth at all costs, an idea man, was all over, didn’t want to let go
  5. You learn a whole lot more from the struggles in the valley than you do on the mountaintop
  6. Never feed problems while starving opportunities
  7. Decision theory makes it clear that for a given set of costs and benefits, selecting alternatives with lower down-side risk, other things being equal, increases the expected payoff
  8. We’ve never been concerned about cannibalizing one part of a company to offer a better solution to the customer. If there’s a better solution for the customer, we need to offer it. most companies won’t do that. We are not in business to support our trucking company. We are in business to support our customers with the best answer possible in that market 
  9. Must constantly adapt and iterate so that you never become stale and optimized for an environment that no longer exists. How you perceive a business segment can affect how you change the curve of the product life cycle
  10. The customer is most certainly not always right. They are always to be respected, listened to, and served, but only when a return is generated
  11. 3 criteria needed to develop core competencies: provides potential access to a wide variety of markets; that it makes a significant contribution to the perceive customer benefits of the end product; and that it is difficult to imitate by competitors
  12. Incentives
    1. Selling JBHT rather than just one segment results in more satisfied and loyal customers. Our bonus structure rewards leaders based on the company’s overall performance. When the company performs well as a whole, everyone reaps the rewards. Ironically, one of the things the original DCS leaders rebelled against was that bonus structure. There are legitimate arguments to do it other ways, but we find our approach fosters a one-for-all-and-all-for-one mentality. We incentivize the company’s success, not just the success of any one part of it. Sharing the wealth with those who helped create it has worked for JBHT for nearly 40 year. 
    2. We measure the quality of a team’s results against its peer groups, not against other JBHT units, so we put the emphasis on being “best in class” not “best within JBHT.” We’ve found this helps eliminate the popularity contests, lead to better decisions, and allows us to celebrate contributions that otherwise might get overlooked 
    3. Growth is key, growth is oxygen
  13. Culture
    1. A good message is clear, actionable, consistent. Give the what/why, not the how
    2. What’s unique is that variables like time, growth and the influx of new people haven’t caused an erosion of our culture. Instead, they have added to it and strengthened it. We’ve been open to change, while staying true to our core; flexible enough to stretch with new ideas, but solid enough to maintain our identity. I credit this to the dynamic interplay between our culture and our leadership and management.
      1. Antifragile
  14. Intermodal – more than one mode of transportation to reach the final destination (ship to train to truck…)
    1. Trucks first complemented and then competed with the railways
    2. “partner with the enemy” became the right choice for railways and trucks as it gave the customer more options, increased efficiencies, grew the pie (win/win/win)
    3. Developing Intermodal opened up new business lines that are now multi-billion dollar segments
  15. Hiring
    1. Grassroots and top-down – go to local colleges and universities to recruit good students and home grow them. From the top-down, Hr goes to the company’s leaders and asks them for the names of 2-3 people they have in mind as their successor. Having a good understanding of the existing talent pool also allows us to know when we need to look outside the company, as was the case when we shifted our approach toward technology and engineering. Growing organically is really healthy and really great for your culture, but you do have to inject outside thinking strategically and purosefully from time to time. 

What I got out of it

  1. A great look inside the culture of a compounder who has grown steadily for decades now

Debt by David Graeber

Summary

  1. The author argues that the standard account of monetary history is precisely backwards. We did not begin bartering, discover money, and then, lastly, create credit systems. It was the absolute opposite – debt and credit systems came first, then money, and then, in some places, barter systems

Key Takeaways

  1. To argue with the king, you must use the king’s language
    1. Galilean Relativity
  2. Interesting that it seems to be a universal that humans feel a moral duty to repay any loans made. In this sense, obligations are also thought of as debt. This book will discuss at length money‘s capacity to turn moral obligations into simple arithmetic. This ability has allowed for specific quantification of what is owed. Specific amounts owed is linked inherently to violence as it is now easy to see what is expected and rightfully owed to someone else. Converting human relations into mathematical numbers underlies much of the problems but are dealing with today
  3. The author dispels the notion that a barter society was the foundation of money. This is widely believed, but nobody has been able to prove that this in fact was the system used by any large and thriving group of people
  4. If money is simply a yardstick what does it measure? Debt. It is an IOU. It allows various people institutions and others who want to trade to be able to do so with less friction, come to a mutual agreement as to what constitutes a fair trade. Does not measure the value of the object as much as it does the trust that we have another human beings. The form the currency takes hardly matters as long as people trust it except it as an IOU and the government excepts it as a form of taxation can be considered currency
  5. Unlike commonly thought, markets do not spring forth before governments, but the opposite. This contradicts what Adam Smith and many modern economist say. Governments spend a lot of their time and focus trying to create a market where one currently doesn’t exist. If Adam Smith was right and there was profit to be had, these markets would spring up spontaneously
  6. Markets and taxation seem to have sprung up from the need to support large armies. If you could create or do something of value that the army would pay you for, all of a sudden you’ve created a vast machine to create valuable goods and sustain your army
  7. The foundations of money seem to be things that were originally the most appropriate things to sacrifice to the gods. For example, oxen were often used as the currency the people spoken and they were also the most common sacrificial animal
  8. If reciprocation is at the root of all exchange, debt could be considered the foundation of morality
  9. Debt is a very specific sort of situation between specific people, people who consider each other similar – similar in status and skills in important ways but are currently unequal but there is a way to set matters straight. Hierarchy plays a huge role – if the debtor cannot restore equality, it is likely something other than debt or there is some larger problem. A debt can then be thought of as an exchange that is not yet brought to completion. Debt is what happens between equality. An interesting definition of debt is a situation or two equals decide one will no longer be equal until the debt is repaid
  10. Saying Please and thank you is a democratization of equality, treating everyone the same way that you only used to have to treat lords in the past. “Thank you” derives from “I will remember this” and often times the reply is “it’s nothing” showing that there is no debt, nothing to repay or remember 
  11. The author makes an interesting argument that money first surfaced and evolved as a form of repayment for things that truly could never be repaid – human lives, for example
  12. The author makes a distinction between commercial economies and human economies. Commercial economies are what the west is familiar with and human economies use currency as a means of keeping tabs on moral obligations, creating, maintaining and severing relations between people. It is more social than commercial. This is how a debt can start as a moral obligation but lead to immoral behavior and violence. Currency could never substitute for a human but in many cultures as human as a substitute for another human. You had to disentangle and rip the person from their context before they could be made upon or asleep. The person had to be abstract from what they truly are every move from any context and their web of relations never mind if people they were a human being
  13. Times of war correlate with increased usage of precious metals as money whereas times of peace correlate with systems of credit as trust in the other person is enough
  14. The author argues against the implicit assumption that paying back ones debt is akin to morality. In fact, some of our greatest institutions – the us government – have trillions of dollars of debt that it will likely never pay back.
  15. Debt is the perversion of a promise

What I got out of it

  1. Great books use their specific topic to open up a wedge to a whole world of ideas and topics. Debt falls into that category – such a rich history of human civilization, trade, economics, psychology, and more.