Principles: Life and Work

Principles: Life and Work
Author:
Publisher:
Published: 9/19/2017
Ray Dalio, one of the world’s most successful investors and entrepreneurs, shares the unconventional principles that he’s developed, refined, and used over the past forty years to create unique results in both life and business—and which any person or organization can adopt to help achieve their goals.

Principles: Life & Work by Ray Dalio

Ray Dalio is the founder of Bridgewater Associates, an investment firm he created in 1975 out of his two-bedroom apartment in New York City. After forty years, Bridgewater has made more money for its clients than any other hedge fund in history. Time magazine included Ray Dalio on their list of the 100 most influential people in the world. Ray credits Bridgewater’s success to the principles he learned from reflecting on life, rather anything special about him.

Well defined principles will help you through uncertain times. It’s important that your principles are so clearly laid out that their logic can easily be assessed by others, and you and others can see if you walk the talk.

It’s always good to have Radical Truth and Transparency, which makes for meaningful work and relationships.

As a manager, it’s crucial to see your company as a machine with a purpose that you are tasked to optimize. Build your company from the top-down and do your best to keep the manager-employee ratio small.

The book is a gigantic list of principles, far too many to list here. Many of them are likely to be unique advice for some people, but not for others. But if you learn anything regarding work principles, he recommends the Idea Meritocracy, which “strives to achieve meaningful work and meaningful relationships through radical transparency.” It requires individuals with humility who can look at multiple views against their own.

Principle #1: Think for yourself to decide 1) what you want, and 2) what is true, and 3) what you should do to achieve what you want in light of what’s true, with humility and open-mindedness.

Ray believes that the key to success lies in knowing how to both strive for a lot and fail well. Failing well means experiencing pain and loss in exchange for big lessons, without failing badly enough to fall out of the game.

Success as an entrepreneur requires being such a good independent thinker that you bet correctly against the consensus, which means you’ll be painfully wrong a fair amount as well. You have to be open to being wrong so you can learn from it, which requires humility, and friends and colleagues who aren’t afraid to tell you the truth.

Life Principles

Embrace reality and Deal with it

Realize you have nothing to fear from knowing the truth. Drop your views of how things “should” be because you will miss out on learning how they really are. Don’t confuse what you wish were true with what is really true. Accept reality is it really is. Making the most of your circumstances is what life is all about. Don’t be afraid of what others think, or about looking good. Worry instead about achieving your goals.

Dreams + Reality + Determination = Successful life.

Be Radically Truthful and Radically Transparent.

This will give you integrity and create meaningful work and relationships success depends on. Learn from your mistakes. The pain of mistakes can be what fuels your progression or what ruins you if you let it.

Evolution is the Greatest Force in the Universe

It’s important to be able to see yourself from the perspective of evolution, which makes life meaningful. Evolve or die: Fail, learn, and improve quickly. The evolutionary process is life’s greatest reward. Reality is optimizing for the whole, not for you, so contribute to the whole and you will likely be rewarded. Your own evolutionary process can be described as a 5-step process for getting what you want out of life:

 

  1.  Have clear goals. Don’t confuse goals with desires. Great expectations create great capabilities: If you limit your goals to what you know you can achieve, you are setting the bar way too low.
  2.  Identify and don’t tolerate the problems that stand in the way of achieving those goals. View painful problems as potential improvements that are screaming at you.
  3.  Accurately diagnose the problems to get at their root causes.
  4.  Design plans that will get you around them.
  5.  Do what’s necessary to push these designs through to results.

 

Nobody has the intelligence to do all of the above effectively, so it’s important to rely on others for help.

See Yourself From Above

The biggest mistake most people make is to not see themselves and others objectively, which leads them to bump into their own and others’ weaknesses again and again. Successful people are those who can go above themselves to see things objectively. Think of yourself as a machine operating within a machine.

Our Biggest Barriers are Ego and Blind Spots.

The way to deal with these weaknesses is to have honest friends and colleagues and to keep a list of past mistakes. Check that list every time you’re about to make a big decision.

Own Your Outcomes

Don’t blame others for your mistakes, however tempting or seemingly justified. Even if it’s true it won’t usually help. Psychologists call this having an “internal locus of control,” and studies consistently show that people who have it outperform those who don’t.

Understand That People Are Wired Differently

Embrace Open-Mindedness and Thoughtful Disagreement. Seeking out brilliant people who disagree with you is one of the best ways to grow smarter, both conceptually and socially.

Good Decision-Making and Getting the Courage to make Good Decisions come from:

 

  1. Go after what you really want
  2. Be Realistic, Radically Open-Minded, and Radically Transparent
  3. Embrace the Pain of Failure, which will eventually start to feel good, like a runner’s high.
  4. Learn From Failure. Grow.

 

Seek the Borders of Your Comfort Zone

Every time you confront something painful, you are at a potentially important juncture in your life. You have the opportunity to choose healthy and painful truths or unhealthy but comfortable delusions. The irony is that if you choose the healthy route, the pain will soon turn into pleasure. And if you choose the unhealthy route, the pleasure will turn into pain that requires pain to escape. Nature seems to throw tricks at us to see who falls for the temptations instead of considering second-order consequences.

When encountering your weaknesses you have four choices:

 

  1. You can deny them (which is what most people do).
  2. You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change).
  3. You can accept your weaknesses and find ways around them.
  4. Or, you can change what you are going after.

 

Work Principles

As a manager, you should build your company like a mechanic optimizing for a purpose.

Trust in Radical Truth/Transparency

  1. Great cultures bring problems and disagreements to the surface so they can be solved well.
  2. Create a culture in which it is okay to make mistakes but unacceptable not to learn from them.
  3. Speak Up, Own it, Or Get Out.
  4. Tough love is effective for achieving great work and relationships.
  5. While most people prefer compliments, accurate criticism is the most valuable.
  6. Be open-minded and assertive
  7. Beware of closed-minded people.
  8. Watch out for people who think it’s embarrassing not to know.
  9. Share things that are hardest to share.

The most effective group decision-making system is an idea meritocracy: “an idea meritocracy that strives to achieve meaningful work and meaningful relationships through radical transparency.”

An idea meritocracy requires people in groups to do three things:

1) Put their honest thoughts on the table for everyone to see.

2) Have thoughtful disagreements such that there are quality dialogues in which people evolve their thinking to come up with the best collective answers possible.

3) Abide by idea-meritocratic ways of getting past the remaining disagreements.

In an Idea of Meritocracy, a single CEO is not as good as a great group of leaders. 

Get and Stay in Sync

  1. Understand that conflicts are essential for great relationships because they determine whether people’s principles are aligned.
  2. Find the most credible people possible who disagree with you and try to understand their reasoning.
  3. Understand that nobody can see themselves objectively.

Make sure to hire the right people, because the penalties for hiring wrong are huge. The most important decision for you to make is who you choose as your Responsible Parties.

Remember that most people will pretend to operate in your interest while operating on their own.

  1. Don’t feel bad about mistakes. Love them and learn from them!
  1. Reflect when in pain.

Do what you set out to do.

And for Heaven’s Sake Don’t Overlook Governance!

  1. Remove people and processes that aren’t working well
  2. Make sure the interests of the community always remain above any individual’s interests.

Ray’s hope is to prompt you to work out your own principles and keep them written down.

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