Author: Fanyu Zhao

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by Professor Aswath Damodaran who disclose some myths in this note.

Myth 1. The Fed as Rate Setter.

The Fed sets only one interest rate, the Fed Funds rate. FFR is an overnight intra-bank borrowing rate, and that none of the rates that we face in our lives, either as consumers (on mortgages, credit cards or fixed deposits) or businesses (business loans and bonds), are set by or even indexed to the Fed Funds Rate.

The Federal Open Market Committee (FOMC) has the power to change this rate, which it uses at irregular intervals, in response to economic, market and political developments. FOMC meets 8 times each year.

The table below lists the rate changes made by the Fed in this century:

FFR is a range such as 5.00%-5.25%, so we usually use the effective FFR, which shrink to a figure.

The Figure below shows the move of effective FFR over time.

There are two periods that stand out.

• The first is the spike in the Fed Funds rate to more than 20% between 1979 and 1982, when Paul Volcker was Fed Chair, and represented his attempt to break the cycle of high inflation that had entrapped the US economy.
• The second was the drop in the Fed Funds rate to close to zero percent, first after the 2008 crisis and then again after the COVID shock in the first quarter of 2020. In fact, coming into 2022, the Fed had kept the Fed Funds rates at or near zero for most of the previous 14 years, making the surge in rates in 2022, in response to inflation, shock therapy for markets unused to a rate-raising Fed.

As noted that the Fed only set FFR, there are undoubtedly other interest rates you will encounter, but are not set by the Fed. Those other rates will fall into one of three buckets – (1) market-set interest rates, (2) rates indexed to market-set rates and (3) institutionally-set rates. None of these rates are set by the Federal Reserve, thus rendering the “Fed sets interest rates” as myth.

Myth 2. The Fed as Rate Leader

Although the Fed does not set rate directly, you may still believe that the Fed influences these rates with changes it makes to the Fed Funds rate.

The rates all seem to move in sync, though market-set rates move more than institution-set rates, which, in turn, are more volatile than the Fed Funds rate. The reason that this is a superficial test is because these rates all move contemporaneously, and there is nothing in this graph that supports the notion that it is the Fed that is leading the change. In fact, it is entirely possible, perhaps even plausible, that the Fed’s actions on the Fed Funds rate are in response to changes in market rates, rather than the other way around.

Some Statistics are provided by Professor Damodaran, as the Table below. To test whether changes in the Fed Funds rate are a precursor for shifts in market interest rates, a simple (perhaps even simplistic) test is provided. At the 249 quarters that compose the 1962- 2024 time period, each quarter was broken own into whether the effective Fed Funds rate increased, decreased or remained unchanged during the quarter. It seems undeniable that the “Fed as leader” hypothesis falls apart. In fact, in the quarters after the Fed Funds rate increases, US treasury rates (short and long term) are more likely to decrease than increase, and the median change in rates is negative. In contrast, in the periods after the Fed Fund decreases, treasury rates are more likely to increase than decrease, and post small median increases.

Findings how that the Fed is more like an follower rather than a leader, when it comes to interest rate. What is the cause of the those interest rate then? How else can you explain why interest rates remained low for the last decades, other than the Fed?

The answer is recognizing that market-set rates ultimately are composed of two elements: (1) expected inflation rate and (2) expected real interest rate, reflecting real economic growth. In the graph below, which the professor have used multiple times in prior posts, he compute an intrinsic risk free rate by just adding inflation rate and real GDP growth each year:

The figure is like the Taylor Rule. Interest rates were low in the last decade primarily because inflation stayed low (the lowest inflation decade in a century) and real growth was anemic. Interest rates rose in 2022, because inflation made a come back, and the Fed scrambled to catch up to markets, and most interesting, interest are down this year, because inflation is down and real growth has dropped. As you can see, in September 2024, the intrinsic risk-free rate is still higher than the 10-year treasury bond rate, suggesting that there will be no precipitous drop in interest rates in the coming months.

Myth 3. The Fed as Signalman

There are two major macroeconomic dimensions on which the Fed collects data,

• (1) real economic growth (how robust it is, and whether there are changes happening), and
• inflation (how high it is and whether it too is changing).

The Fed’s major signaling device remains the changes in the Fed Funds rate, and it is worth pondering what the signal the Fed is sending when it raises or lowers the Fed Funds rate.

• On the inflation front, an increase or decrease in the Fed Funds rate can be viewed as a signal that the Fed sees inflationary pressures picking up, with an increase, or declining, with a decrease.
• On the economic growth front, an increase or decrease in the Fed Funds rate, can be viewed as a signal that the Fed sees the economy growing too fast, with an increase, or slowing down too much, with a decrease.

These signals get amplified with the size of the cut, with larger cuts representing bigger signals.

The 50bp cut on the 18th of Sep means the mix. If you are an optimist, you could take the action to mean that the Fed is finally convinced that inflation has been vanquished, and that lower inflation is here to stay. If you are a pessimist, the fact that it was a 50bp decrease, rather than the expected 25bp, can be construed as a sign that the Fed is seeing more worrying signs of an economic slowdown than have shown up in the public data on employment and growth. There is of course the cynical third perspective, which is that the Fed rate cut has little to do with inflation and real growth, and more to do with an election that is less than fifty days away.

In sum, signaling stories are alluring, and you will hear them in the coming days, from all sides of the spectrum (optimists, pessimists and cynics), but the truth lies in the middle, where this rate cut is good news, bad news and no news at the same time, albeit to different groups.

Myth 4. The Fed as Equity Market Whisperer

The Fed’s capacity to influence the interest rates that matter is limited, but you may still hold on to the belief that the Fed’s actions have consequences for stock returns. In fact, Wall Street has its share of investing mantras, including “Don’t fight the Fed”, where the implicit argument is that the direction of the stock market can be altered by Fed actions.

Based on the professor’s data, the S&P 500 did slightly better in quarters after the FFR decreased than when the rate increased, but reserved its best performance for quarters after those where there was no change in the FFR. Stock markets will be better served with fewer interviews and speeches from members of the FOMC and less political grandstanding (from senators, congresspeople and presidential candidates) on what the Federal Reserve should or should not do.

Myth 5. The Fed as Chanticleer

The Fed is like Chanticleer, with investors endowing it with powers to set interest rates and drive stock prices, since the Fed’s actions and market movements seem synchronized. As with Chanticleer, the truth is that the Fed is acting in response to changes in markets rather than driving those actions, and it is thus more follower than leader. That said, there is the very real possibility that the Fed may start to believe its own hype, and that hubristic central bankers may decide that they set rates and drive stock markets, rather than the other way around.

Conclusion

The delusion shall be broken. The Fed did not lead the market but follow the market. Analyse the instruction of Fed might miss the cause and effect. Should do analyse the following factors.

It has distracted us from talking about things that truly matter, which include growing government debt, inflation, growth and how globalisation may be feeding into risk, and allowed us to believe that central bankers have the power to rescue us from whatever mistakes we may be making.

