We may get our principles (beliefs) through our experiences and reflections;

sometimes we accept them from parents; or we adopt holistic packages of principles

from a religion or legal framework.

When you enter relationships, your principles and values will determine how you get
along with others.

Finance TIP:
1. Right Futures mix will enable you to quote fixed price to clients even when you
face the risk of volatile costs.
2. ?Model complex systems as machine and hedge for volatile costs of most impactful
parts.

Market TIP:
1. If you can give up everything and study the history and background of the market
carefully as a medical student studies anatomy, and you have cool nerves of a
gambler, sixth sense of a clairvoyant, courage of a lion, then you have a chance of
making money in the markets.

Investment TIP:
1. Accelerating inflation - gold is good, cash is bad. Deflationary depression -
bonds is good, stocks is bad.

Business TIP:
1. Most important components of business - profits from core business and profits
from speculation (price, interest rate variations).
2. ?Speculative component should be hedged (risk-neutral) if one doesn't have a
view of the markets.
3. ?Having a few good, uncorrelated return streams is better than having just one,
and knowing how to combine return streams is even more effective than choosing good
ones. (Correlated streams go up and down together.)
4. ?Tools help in reinforcing desired behaviours (eg: "issues log" creates a
culture of bringing problems and disagreements to the surface rather than managers
having to look for them)
5. ?When faced with fork-in-the-road cases with choices that are seemingly at odds,
go slowly to figure out how to have as much of both, as possible. There is always a
better choice that you haven't figured out, just yet.
6. ?Having work principles written out makes it clear about how to deal with other
persons and also handle every situation as it comes up. (This helps people who may
have lesser contact with you.)

Radical open-mindedness:
1. Seek out the smartest people who disagree with you and understand their
reasoning.
2. ?Know when not to have an opinion.
3. ?Develop, test and systemize principles (decision-making criterias) so that they
become timeless and universal.
4. ?Balance risks keeping the upside big and the downside tolerable and
educational.

Building a decision system:

1. Using intuitions, write down all decision-making criterias, logically.
2. ?Capture them in a sytematic way, creating a mental map of what I would do in
each particular situation.
3. ?Transform these into algorithms (formulas).
4. ?Run lots of historical data to see if the algorithms predict past results
successfully, or modify rules accordingly.
5. ?Keep refining algorithm rules to make them timeless and universal.
6. ?Use system and your intuition, in conjunction, to predict future results.
7. ?Keep learning from system or making corrections to algorithm rules, as needed.
(There won't be any fundamental disagreements with system as it runs on your
criterias. Also, argument with partners will be on decision-making criterias and
not on conclusions; these can be resolved by testing the criterias, objectively.)
8. ?Old method: weigh in all the influences and markets in our heads, hire
investment managers as we scale, supervise and understand how they made decisions,
verify/ correct for their principles, while dealing with their personality issues.

Issues log:
If something went badly, put it in the log, characterise its severity and make
clear who is responsible for it. (If you didn't log it, then you were in trouble.)
It generates lot of discomfort and conflict, especially, when it comes to exploring
people's weaknesses.

Baseball cards for people

Details about persons in the cards.
"Big-picture person" shouldn't be assigned detail-oriented tasks.
Putting this information out in the open can be more liberating than constraining;
they will gain the comfort that comes with just being themselves at work as in
their homes.

