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The secret to actually achieving lofty dreams
Half the battle is achieving clarity
I love a lofty dream, but they're often a bit scary to consider because it's really unclear how we get from where we are today to where we want to be. In this essay, we're going to dive into three ideas that'll help you navigate through that fog of uncertainty and set a clear path toward making those dreams a reality.
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When thinking about a big lofty dream, I think it's helpful to consider the composition of achievement. Whether it's a huge bank account or holding a top job, when you look at the series of events leading up to a particular achievement, you realize that most of the progress made only came from a tiny subset of moments.
A huge stock portfolio balance likely saw massive growth over a handful of good years. A significant promotion at work can be traced back to killing it on one or two high visibility projects.
In his excellent book "The Psychology of Money", Morgan Housel neatly describes this phenomenon: "Long tails—the farthest ends of a distribution of outcomes—have tremendous influence in finance, where a small number of events can account for the majority of outcomes."
While Housel is taking on this idea from a financial perspective, I think it's broadly applicable to many areas of our lives. This brings us to our first key idea: When it comes to our lofty dreams, we should anticipate that the vast majority of progress will likely come in the form of a small number of outlier events.
The thing to know about these outliers is that, by definition, they belong to a far larger set of regular events. While we may not have control over when and how any given event becomes an outlier, we do have total control over the systems that generate the set of events in the first place. Going back to our work example, you many not know when you'll be selected for that career defining project, but you can ensure that you're regularly signing up for and delivering projects a high standard.
While outlier events are awesome when they come, I take a lot of comfort in the fact that they're not actually necessary to reach your dreams. Sure, a chance outlier event can greatly compress the timeline to success, but timing aside, it's still possible to make a dream come true through simple relentless progress, and that's where compounding systems come in
Going back to finance, Housel writes: But good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.
And that brings us to our second idea: With compounding, consistency and time are the only things that matter. Each individual event only has to be marginally good. You don't have to deliver a command performance each time you step onto the field. You just have to get the reps in and improve a little at a time for the gains to begin to accumulate.
So long as you're patient and consistently making progress, success becomes a matter of when and not if. When you change your focus from chasing outlier events to optimizing compounding systems, the path toward your dreams becomes far more vivid, and your ability to control things becomes much finer grained.
Compound interest relies on playing out a set of seemingly tiny conditions over a great many times. You can see this play out all over the place. A very slight edge in winning probably enables casinos to be reliably turn a profit for decades at a time. It's also how insurance works. At a macro level, there will be fewer people filing claims than making premium payments, and over time, insurance companies have grown to be some of the most profitable businesses around. I love how Housel explains this process through an example from the natural world.
He tells us that until very recently, many people thought that the ice age was due to a cataclysmic event like a massive super volcano erupting, or global wind patterns being shifted by mountain ranges that suddenly sprung up from colliding tectonic plates. All that began to change when scientists realized that there wasn't just one ice age, but five.
Sure those earlier theories could explain one or maybe two of these ice ages, but five? What on earth is powerful and regular enough to account for that? Two words: compound interest.
Quoting Housel: Moderately cool summers, not cold winters, were the icy culprit. It begins when a summer never gets warm enough to melt the previous winter’s snow. The leftover ice base makes it easier for snow to accumulate the following winter, which increases the odds of snow sticking around in the following summer, which attracts even more accumulation the following winter. Perpetual snow reflects more of the sun’s rays, which exacerbates cooling, which brings more snowfall, and on and on. Within a few hundred years a seasonal snowpack grows into a continental ice sheet, and you’re off to the races.
And that brings us to our third key idea: Developing a compounding system for yourself is tantamount to figuring out what your moderately cool summer looks like. I love this concept because it distills the idea of massive unfathomable change into a simple, bite-sized atomic goal that you can figure out how to deliver with regularity.
In my previous essay, I shared how I ran 500 miles without having defined an explicit goal to so. Instead, I focused on developing a running system that I could actually stick with, where my moderately cool summer was a steadily growing daily run. When building a career, it could look like producing a stream of deliverables, each slightly more capable than the last.
The key three ideas we covered here reinforce one another perfectly. By prioritizing consistency and time, we can focus our attention on developing systems that produce a regular steam of specifically designed moments. Our version of a moderately cool summer. Once this system is set up and dependably delivering those events, we greatly magnify the likelihood of one of those events becoming an outlier. Put all of that together, and the path toward your dream starts to go from hazy to crystal clear.
In case you’d like to see a spoken version of this essay, be sure to check out this post on YouTube.