The Fed Delusion has destroyed enough investing brain cells for those who holding on to the delusion cannot let go. Do not hear talking among this group about what the FOMC may or may not do at its next meeting (and the meeting after that), and what this may mean for markets, restarting the Fed Watch. The insanity of it all!

Reference

https://aswathdamodaran.blogspot.com/2024/09/fed-up-with-fed-talk-central-banks.html

by Marshall B. Rosenberg, PhD

The book is discussing about how to do compassionate communication, or Non-Volent Commutation. The abbreviation NVC.

1. Giving from the Heart

There raise two questions:

1. What happens to disconnect us from our compassionate nature, leading us to behave violently and exploitative?
2. What allows some people to stay connected to their compassionate nature under even the most trying circumstances?

NVC is a way of communicating that leads us to give from the heart.

We perceive relationships in a new light when we use NVC to hear our own deeper needs and those of others.

Generally, the book gives a NVC model with four components.

1. (Part One) Observations. We observe what is actually happening in a situation.

   The trick is to be able to articulate this observation without introducing any judgement or evaluation — to simply say what people are doing that we either like or don’t like.

2. (Part One) Feeling. We state how we feel when we observe this action, are we hurt scared, joyful, amused, irritated?

3. (Part One) Needs. We say what needs of ours are connected to the feelings we have identified.

4. (Part Two) Requests. The fourth component, requests, address what we are wanting from the other person that would enrich our lives or make life more wonderful for us.

We connect with people by first sensing what they are observing, feeling, and needing; then we discover what would enrich their lives by receiving the fourth piece — their request.

2. Communication That Blocks Compassion

• Moralistic Judgements.

  One kind of life-alienating communication is the use of moralistic judgements that imply wrongness or badness on the part of people who don’t act in harmony with our values. (Don’t judge Good or Bad for others)

  Don’t judge. Don’t do judgement, like “who is what”.

  Analyses of others are actually expressions of our own needs and values.

  It is important not to confuse value judgements and moralistic judgements. (We don’t do moralistic judgement, but can do value judgement).

  • All of us make value judgements as to the qualities we value in life: for example, we might value honesty, freedom, or peace. Value judgements reflect our beliefs of how life can best to be served.

  • We make moralistic judgements of people and behaviours that fail to support our value judgement: for example, “Violence is bad. People who kill others are evil”

  • Classifying and judging people promotes violence.

• Make Comparisons.

  Comparisons are a form of judgement. Making comparison blocks compassion.

• Denial of Responsibility.

  The use of the common expression have to, as in “There are some things you have to do, whether you like it or not”, illustrates how personal responsibility.

  The phrase makes one feel, as in “You make me feel guilty”, is another example of how language facilitates denial of personal responsibility for our own feelings and thoughts.

• Other Forms of Life-Alienating Communication.

  Communicating our desires as demands is yet another form language that blocks compassion.

  A demand explicitly or implicitly threatens listeners with blame or punishment if they fail to comply. It is a common form of communication in our culture, especially among those who hold positions of authority.

  Thinking based on “Who deserves what” blocks compassionate communication.

  Most of us grew up speaking a language that encourages us to label, compare, demand, and pronounce judgements rather than to be aware of what we are feeling and needing.

Four Components of NVC: Self-expression

3. Observing without Evaluating

The first component of NVC entails the separation of observation from evaluation.

• Observations are an important element in NVC, where we wish to clearly and honestly express how we are to another person. When we combine observation with evaluation, we decrease the likelihood that others will hear our intended message. Instead, they are apt to hear criticism and thus resist whatever we are saying .

• NVC does not mandate that we remain completely objective and refrain from evaluating. It only requires that we maintain separation between our observations and our evaluations.

• Don’t label even for positive words.

• The highest form of human Intelligence.

  The Indian philosopher J. Krishnamurti once remarked that observing without evaluating is the highest form of human intelligence.

• Distinguishing Observations from Evaluations.

  • The words always, never, ever, whenever, etc. express observations when used in the following ways

  Whenever I have observed Jack on the phone, he as spoken for at least thirty minutes.

  I cannot recall your ever writing to me.

  • Sometimes such words are used as exaggerations, in which case observations and evaluations are being mixed:

  You are always busy.

  She is never there when she’s needed.

  • When these words are used as exaggerations, they often provoke defensiveness rather than compassion.

  Words like frequently and seldom can also contribute to confusing observation with evaluation.

4. Identifying and Expressing Feelings

The second component of NVC is to express how we are feeling.

• Feelings versus Non-feelings. The confusion, generated by the English language, is our use of the word feel without actually expressing a feeling.

  Conversely, in the English language, it is not necessary to use the word feel at all when we are actually expressing a feeling: we can say, “I’m feeling irritated”, or simply “I’m irritated”.

  So, distinguish between what we feel and what we think we are. Distinguish feelings from thoughts. For example,

  • “I feel misunderstood“. The word “misunderstood” indicates the assessment of the other person’s level of understanding rather than any actual feeling.
  • “I feel unimportant to the people with whom I work”. The word “unimportant” describes how I think others and evaluating me, rather than an actual feeling, which in this situation might be “I feel sad” or “I feel discouraged“.
  • “I feel ignored”. The word “ignored” expresses how we interpret others, other than how we feel.

By developing a vocabulary of feelings that allows us to clearly and specifically name or identify our emotions, we can connect more easily with one another. Allowing ourselves to be vulnerable by expressing our feelings can help resolve conflicts.

5. Taking Responsibility for Our Feelings

The third component of NVC entails the acknowledgement of the root of our feelings.

NVC heightens our awareness that what others say and do may be the stimulus, but never the cause, of our feelings.

We see that our feelings result from how we choose to receive what others say and do, as well as from our particular needs and expectations in that moment. With this third component, we are led to accept responsibility for what we do to generate our own feelings.

• Four options for receiving negative messages:
  1. Blame ourselves
  2. Blame others
  3. Sense our own feelings and needs
  4. Sense others’ feelings and needs

  We accept responsibility for our feelings, rather than blame other people, by acknowledging our own needs, desires, expectations, values, or thoughts.

• The more we are able to connect our feelings to our own needs, the easier it is for others to respond compassionately.

  Connect your feeling with your needs: “I feel … because I need …”

• Distinguish between giving from the heart and being motivated by guilt.

  The basic mechanism of motivating by guilt is to attribute the responsibility for one’s own feelings to others.

• The needs at the Roots of Feelings.

  Judgements of others are alienated expressions of our own unmet needs.

  If someone says, “You never understand me,” they are really telling us that their need to be understood is not being fulfilled.

  When we express our needs indirectly through the use of evaluations, interpretations, and images, others are likely to hear criticism. And when people hear anything that sounds like criticism, they tend to invest their energy in self-defense or counterattack.

  So, what shall we do is to express our needs, and we would have a better chance of getting the needs met, as it would be easier for others to respond to us compassionately. And, if we don’t value our needs, others may not either.

• From Emotional Slavery to Emotional Liberation.