Life principles:
1. Problem solving
Know that each encounter is "another one of those", like a biologist, identify its
species, using the knowledge about its expected behaviours, react appropriately.
Realise that even the painful first time encounters had happened to other people in
other situations (respect history). "I saw pain as nature's reminder that there is
something important for me to learn."
"I think of my life as a game, and every problem that I face are puzzles that I
need to solve. Every puzzle I solve gives me a gem in the form of a principle.
Collecting these gems, continually, improves my decision-making and I advance to
higher levels, where the game gets harder, but rewards are greater."
2. Embracing radical truth and radical transparency will bring more meaningful work
and relationships.
3. ?While other species operate by following their instincts and emotions, man
alone can think abstractly (stories) and logically (science), thanks to more
developed neocortex. This is also why animals have a straightforward life while we
have a confusing life.
4. ?Nature is supremely more intelligent than us, we can't even create a mosquito.
Nature optimises for the whole, not the individual, so contribute to the whole and
be happy/ rewarded. But most people judge good and bad based only on how it affects
them.
5. ?Three types of learning: Conscious (memory based learnings help us to evolve
not just across generations but within our own lifetimes), Subconscious (connecting
dots), DNA propagation (offsprings).
6. ?My goal is to evolve and contribute to evolution in some tiny way possible. At
the same time, my work and my relationships are what motivate me. The pleasure in
chasing after things is just the bait, it forces us to evolve; the evolution is
what gives us satisfaction.
7. ?Everything that nature made has a purpose. Pain alerts us and helps direct us.
Pain + Reflection = Progress.
8. ?Truthfulness - People be honest with you and share their negative thoughts
about you. You are comfortable being yourself, not pretending strong where you are
weak. Identify, accept, learn how to deal with weaknesses.
9. ?Embrace tough love, but explain the logic and caring behind your decisions
clearly and repeatedly.
10. ?Don't overweigh first order consequences (painful exercise) relative to second
order (better health) or even third order consequences (fitness for travel).
11. ?LEADER FINDER: Good mental maps (good at knowing what to do on their own) and
open-mindedness (humble) creates the most powerful person.
12. ?BELIEVABILITY SCORE: Believable people who have strong track record with at
least 3 successes in the field, and have great explanations of their approach when
probed.
13. ?DECISION MAKING: Significantly raise your probability of making right
decisions by open-mindedly triangulating (questioning individually and encouraging
thoughtful disagreement with each other, while I watch and ask questions) with
believable people. TWO biggest barriers in good decision making: Ego barrier -
subliminal defence mechanisms that make it hard for you to accept your mistakes and
weaknesses. Blind spot barrier - areas where your way of thinking prevents you from
seeing things accurately.
14. ?DECISION MAKING BOT:
(Decision making is a 2 step process.)
LEARNING - Synthesize (convert lot of datapoints into an accurate picture).
Triangulate your view with people who Synthesize well.
Step 1: Synthesize the situation at hand.
A datapoint is just 1 piece of data from 1 moment in time. Should be able to tell
which datapoints are important. Get datapoints from believable people. Every
datapoint looks bigger up close than in hindsight. New datapoint is overvalued
relative to great, avoid it.
Step 2: Synthesize the situation through time
Collect, analyse and sort different types of datapoints through good/ bad events.
Plotting single event through time helps you identify patterns. (Is my sale
improving?) Set an Minimum bar and Excellent bar when plotting to see if we are on
right track of improvement.
Step 3: Navigate levels effectively
Reality exists at different levels and each of them gives valuable perspectives.
Above the line (main points) and below the line (sub points) datapoints should be
dealt differently.
DECIDING - Calculate Expected value: EV = (reward x probability of being correct)
- (penalty x wrong probability); positive EV irrespective of correct probability is
a good sign.
Increase the probability of being correct by acquiring more information and stress-
testing your thinking or running your criterias/ principles through historical
data.
Possibilities vs Probabilities. Anything is possible, but it's the probabilities
that matter.
3 types of computer aided decision making systems:
-Expert system: a designer specifies criterias or principles based on their logical
understanding of a cause-effect relationship, and then see how different scenarios
would emerge under different circumstances.
-Mimicking: computer observe patterns and apply them in their decision making
without any understanding of logic behind them. But, this system can fall out of
sync when things change.
-?Data mining: powerful computers ingest massive amounts of data, and using ML,
look for patterns. This is popular, but such systems if not accompanied by deep
understanding can be dangerous because you won't know if what happened is genuinely
valuable, or now, if its value has disappeared over time. This uses correlation,
which may not be causal.

