11 highlights
-
The key thing about evolution is that everything dies.
-
There is no perfect species, one adapted to everything at all times. The best any species can do is to be good at some things until the things it’s not good at suddenly matter more.
-
A century ago a Russian biologist named Ivan Schmalhausen described how this works. A species that evolves to become very good at one thing tends to become vulnerable at another. A bigger lion can kill more prey, but it’s also a larger target for hunters to shoot at.
-
So species rarely evolve to become perfect at anything, because perfecting one skill comes at the expense of another skill that will eventually be critical to survival.
-
Biologist Anthony Bradshaw says that evolution’s successes get all the attention, but its failures are equally important. And that’s how it should be: Not maximizing your potential is actually the sweet spot in a world where perfecting one skill compromises another.
-
Psychologist Amos Tversky once said “the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”
-
But Tversky’s point is that if your job is to be creative and think through a tough problem, then time spent wandering around a park or aimlessly lounging on a couch might be your most valuable hours. A little inefficiency is wonderful.
-
Another form of helpful inefficiency is a business whose operations have some slack built in.
-
Just-in-time manufacturing – where companies don’t stock the parts they need to build products, relying instead on last-minute shipments of components – was the epitome of efficient operations over the last 20 years. Then Covid hit, and virtually every manufacturer found itself dreadfully short of what it needs.
-
We are in the biggest post-WW2 consumer boom and car companies are shutting down production because they’re out of chips. A little inefficiency across the whole supply chain would have been the sweet spot.1
- Leverage is the most efficient way to maximize your balance sheet, and the easiest way to lose everything. Concentration is the best way to maximize returns, but diversification is the best way to increase the odds of owning a company capable of delivering returns. On and on, if you’re honest with yourself you’ll see that a little inefficiency is the ideal spot to be in.2