  • Stage 1: Emotional Slavery. W see ourselves responsible for others’ feelings.

  We think we must constantly strive to keep everyone happy. Taking responsibility for the feelings of others can be very detrimental to intimate relationships.

  • Stage 2: The obnoxious stage. We feel angry; we no longer want to be responsible for others’ feelings.

  We become aware of the high costs of assuming responsibility for others’ feelings and trying to accommodate them at our own expense.

  We tend toward obnoxious comments like, “Thant’s your problem! I’m not responsible for your feelings” when presented with another person’s pain.

  • Stage 3: Emotional Liberation. We take responsibility for our intentions and actions.

  We respond to the needs of others out of compassion, never out of fear, guilt, or shame.

6. Requesting That Which Would Enrich Life.

The fourth and final component of this process addresses what we would like to request of others in order to enrich life for us.

• Using positive Action Language.

  We express what we are requesting rather than what we are not requesting. Do not request a “don’t”. Because “How do you do a don’t”? All I know is I feel won’t we I’m told to do a don’t.

• Tell others what to do, while requesting. Don’t be vague.

  In addition to using positive language, we also want to word our requests in the form of concrete actions that others can undertake and to avoid vague, abstract, or ambiguous phrasing.

  Making requests in clear, positive, concrete action language reveals what we really want. Don’t make vague language, as vague language contributes to internal confusion.

  For example, instead of saying “I want you to feel free to express yourself around me” , “I’d like you to tell me what I might do to make it easier for you to feel free to express yourselves around me”.

  The first sentence do not actually tell the other to express what.

• Making Requests Consciously.

  When we simply express our feelings, it may not be clear to the listener what we want them to do.

  We are often not conscious of what we are requesting. We talk to others or at them without knowing how to engage in a dialogue with them. We toss out words, using the presence of others as a wastebasket. In such situations, the listener, unable to discern a clear request in the speaker’s words, may experience the kind of distress.

  Requests may sound like demands when unaccompanied by the speaker’s feelings and needs.

  The clearer we are about what we want, the more likely it is that we’ll get it.

• Asking for a Reflection.

  To make sure the message we sent is the message that’s received, ask the listener to reflect it back.

  Express appreciation when your listener tries to meet your request for a reflection.

  When we first begin asking others to reflect back what they hear us say, it may feel awkward and strange because such requests are rarely made. When I emphasize the importance of our ability to ask for reflections, people often express reservations. They are worried about reactions like, “What do you think I am — deaf?” or, “Quit playing your psychological games.” To prevent such responses, we can explain to people ahead of time why we may sometimes ask them to reflect back our words. We make clear that we’re not testing their listening skills, but checking out whether we’ve expressed ourselves clearly.

• Requesting Honesty

  After we express ourselves vulnerably, we often want to know:

  1. What the listener is feeling.

     We’d like to know the feelings that are stimulated by what we said, and the reasons for those feelings. For example, by asking. “I would like you to tell me how you fell about what I just said, and your reasons for feeling as you do”.

  2. What the listener is thinking.

     Specify which thoughts we’d like them to share. For example, we might say, “I’d like you to tell me if you predict that my proposal would be successful, and if not, what you believe would prevent its success.” rather than simply saying, “I’d like you to tell me what you think about what I’ve said.” When we don’t specify which thoughts we would like to receive, the other person may respond at great length which thoughts that aren’t the ones we are seeking.

  3. Whether the listener would be willing to take a particular action.

     For example, by asking, “I would like you to tell me if you would be willing to postpone our meeting for one week.”

• Requests versus Demands

  Requests are good, while Demands are bad.

  Our requests are received as demands when others believe they will be blamed or punished if they do not comply. When people hear a demand, they see only two options: submission or rebellion. Either way, the person requesting is perceived as coercive, and the listener’s capacity to respond compassionately to the request is diminished.

  The more we have in the past blamed, punished, or “laid guilt trips” on others when they haven’t responded to our requests, the higher the likelihood that our requests will now be heard as demands. We also pay for others’ use of such tactics. To the degree that people in our lives have been blamed, punished, or urged to feel guilty for not doing what others have requested, the more likely they are to carry this baggage to every subsequent relationship and hear a demand in any request.

  It’s a demand if the speaker then lays a guilt trip.

  We can help others trust that we are requesting, not demanding by indicating that we would only want them to comply if they can do so willingly. Thus we might ask, “Would you be willing to see the table?” rather than “I would like you to set the table.” However, the most powerful way to communicate that we are making the most powerful way to communicate that we are making a genuine request is to empathise with people when they don’t agree to the request.

• Defining our objective when making requests.

  Expressing genuine requests also requires an awareness of our objective. If our objective is only to change people and their behaviour or to get our way, then NVC is not an appropriate tool.

  The objective of NVC is not to change people and their behaviour in order to get our way; it is to establish relationships based on honesty and empathy that will eventually fulfill everyone’s needs.

  Our objective is a relationship based on honesty and empathy.

Four Components of NVC: Apply to others

7. Receiving Emphatically

We refer the communication process that contains observing, feeling, needing, and requesting, as receiving emphatically

• Empathy is not just hearing.

  The hearing that is only in the ears is one thing. The hearing of the understanding is another. But the hearing of the spirit is not limited to any one faculty, to the ear, or to the mind.

  Bad: give advice or reassurance and to explain our own position or feeling.

  Good: The true empathy requires us to focus full attention on the other person’s message. We give to others the time and space they need to express themselves fully and to feel understood.

  Intellectual understanding blocks empathy. Questions such as, “when did this begin?” constituted the most frequent response; they give the appearance that the professional is obtaining the information necessary to diagnose and then treat the problem. In fact, such intellectual understanding of a problem blocks the kind of presence that empathy requires.

  The key ingredient of empathy is presence: we are wholly present with the other party and what they are experiencing.

• Listening for feelings and needs.

  No matter what words people use to express themselves, we listen for their (1)observations, (2)feelings, (3)needs, and (4)requests.

  To listen to what people are needing rather than what they are thinking. People would be less threatening if you hear what they’re needing rather than what they’re thinking about you. Instead of hearing that he’s unhappy because he thinks you don’t listen, focus on what he’s needing by saying, “Are you unhappy because you are needing…”

• Paraphrasing.

  After we focus our attention and hear what others are observing feeling, and needing and what they are requesting to enrich the lives, we may wish to reflect back by paraphrasing what we understood.

  Advantages:

  1. If we have accurately received the other party’s message, our paraphrasing will confirm this for them. If, on the other hand, the paraphrase is incorrect, we give the speaker an opportunity to correct us.
  2. Paraphrasing offer people time to reflect on what they’ve said and an opportunity to delve deeper into themselves.

  How to Do: Paraphrasing take the form of questions that reveal our understanding while eliciting any necessary corrections from the speaker.

  Questions may focus on these components:

  1. What others are observing: “Are you reacting to how many evenings I was gone last week?”
  2. how others are feeling and the needs generating their feelings: “Are you feeling hurt because you would have liked more appreciation of your efforts than you received?”
  3. what others are requesting: “Are you wanting me to tell you my reasons for saying what I did?”
  • Do the questions like above, not the followings, as the above invite others’ corrections.