______

Principles WORK

1) Great organisation is a MACHINE with:

1. Great people: independent thinkers who speak their minds (radically truthful)
and are radically transparent; and they have the skills and abilities to do their
jobs excellently. Basically, people with matching values (temperament) and levels
of caring, abilities (personality), and skills.
2. Great culture: brings problems and disagreements to the surface and solves them
well with the help of believable people and using idea meritocracy; they love
building new great things; they have meaningful relationships, treating teammates
like extended family.

2) Work culture:
1. RADICAL TRUTH: not filtering ones thoughts and questions , especially the
critical ones and challenging each other's ideas in a respectful manner.

2. ?RADICAL TRANSPARENCY: giving most people the ability to see most everything,
which reduces harmful office politics. Criticism should be offered in person.
People need to know if a committe in meeting has talked about them in their absence
(video).
Radical transparency is an idealism that needs to be approached but never achieved;
prudence is the key.
Some exceptions:
1. Private, personal, confidential info that doesn't impact the community
meaningfully
2. ?Info that affects long term interests of community (clients, employees). Eg.
Proprietary business logic, legal dispute
3. ?Info with low value and high distraction, like compensation details.

3. MEANINGFUL WORK: work that you enjoy doing and are self motivated to do; where
you work with people you care about and respect.

4. MEANINGFUL RELATIONSHIPS: in which people care enough about each other, be a

support when needed, enjoy their company both inside and outside work.
1. Logical people who do not care about all this are also acceptable as long as
they abide by the principles and are considerate. Note that they would not provide
skeletal strength to the community.
2. ?Generosity vs Entitlement: we cannot measure and give gifts, so people should
be happy with the degree of generosity received and think through complaints and
thoughts of entitlement.
3. ?Any person can share both OBJECTIVE and SUBJECTIVE views. Only the objective
ones need to be scrutinized by believable people, while the subjective ones need to
be tested with appropriate risk attached to them.

5. IDEA MERITOCRACY = Radical truth + Radical transparency + Believability weighted

decision making.
Have a hierarchy of merit based on believability.
Believability is determined by:
experienced >3 times success in the field
great explanation of the reasoning behind their conclusions (opinions). Opinions
are a product of data and reasoning.
Track records help over time to assess believability: BASEBALL CARDS, DOT
COLLECTOR, OGRIT CULTURE
Open-minded conversations with believable people who disagree with you is the
quickest way to learn.
Less believable people should take the role of an open-minded student, while more
believable be the teacher.
Worse than having no answer is getting answer from nonbelievable (uninformed)
people.

6. It's okay to make MISTAKES but unacceptable not to learn from them. Create an
ISSUES LOG to record all mistakes and bad outcomes. A person's weakness is revealed
in the patterns of mistake he makes. Complement it with end of day GRATITUDE LOG to
record all successes and good outcomes.

7. ?GET IN SYNC: solve minor misunderstanding or even fundamental disagreement.

Both parties can try to solve themselves, openly, or escalate to management
committe; they may even choose to send cases to entire company for people to judge.
Prioritize syncing with most believable people about most important issues.
Qualities required are OPEN-MINDEDNESS (seeing through others pov) and
assertiveness (communicate your pov clearly). People are generally less open-minded
possibly because they have ego attachments to being right, which is totally
natural.
Note:
substance > style
reason > emotion
suggestion > criticism
Meetings: aimed at educating or boosting cohesion (broader set of people) vs
finding the best answer (relevant believable people).
See things from a higher level = seeing every povs and situations as an objective
observer. For people who find this difficult, COACH helps in connecting situations
to principles.