  1.“What did I do that you are referring to?” 2. “How are you feeling?” “Why are you feeling that way?” 3. “What are you wanting me to do about it?”

  This second set of questions asks for information without first sensing the speaker’s reality.

  When asking for information, first express our own feelings and needs. Because schoolteacher types questions are too straight forward. People would prefer questions that reveals the feelings and needs within ourselves, and show feelings make people feel safer.

  i.e. Instead of asking “What did I do?”, we might say, “I’m frustrated because I’d like to be clearer about what you are referring to. Would you be willing to tell me what I’ve done that leads you to see me in this way”

• Sustaining Empathy.

  I recommend allowing others the opportunity to fully express themselves before turning our attention to solutions or requests for relief. When we proceed too quickly to what people might be requesting, we may not convey our genuine interest in their feelings and needs; instead, they may get the impression that we’re in a hurry to either be free of them or to fix their problem.

  By maintaining our attention on what’s going on within others, we offer them a chance to fully explore and express their interior selves.

  We know a speaker has received adequate empathy when (1) we sense a release of tension, or (2) the flow of words comes to a halt.

8. The Power of Empathy

Empathy allows us “to re-perceive [our] world in a new way and to go on.”

• Empathy and the Ability to Be Vulnerable

  Because we are called to reveal our deepest feelings and needs, we may sometimes find it challenging to express ourselves in NVC.

  Self-expression becomes easier, however, after we empathise with others, because we will then have touched their humanness and realized the common qualities we share. The more we connect with the feelings and needs behind their words, the less frightening it is to open up to other people.

• Empathy for Silence

  Empathise with silence by listening for the feelings and needs behind it.

9. Connecting Compassionately with Ourselves

• Translating Self-Judgements and Inner Demands.

  Self-judgements, like all judgements, are tragic expressions of unmet needs.

  A basic premise of NVC is that whenever we imply that someone is wrong or bad, what we are really saying is that he or she is not acting in harmony with our needs. If the person we are judging happens to be ourselves, what we are saying is, “I myself am not behaving in harmony with my own needs.” I am convinced that if we learn to evaluate ourselves in terms of whether and how well our needs are being fulfilled, we are much more likely to learn from the evaluation.

• NVC Mourning

  Mourning in NVC is the process of fully connecting with the unmet needs and the feelings that are generated when we have been less than perfect. It is an experience of regret, but regret that helps us learn from what we have done without blaming or hating ourselves.

  We can train ourselves to recognise judgemental self-talk and to immediately focus our attention on the underlying needs.

• Self-Forgiveness.

  When were listen emphatically to ourselves, we will be able to hear the underlying need. Self-forgiveness occurs the moment this emphatic connection is made.

  NVC Self-Forgiveness: connecting with the need we were trying to meet when we took the action that we now regret.

  The process of mourning and self-forgiveness frees us in the direction of learning and growing.

• Don’t Do Anything That Isn’t Play

  Do things that are playful. We want to take action out of the desire to contribute to life rather than out of fear, guilt, shame, or obligation. Here are some possible ways:

  1. Translating “Have to” to “Choose to”

     With every choice you make, be conscious of what need it serves.

  2. Cultivating Awareness of the Energy Behind Our Actions.

     Consider the statement “I choose to … because I want …”. Be careful with the important values behind the choices you have made.

  • For Money
  • For Approval
  • To Escape Punishment
  • To Avoid Shame
  • To Avoid Guilt
  • To Satisfy A Sense of Duty

10. Expressing Anger Fully

• The Core of Anger

  All angers are as a result of life-alienating, violence-provoking thinking. At the core of all anger is the need that is not being fulfilled. Thus anger can be valuable if we use it as an alarm clock to wake us up — to realise we have a need that isn’t being met and that we are thinking in a way that makes it unlikely to be met.

• Four Steps to Expressing Anger.

  1. Stop and do nothing except to breathe. We refrain from making any move to blame or punish the other person. We simply stay quiet.
  2. Identify the thoughts that are making us angers
  3. Connect with our needs. We know that all judgements are tragic expressions of unmet needs, so we take the next step and connect to the needs behind those thoughts.
  4. Express our feelings and unmet needs. We open our mouth and speak the anger — but the anger has been transformed into needs and need-connected feelings.
• Offering Empathy First.

  Another step needs to take place before we can expect the other party to connect with what is going on in us. Offer Empathy First.

  • The more we hear them, the more they’ll hear us.

  • Stay conscious of the violent thoughts that arise in our minds, without judging them.

  • When we hear another person’s feelings and needs, we recognise our common humanity.

11. Conflict Resolution and Mediation

This topics is regarding addressing how to apply NVC in resolving conflicts.

• Human Connection.

  Create connection between the people who are in conflict is the most important thing.

• Steps.

  1. Express our own needs.
  2. Seek the real needs of the other person. Seek the need behind their words, the need underneath what they are saying.
  3. Verify that we both accurately recognise the other person’s needs.
  4. Provide as much empathy, mutually hearing each other’s needs accurately.
  5. Propose strategies for resolving the conflict.

  P.S. Avoid the use of language that implies wrongness. Listen to each other with utmost care.

• On Needs, Strategies, and Analysis.

  Fundamentally, needs are the resources life requires to sustain itself. Consider difference between a person’s needs and his or her strategy for fulfilling them, and make strategies.

  Sensing others’ needs, no matter what they’re saying.

  Using present and positive action language to resolve conflict.

The use of NVC to resolve conflict differs from traditional mediation methods; instead of deliberating over issues, strategies, and means of compromise, we concentrate foremost on identifying the needs of both parties, and only then seek strategies to fulfill those needs.

We start by forging a human connection between the parties in conflict. Then we ensure that both parties have the opportunity to fully express their needs, that they carefully listen to the other person’s needs, and that once the needs have been heard, they clearly express doable action steps to meet those needs. We avoid judging or analysing the conflict and instead remain focused on needs.

When one party is in too much pain to hear the needs of the other, we extend empathy, taking as long as necessary to ensure that the person knows their pain is heard. We do not hear “no” as a rejection but rather as an expression of the need that is keeping the person from saying “yes”. Only after all needs have been mutually heard, do we progress to the solution stage: making doable request using positive, action language.

When we assume the role of mediating a conflict between two other parties, the same principles apply. In addition, we keep careful track of progress, extend empathy where needed, keep the conversation focused on the present, moving it forward, and interrupting where necessary to return to the process.

With these tools and understanding, we can practice and help others resolve even long-standing conflicts to their mutual satisfaction.

12. The Protective Use of Force

In situations where there is no opportunity for communication, such as in instances of imminent danger, we may need to resort to the protective use of force. The intention behind the protective use of force is to prevent injury or injustice, never to punish or to cause individuals to suffer, repent, or change. The punitive use of force tends to generate hostility and to reinforce resistance to the very behaviour we are seeking. Punishment damages goodwill and self-esteem, and shifts our attention from the intrinsic value of an action to external consequences. Blaming and punishing fail to contribute to the motivations we would like to inspire in others.

13. Liberating Ourselves and Counselling Others.

Apply the NVC to ourselves, in order to enhances inner communication by helping us translate negative internal messages into feelings and needs. Our ability to distinguish our own feelings and needs and to empathise with them can free us from depression.

14. Expressing Appreciation in Nonviolent Communication

Research shows that if a manager compliments employees, they work harder. And the same goes for schools: if teachers praise students, they study harder. The author have reviewed this research, and find that recipients of such praise do work harder, but only initially. Once they sense the manipulation behind the appreciation, their productivity drops.

When we use NVC to express appreciation, it is purely to celebrate, not to get something in return.

• The Three Components of Appreciation
  1. the actions that have contributed to our well-being;
  2. the particular needs of ours that have been fulfilled;
  3. the pleasureful feelings engendered by the fulfilment of those needs

  The sequence of these ingredients may vary; sometimes all three can be conveyed by a smile or a simple “Thank you.” However, if we want to ensure that our appreciation has been fully received, it is valuable to develop the eloquence to express all three components verbally.

• We shall overcome the reluctance to express appreciation.

• When we receive appreciation expressed in this way, we can do so without any feeling of superiority or false humility—instead we can celebrate along with the person who is offering the appreciation.

by James Clear

The book tells how to cultivate habits.

The author states the following. As changes that seem small and unimportant at first will compound into remarkable results if you’re willing to stick with them for years. We all deal with setbacks but in the long run, the quality of our lives often depends on the quality of our habits. With the same habits, you’ll end up with the same results. But with better habits, anything is possible.

The backbone of this book is the author’s four-step model of habits–cue, craving, response, and reward–and the four laws of behaviour change that evolve out of these steps.

The Fundamentals – Why Tiny Changes Make a Big Difference

1 The Surprising Power of Atomic Habits

• The relentless commitment to a strategy make a Cycling Coach outstanding than others (referred as “the aggregation of marginal gains”, which was the philosophy of searching for a tiny margin of improvement in everything you do). The whole principle of this coach is if you broke down everything you could think of that goes into riding a bike, and then improve it by 1 percent, you will get a significant increase when you put them all together.

• As these and hundreds of other small improvements accumulated, the results came faster than anyone could have imagined.

  But when we repeat 1 percent errors, day after day, by replicating poor decisions, duplicating tiny mistakes, and rationalising little excuses, our small choices compound into toxic results.

  Making a choice that is 1 percent better or 1 percent worse seems insignificant in the moment, but over the span of moments that make up a lifetime these choice determine the difference between who you are and who you could be. Success is the product of daily habits–not once-in-a-lifetime transformations.

• Time magnifies the margin between success and failure. It will multiply whatever you feed it. Good habits make time your ally. Bad habits make time you enemy.

• Forget about goals, focus on systems instead.

  What’s the difference between systems and goals? Goals are about the results you want to achieve. Systems are about the processes that lead to those results.

  Goals are good for setting a direction, but systems are best for making progress.

  A handful of problems arise when you spend too much time thinking about your goals and not enough time designing your systems.

  • Problem #1: Winers and losers have the same goals.

  Goal setting suffers from a serious case of survivorship bias. People who end up with winning–the survivors–and mistakenly assume that ambitious goals led to their success while overlooking all of the people who had the same objective but didn’t succeed.

  Nobody has the goal of losing, but only winners prove with the goal.

  • Problem #2: Achieving a goal is only a momentary change.

  When you solve problems at the results level, you only solve them temporarily. In order to improve for good, you need to solve problems at the systems level. Fix the inputs and outs will will fix themselves.

  • Problem #3: Goals restrict your happiness. Goals create an “either-or” conflict: either you achieve your goal and are successful or you fail and you are a disappointment. Do not link goals with happiness, instead link with the process. When you fall in love with the process rather than the product, you don’t have to wait to give yourself permission to be happy. You can be satisfied anytime your system is running.

  • Problem #4 Goals are at odds with long-term progress. A goal-oriented mindset can create a “yo-yo” effect. Many runners work hard for months, but as soon as they cross the finish line, they stop training. The purpose of setting goals is to win the game. The purpose of building systems is to continue playing the game. Have a long-term thinking, and do not be goal-oriented.

• If you’re having trouble changing your habits, the problem isn’t you. The problem is your system. Focusing on the overall system rather than a single goal, is one of the core themes of this book.

  The atomic habit refers to a tiny change, a marginal gain, a 1 percent improvement. Atomic habits are the building blocks of remarkable results.

2 How Your Habits Shape Your Identity (and Vice Versa)

Few things can have a more powerful impact on your life than improving your daily habits. However, once your habits are established, they seem to stick around forever–especially the unwanted ones.

• There are three layers of behaviour changes:
  • The first layer is changing your outcomes/results.

  • The second layer is changing your process, changing the habits and systems

  • The third and deepest layer is changing your identity, changing the beliefs, the worldview, the self-image, etc.

  • Outcomes are about what you get. Processes are about what you do. Identity is about what you believe.

  • Many people begin the process of changing their habits by focusing on what they want to achieve. This leads us to outcome-based habits. The alternative is to build identity-based habits. With this approach, we start by focusing on who we wish to become.

• The ultimate form of intrinsic motivation is when a habit becomes part of your identity. True behaviour change is identity change. You might start a habit because of motivation, but the only reason you’ll stick with one is that it becomes part of your identity. i.e.

  • The goal is not to read a book, the goal is to become a reader/

  • The goal is not to run a marathon, the goal is to become a runner.

  • The goal is not to learn an instrument, the goal is to become a musician.

• The Shaping Identity is a double-edged sword. The deeply a thought or action is tied to your identity, the more difficult it is to change it.

• A two-step process to changing your identity.

  1. Decide the type of person you want to be.
  2. Prove it to yourself with small wins.
  • The more you repeat a behaviour, the more you reinforce the identity associated with the behaviour.

  • The more evidence you have for a belief, the more strongly you will believe it.

  The process of building habits is actually the process of becoming yourself.

  • Small habits can make a meaning full difference by proving evidence of a small identity.
• Use the feedback loops. Once you have a handle on the type of person you want to be, you can begin taking small steps to reinforce your desired identity. Your habits shape your identity, and your identity shapes your habits.

• To cultivate a habit. The first step is not what or how, but who.

3. How to Build Better Habits in 4 Simple Steps

Scholar, Thorndike, described the learning process, “Behaviours followed by satisfying consequences tend to be repeated and those that produce unpleasant consequences are less likely to be repeated”

• Why the Brain builds habits?

  Whenever you encounter a new situation in life, the brain has to make a decision. Neurological activity in the brain is high during the period.

  As habits are created, the level of activity in the brain decreases. When a similar situation arises in the future, you know exactly what to look for. There is no longer a need to let the brain think and make decision and analyse every angle of a situation.