3) PARTS of the MACHINE

Every employee is building a PART that fits into the overall MACHINE. Questions to
the employee: What are the QUALITIES of the person who will oversee your PART? Who
can constantly improve it, or decide to get rid of it? Their job specifications?
Where to find such a person? People who can be responsible for the goals, outcomes
and PARTS at the highest level are very important.
People in group should be aware of other's DIFFERENCES and be open-minded to
realise that none of them have the COMPLETE PICTURE.
Most recruiters hire people LIKE themselves rather than the best fit for a job. So
let a visionary recruit another visionary and a group recruit someone with mix of
each of their qualities.
PERFORMANCE PROOF: Compare values, abilities and skills from Ogrit with that from
current BELIEVABLE people, DOCUMENTED evidence, and PAST REVIEWS.
1) School performance is a good gauge of a person's determination to succeed and
ability to follow directions (and memory, processing speed), but it can't gauge
common sense, vision, creativity and decision making skills.
2) ?Conceptual thinkers (CTO) are creative and open-minded and can give a good
structure, but a person with experience and track record who has devoted decades to
his specialty (COO) are highly reliable for day to day tasks.
3) Beware of ?Idealists who have moralistic notions of the world without knowing
how people really behave. Realist Idealists know where people's interests lie, and
how to design machines that produce results, and metrics that measure benefits vs
cost.
4) ?COMPENSATION should provide both stability and opportunity (linked to
performance metrics).
5) ?In great partnerships, consideration and generosity are more important than
money.

4) Evaluation, Testing, Sorting.

1) How to make people evolve faster:
Assessment of strengths and weaknesses
Plan for mitigating weaknesses through training or switching to a different job
that taps into their strengths
2) Give the goals, not the tasks (micromanagement). Train and Test. Explore how
they are doing (personality) and why (temperament).
3) Goals, Results ATTRIBUTION: link specific responsibilities (goals) to specific
people and specific results to specific actions of specific people.
4) ?Compliments are easy. But pointing out mistakes and weaknesses is valuable in
the long run. It's difficult for new people to understand, hence, to be effective,
you must clearly and repeatedly explain the logic and caring behind it.
5) ?Evaluate a person's VAS with other stakeholders. VALUES: deep-seated beliefs
that motivate behaviours and determine people's compatibilities with each other
(similar to Temperament, METAL) ABILITIES: ways of thinking and behaving (similar
to Personality) SKILLS: what they are good at doing. Lack of skills can be fixed,
but not the lack of ability and values.
6) ?Make people create CHECKLIST and track Checklist completion ratio.
7) ?Assessments is about "what people are", and not about "what they should be".
Goal of a review is to be clear about what the person can and can't be trusted to
do based on what they are like (temperament, personality).
8) ?To help people succeed: First, let them see their failures so clearly that they
are motivated to change them. (To avoid demoralisation.) Second, show them how to
either change what they are doing or rely on others who are strong where they are
weak.
9) ?Good and bad outcomes can arise from circumstances that are out of the hands of
the assesse. So, assess people based on both outcomes and reasoning.
10) ?People change (abilities) very slowly or never at all. So, only option is to
change design of role, responsibilities, workflows (a bad idea) or change people
(another position that requires those abilities) or remove from company.

5) Building the MACHINE; MANAGEMENT

Managers of the machine should objectively compare the outcomes of the machine with
the goals to gain feedback about how well it is working. Feedback should indicate
whether problem lies in the way PEOPLE handle their responsibilities or a flaw in
the DESIGN.