  In short, habits are mental shortcuts learned from experience.

  Habits reduce cognitive load and free up mental capacity, so you can allocate your attention to other tasks.

  Habits do not restrict freedom. They create it. In fact, the people who don’t have their habits handled are often the ones with the least amount of freedom, because the brain is always overloaded.

  When you have habits dialed in and the basics of life are handled and done, your mind is free to focus on new challenges and master the next set of problems.

• The process of building a habit.

  Four simple steps: cue, craving, response, and reward.

  1. Cue triggers your brain to initiate a behaviour.
  2. Cravings are the motivational force behind every habit.
  3. Response is the actual habit you perform, which can take the form of a thought or an action.
  4. Rewards are delivered by Response. There are two purposes of reward. (1) Reward satisfy your craving. (2) reward teaches us which actions are worth remembering in the future.
  • The author would illustrate those four steps in details later.
  • The four steps make a loop, and reinforce the process. The cue triggers a craving, which motivates a response, which provides a reward, which satisfies the craving and, ultimately, becomes associated with the cue.
• The four laws of behaviour change.
  1. The 1st Law (Cue) <– Make it obvious.
  2. The 2nd Law (Craving) <– Make it attractive.
  3. The 3rd Law (Response) <– Make it easy.
  4. The 4th Law (Reward) <– Make it satisfying.
  • For bad habits, do the reveres. Make the cue invisible, make craving unattractive, make response difficult, and make reward unsatisfying.

The 1st Law: Make it Obvious

4. The Man who didn’t Look Right

• With enough practice, your brain will pick up on the cues that predict certain outcomes without consciously thinking about it.
• Once the habits become automatic, we stop paying attention to what we are doing.
• The process of behaviour change always starts with awareness. You need to be aware of your habits before you can change them.

5. The Best Way to Start a New Habit

• The 1st law of Behaviour Change is make it obvious.

• Two most common cues are time and location. Create the Implementation Intention, which is a plan you make beforehand about when and where to act. That is, how you intend to implement a particular habit. Like “When situation X arises, I will perform response Y”. Or, I will [BEHAVIOUR] at [TIME] in [ LOCATION].

• Many human behaviours follow a chain reaction cycle. You decide what to do next based on what you have just finished doing (Bayesian). No behaviours happen in isolation. Each action becomes a cue that triggers the next behaviour.

• Habit Stacking. Inspired by the above, when it comes to building new habits, you can use the connectedness of behaviour to your advantage. One of the best ways to build a new habit is to identify a current habit you already do each day, and then stack your new behaviour on the top. In a word, linking one behaviour with the other.

• Tie your desired behaviour into something you already do each day. Once you have mastered this basic structure, you can begin to create larger stacks by chaining small habits together. The habit stacking allows you to create a set of simple rules that guide your future behaviour.

  In short, After I [CURRENT HABIT], I will [NEW HABIT].

6. Motivation is Overrated, Environment Often Matters More

People Often choose products not because of what they are, but because of where they are. Environment is the invisible hand that shapes human behaviour.

In this way, the most common form of change is not internal, but external: we are changed by the world around us. Every habit is context dependent.

By psychologist Kurt Lewin (1936): Behaviour is a function of Person in their Environment, B=f(P,E).

• In humans, perception is directed by the sensory nervous system. We perceive the world through sight, sound, smell, touch, and taste. And other ways of sensing stimuli, some are conscious, but many are non-conscious. Receptors in your body pick up on a wide range if internal stimuli. One of the most powerful human sensory abilities is vision. A small change in what you see can lead to a big shift in what you do.

• The environments where we live and work often make it easy not to do certain actions because there is no obvious cue to trigger the behaviour. What we do is to make it visually obvious. We shall change the environment.

• Environment design is powerful not only because it influences how we engage with the world but also because we rarely do it.

• Create the the Context of Cue.

  Over time, your habits become associated not with a single trigger but with the entire context surrounding the behaviour.

  The behaviour is not defined by the objects in the environment but by our relationship to them. Thank in terms of how you interact with the spaces around you.

  The power of context reveals an important strategy: habits can be easier to change in a new environment.

  Whenever possible, avoiding mixing the context of one habit with another. The inspiration is to split the Space to Work, and the Space to Study and Live.

  If your space is limited, divide your room into activity zones: a chair for reading, a desk for writing, a table for eating, etc.

7. The Secret to Self-Control

When scientists analyse people who appear to have tremendous self-control, it turns out those individuals aren’t all the different from those who are struggling. Instead, “disciplined” people are better at structuring their lives in a way that does not require heroic willpower and self-control. In other words, they spend less time in tempting situations.

• Bad habits are auto-catalytic: the process feeds itself.

  One of the most practical ways to eliminate a bad habit is to reduce exposure to the cue that causes it.

  The practice is an inversion of the 1st Law of Behaviour Change. Rather than make it obvious, you can make it invisible (for the bad habit).

The 2nd Law: Make it Attractive

8. How to Make a Habit Irresistible

Scientists refer to exaggerated cues as supernormal stimuli, which is a heightened version of reality and elicits a stronger response than usual. They exaggerate features that are naturally attractive to us, and our instincts go wild as a result, driving us into excessive shopping habits, social media habits, porn habits, eating habits, and many others. Hereafter are some biological response.

• The Dopamine-Driven Feedback Loop

  Dopamine is not the only chemical that influences your habits, but it is the one that provide a window into the biological underpinnings of desire, craving, and motivation that are behind every habits.

  For years, scientists assumed dopamine was all about pleasure, but now we know it plays a central role in many neurological processes, including motivation, learning and memory, punishment and aversion, and voluntary movement.

  When it comes to habits, the key takeaway is this: dopamine is released not only when you experience pleasure, but also when you anticipate it.

  The more attractive an opportunity is, the more likely it is to become habit-forming.

• Use the Temptation Bundling to make your habits more attractive.

  Temptation bundling works by linking an action you want to do with an action you need to do.

9. The Role of Family and Friends in Shaping Your Habits

• The Seductive Pull of Social Norms: Humans are herd animals. We want to fit in, to bond with others, and to earn the respect and approval of our peers.

  Those who collaborated and bonded with others enjoyed increased safety, mating opportunities, and access to resources.

  We imitate the habits of three groups in particulars:

  1. The close.

     As a general rule, the closer we are to someone, the more likely we are to imitate some of their habits. Our friends and family provide a sort of invisible peer pressure that pulls us in their direction. We soak up the qualities and practices of those around us.

     One of the most effective things you can do to build better habits is to join a culture where your desired behaviour is the normal behaviour. Join a culture where (1) your desired behaviour is the normal behaviour and (2) you already have something in common with the group.

     Conversely, peer pressure is bad only if you’re surrounded by bad influences.

  2. The many.

     The normal behaviour of the tribe often overpowers the desired behaviour of the individual.

     Humans are similar. There is tremendous internal pressure to comply with the norms of the group. The reward of being accepted is often greater than the reward of winning an argument, looking smart, or finding truth.

  3. The powerful.

     We try to copy the behaviour of successful people because we desire success ourselves.

     High-status people enjoy the approval, respect, and praise of others. And the means if a behaviour can get us approval, respect, and praise, we find it attractive.

10. How to Find and Fix the Causes of Your Bad Habits

• Habits are all about associations. There associations determine whether we predict a habit to be worth repeating or not. The brain is continually absorbing information and noticing cues in the environment. Every time you perceive a cue, your brain runs a simulation and makes a prediction about what to do in the next moment.

  The cause of your habits is actually the prediction that precedes them.

  There predictions lead to feelings, which is how we typically describe a craving — a feeling, a desire, an urge. Feelings and emotions transform the cues we perceive and the predictions we make into a signal that we can apply.

  To summaries, the specific cravings you feel and habits you perform are really an attempt to address your fundamental underlying motives. Whenever a habit successfully addresses a motive, you develop a craving to do it again.

  Habits are attractive when we associate them with positive feelings, and we can use this insight to our advantage rather than to our detriment.

• Reprogram Your Brain to Enjoy Hard Habits.

  Changing just one word: You don’t “have” to You “get” to.

  Transition from seeing there behaviours as burdens and turn them into opportunities.

  Re-framing your habits to highlight their benefits rather than their drawbacks is a fast and light wight way to reprogram your mind and make a habit seem more attractive.

  If you want to take it a step further, you can crate a motivation ritual. You simply practice associating your habits with something you enjoy, then you can use that cue whenever you need a bit of motivation.

  ​ Three deep breaths. Smile. Ped the dog. Repeat.

  ​ Eventually, you’ll begin to associate this breathe-and-smile routine with being in a good mood. It becomes a cue that means feeling happy.

  The key to finding and fixing the causes of your bad habits is to re-frame the associations you have about them. It’s not easy, but if you can reprogram your predictions, you can transform a hard habit into an attractive one.

The 3rd Law: Make it Easy

11. Walk Slowly, but Never Backward

When you’re in motion, you’re planning and strategising and learning.

Action is the type of behaviour that will deliver an outcome.

If you want to master a habit, the key is to start with repetition, not perfection. You don’t need to map out every feature of a new habit. You just need to practice it.

Get start, try and protect, get exploration, not prepare for perfection.

• How long does it actually take to form a new habit?

  The more you repeat an activity, the more the structure of your brain changes to become efficient at that activity. Neuroscientists call this long-term potentiating, which refers to the strengthening of connections between neurons in the brain based on recent patterns of activity. With each repetition cell-to-cell signaling improves and the neural connections tighten.

• Repetition is a form of change

  An English philosopher George H Lewes noted, “In learning to speak a new language, to play on a musical instrument, or to perform unaccustomed movements, great difficulty is felt, because the channels through which each sensation has to pass have not become established; but no sooner has frequent repetition cut a pathway, than this difficulty vanishes; the actions become so automatic that they can be performed while the mind is otherwise engaged.”

• All habits follow a similar trajectory from effortful practice to automatic behavior, a process known as automaticity. Automaticity is the ability to perform a behaviour without thinking about each step, which occurs when the non-conscious mind takes over.

  

In practice, it doesn’t really matter how long it takes for a habit to become automatic. What matters is that you take the actions you need to take to make progress. Whether an action is fully automatic is of less importance.

12. The Law of Least Effort

• Habits like scrolling on our phones, checking email, and watching television steal so much of our time because they can be performed almost without effort. They are remarkable convenient.

• You don’t actually want the habit itself. What you really want is the outcome the habit delivers. The greater the obstacle — that is, the more difficult the habit — the more friction there is between you and your desired end state. This is why it is crucial to make your habits so easy that you’ll do them even when you don’t feel like it. If you can make your good habits more convenient, you’ll be more likely to follow through on them.

• The less friction you face, the easier it is for your stronger self to emerge. The idea behind make is easy is not only do easy things. The idea is to make it as easy as possible in the moment to do things that payoff in the long run.

• Reduce the friction associated with good behaviours. When friction is low, habits are easy. Increase the griction associated with bad behaviours. When friction is high, habits are difficult.
• Prime your environment to make future actions easier.

13. How to Stoop Procrastinating by Using the Two-Minute Rule

• The Two-Minute Rule. Even when you know you should start small, it’s easy to start too big. When you dream about making a change, excitement inevitably takes over and you end up trying to do too much too soon. The most effective way I know to counteract this tendency is to use the Two-Minute Rule, which states, “When you start a new habit, it should take less than two minutes to do”.

  A new habit should not feel like a challenge. The actions that follow can be challenging, but the first two minutes should be easy. What you want is a “gateway habit” that naturally leads you down a more productive path.

• For Example: You can usually figure out gateway habits that will lead to your desired outcome by mapping out your goals on a scale from “very easy” to “very hard”. For instance, running a marathon is very hard. Running a 5K is hard. Walking ten thousand steps is moderately difficult. Walking ten minutes is easy. And putting on your running shoes is very easy. Your goal might be to run a marathon, but your gateway habit is to put on your running shoes. That’s how you follow the Two-Minute Rule.

• focusing on just the first two minutes and mastering that stage before moving on the next level. Eventually, you’ll end up with the habit you had originally hoped to build while still keeping your focus where it should be: on the first two minutes of the behaviour.

14. How to Make Good Habits Inevitable and Bad Habits Impossible

• Usecommitment device, a choice you make in the present that controls your actions in the future.

• The best way to break a bad habit is to make it impractical to do. Increase the friction until you don’t even have the option to act.

• Onetime choices — like buying a better mattress or enrolling in an automatic savings plan — are single actions that automate your future habits and deliver increasing returns over time.

The 4th Law: Make It Satisfying

15. The Cardinal Rule of Behaviour Change

We are more likely to repeat a behaviour when the experience is satisfying. Conversely, if an experience is not satisfying, we have little reason to repeat it.

• The first three laws of behaviour change — make it obvious, make it attractive, and make it easy — increase the odds that a behaviour will be performed this time. The fourth law of behaviour change — make it satisfying — increases the odds that a behaviour will be repeated next time. It completes the habit loop.

• However, there is a trick. Your human nature live in what scientists call an immediate-return environment because your actions instantly deliver clear and immediate outcomes. Yet, you, per se, live in what scientists call a delayed-return environment because you can work for years before your actions deliver the intended payoff.

  The world has changed much in recent years, but human nature has changed little. The world becomes more Rewards-Delayed, but human nature needs Rewards-Immediate.

  The brain’s tendency to prioritise the present moment means you can’t rely on good intentions.

• Every habit produces multiple outcomes across time. Unfortunately, these outcomes are often misaligned. With our bad habits, the immediate outcome usually feels good, but the ultimate outcome feels bad. With good habits, it is the reverse: the immediate outcome is enjoyable, but the ultimate outcome feels good.

  In other words, the costs of your good habits are in the present. The costs of your bad habits are in the future.

• Cardinal Rule of Behaviour Change: What is immediately rewarded is repeated. What is immediately punished is avoided.