GREAT MANAGER:
-See their organization as a machine.
-?Create process flow diagrams to show how the machine works.
-?Build metrics to evaluate how well the people and design works. It's one of the
objective means of assessment. It's about answering your most important questions.
-?Tinkers constantly with the design and people to make them better.
-?They do all this systematically, by controlling fellings for people and facing
any discomfort that may come in the way of the machine's improvement.
-?Know that in higher up the organization, people are more visionary and creative,
but still needs to be a good organisational engineer.
-Two purposes: move closer to goals, and train and test the machine (people and
design).
-?Discussion on problems should be on 2 levels: machine level (why that outcome?
can it be avoided in future?) and case-at-hand level (how to solve it/ this is
micromanagement though, so let the managee come up with solutions).
-?Learn about a person's values, abilities and skills before delegating any
responsibility.
-?Probe deep, both managers and managees, in order to surface their problems and
mistakes, making sure they know its good for them and the machine. Also, be open to
being probed, as no one can see themselves objectively.
-?Make sure everyone knows their responsibilities and keep their positions like pro
football players rather than simply chase the ball out of position (goals).
-?Ensure that you understand the people, process and problems in your domain to
make well-informed decisions, or will keep believing the stories and excuses being
told.
-?Know that people see things differently based on their temperament, personality
and beliefs. So, all people have blindspots. Working through blindspots/
differences requires a lot of patience and open-mindedness, and triangulation with
other people. Resolving small differences of perception can prevent more serious
divergence of views, later.
-?Structure incentives and penalties that encourage people to take full ownership
of what they do.
-?Before moving forward with a new plan, take time to reflect on how the machine
has been working up till now.
-?Escalate when you can't adequately handle your responsibilities or RP job.
Encourage your managees to do the same.
-?Understand that Principles/ policies can only be changed by those who made it or
those responsible for evolving them.
-?Types of managers:
MANAGING: being the conductor of an orchestra, they don't do any task, but direct
their people to do their work well.
MICROMANAGING: telling their people what tasks to do or doing their tasks for them.
Authoritarian managers don't develop their managees, they remain dependent. People
resent managers who give too many orders and likely defy them when they aren't
looking.
NOT MANAGING: having people do their work without your oversight and involvement.

Stay in sync with people who are closest to the most important functions.

Acknowledging a weakness isn't the same as accepting it. It's a necessary first
step towards overcoming it. In some cases, people accept the unacceptable problems
perceiving them as difficult, which leads to more stress, and chronic bad outcomes.
So, fix it or escalate it.
Encourage people to bring problems to you. Process: note the problem (what),
determine the responsible person (who), decide the right time to discuss (when).

On your way to goals, you will inevitably encounter problems. Problems are like
coal thrown into a locomotive engine, because burning them (inventing solutions for
them) propels us forward.
When you encounter problems, your objective is to specifically identify the root
causes of those problems: specific people or design that caused them; also check
for patterns.

Build your team top down. Hire manager before their reports. Managers can help
design the machine and choose the people who complement it. Everyone must be
overseen by a believable person with high standards.
First, come up with the best workflow design, then sketch the org chart, visualise
how the parts interact, and specify what qualities are needed for each job, only
then, should you choose the people to fill the slots.
Efficiency of an organization decreases as its complexity, no of people increases.
Larger the organization, more important are the IT management and Cross
departmental communication.

Risk of using consultants: they are only good for a quick fix, not suitable as a
long-term solution.
- Quality control. You're operating by their standards, unlike an employee
- ?Cost. Daily rates of consultants are more than employee
- ?Culture. You risk diluting your culture
- ?Security. Difficult to monitor whether they follow proper precautions

Tools:
1) Goal manager: time keeps running in bg. Assigned Manager(s) can add thr goal and
update progress in % (tick a checklist or add an item) and write a note. They can
also assign sub tasks to employees with same steps. At completion, all employees
can see a graph of time vs progress. Click on progress points to read the notes or
subtasks and who did what, when.
2) ?Smart Note: notes which shows history on request, and predicts terms based on
history. Can be linked with pc to get personalised predictions.

Goals for duthink:

- learn what people are like
- ?provide personalised training
- ?offer guidance in specific situations
- ?sort people into right roles
- ?governance: remove people and processes if they aren't working well
Mistakes are puzzles that could lead you to gems.

Puzzles= how to improve those mistakes?

Gems= clearly written principles
Algorithmic decision making using these principles.

Any task-
Resources spent vs Results obtained feedback after each task.
(In vineyards, vine keepers are always pruning new growth to ensure that the older,
fruit-bearing parts receive the necessary nutrients. This same cutting back process
is applicable to energy management.)

Divide employment based on Creative and Normal mode. People can select Creative or
Normal mode for every month. Creative mode means, you earn your own salary, no one
will question you. Normal mode is fixed salary with responsibilities with
deadlines.