• You need to work with the grain of human nature, not against it. The best way to do this is to add a little bit of immediate pleasure to the habits that pay off in the long-run and a little bit of immediate pain to ones that don’t/ Cultivate habits by artificially rewards yourself to the human nature.

  To select short-term rewards that reinforce your identity rather than ones that conflict with it.

• In summary, a habit needs to be enjoyable for it to last.

16. How to Stick with Good Habits Every Day

Making progress is satisfying, and visual measures — like moving paper clips or hairpins or marbles — provide clear evidence of your progress. As a result, they reinforce your behaviour and add a little bit of immediate satisfaction to any activity.

• Use habit track. Habit tracking (1) creates a visual cue that can remind you to act, (2) is inherently motivating because you see the progress you are making and don’t want to lose it, and (3) feels satisfying whenever you record another successful instance of your habit.
• What can we do to make tracking easier? First, whenever possible, measurement should be automated. Second, manual tracking should be limited to your most important habits. Finally, record each measurement immediately after the habit occurs.
• How to recover quickly when your habits were interrupted? Never miss twice. Try to not break the Chain.

17. How an Accountability Partner Can Change Everything

• The more immediate the pain, the less likely the behaviour. If you want to prevent bad habits and eliminate unhealthy behaviours, then adding an instant cost to the action is a great way to reduce their odds.

• An accountability partner can create an immediate cost to inaction. We care deeply about what others think of us, and we do not want others to have a lesser opinion of us.

• A habit contract can be used to add a social cost to any behaviour. It makers the costs of violating your promises public and painful.

  Just as governments use laws to hold citizens accountable, you can create a habit contract to hold yourself accountable.

Advanced Tactics: How to Go from Being Merely Good to Being Truly Great

18. The Truth About Talent (When Genes Matter and When They Don’t)

The secret to maximising the odds of success is to choose the right field of competition. In short: Genes don’t determine your destiny. They determine your areas of opportunity.

• How your personality influences your habits:
  1. Openness to experience
  2. Conscientiousness
  3. Extroversion
  4. Agreeableness
  5. Neuroticism

  Our habits are not solely determined by our personalities, but there is no doubt that our genes nudge us in a certain direction.

  The Takeaway is that you should build habits that work for your personality. You don’t have to build the habits everyone tells you to build. Choose the habit that best suits you, not the one that is most popular.

• How to find a game where the odds are in your favour:

  1. In the beginning of a new activity, there should be a period of exploration. The goal is to try out many possibilities, research a broad range of ideas, and cast a wide net.
  2. After this initial period of exploration, shift your focus to the best solution you’ve found — but keep experimenting occasionally.
  3. In the long-run it is probably most effective to work on the strategy that seems to deliver the best results about 80 to 90 percent of the time and keep exploring with the remaining 10 to 20 percent.

  When you can’t win by being better, you can win by being different. By combining your skills, you reduce the level of competition, which makes it easier to stand out.

• How to getthe most out of your genes:

  The genes do not eliminate the need for hard work. They clarify it. They tell us what to work hard on. Once we realise our strengths, we know where to spend our time and energy.

In summary , one of the best ways to ensure your habits remain satisfying over the long-run is to pick behaviours that align with your personality and skills. Work hard on the things that come easy.

19. The Goldilocks Rule: How to Stay Motivated in Life and Work

The way to maintain motivation and achieve peak levels of desire is to work on tasks of “just manageable difficulty”.

The human brain loves a challenge, but only if it is within an optimal zone of difficulty.

• The Goldilocks Rule states that humans experience peak motivation when working on tasks that are right on the edge of their current abilities. Not too hard. Not too easy. Just right.

  When you’re starting a new habit, it’s important to keep the behaviour as easy as possible so you can stick with it even when conditions aren’t perfect.

  Once the habit has been established, it is important to continue to advance in small ways.

  

• How to stay focused when you get bored working on your goals

  The greatest threat to success is not failure but boredom.

  Variable rewards won’t create a craving, but they are a powerful way to amplify the cravings we already experience because they reduce boredom.

• Professionals stick to the schedule; amateurs let life get in the way. Professionals know what is important to them and work toward it with purpose; amateurs get pulled off course by the urgencies of life.

  The only way to become excellent is to be endless fascinated by doing the same thing over and over. You have to fall in love with boredom

20. The Downside of Creating Good Habits

Habits are necessary, but not sufficient for mastery. What you need is a combination of automatic habits and deliberate practice.

\text{Habits} + \text{Deliverate Practive} = \text{Mastery}

• Mastery is the process of narrowing your focus to a tiny element of success, repeating it until you have internalised the skill, and then using this new habit as the foundation to advance to the next frontier of your development.

• Improvement is not just about learning habits, it’s also about fine-tuning them. Reflection and review ensures that you spend your time on the right things and make course corrections whenever necessary.

• Perform annual review, in which reflect on the previous year, reflect on my progress by answering three questions:

  1. What when well this year?
  2. What didn’t go so well this year?
  3. What did I learn?

  Answer three questions in the yearly Integrity Report:

  1. What are the core values that drive my life and work?
  2. How am I living and working with integrity right now?
  3. How can I set a higher standard in the future.

  Never reviewing your habits is like never looking in the mirror. Periodic reflection and review is like viewing yourself in the mirror from a conversational distance. You can see the important changes you should make without losing sight of the bigger picture.

• How to break the beliefs that hold you back:

  The more scared an idea is to us — that is, the more deeply it is tied to our identity — the more strongly we will defend it against criticism.

  One solution is to avoid making any single aspect of your identity an overwhelming portion of who you are.

  “Keep your identity small”. The more you let a single belief define you, the less capable you are of adapting when life changes you. In other words, don’t be overconfident about your identity, Be acceptable to things.

• When you spend your whole life defining yourself in one way and that disappears, who are you now?

  The key to mitigating these losses of identity is to redefine yourself such that you get to keep important aspects of your identity even if your particular role change. I.E.

  • Instead of saying “I’m the CEO”, say “I’m the type of person who builds and creates things”

  • Not “I’m a great soldier”, Yes “I’m the type of person who is disciplined, reliable, and great on a team”

  Habits deliver numerous benefits, but the downside is that they can lock us into our previous patterns of thinking and acting — even when the world is shifting around us. Everything is impermanent. Life is constantly changing, so you need to periodically check in to see if your old habits and beliefs are still serving you.

• A lack of self-awareness is poison. Reflection and review is the antidote.

  Don’t let the Identity obstacle your belief. Be a Open Person.

Men are born soft and supple; dead they are stiff and hard.

Plants are born tender and pliant; dead, they are brittle and dry.

Thus whoever is stiff and inflexible is a disciple of death.

Whoever is soft and yielding is a disciple of life.

The hard and stiff will be broken.

The soft and supple will prevail.

人之生也柔弱，其死也坚强。草木之生也柔脆，其死也枯槁。故坚强者死之徒，柔弱者生之徒。是以兵强则灭，木强则折。

《道德经》– 老子