Principles Life and Work#
Importante
These are my notes from the book Principles Life and Work by Ray Dalio. All principles coverd in the book can be fund here: Life and Work Principles.
The Idea of Principles#
Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. The principles you choose can be anything you want them to be as long as the are authentic (i.e. as long as they reflect your true character and values). If inconsistencies seem to exist, you should explain them. Principles themselves are a form of leverage-they´re a way to compound your understanding of situations so that you don´t need to exert the same effort each time you encounter a problem. It is a way to systemize your decision making using believability-weighted decisions.
It’s smarter to start with what you really want, which are your real goals, and then work back to what you need to attain them. Use daily observations and look to nature to learn how reality works. Truth-or, more precisely, an accurate understanding of reality-is the essential foundation for any good outcome. It is a fundamental law of nature that you get stronger only by doing difficult things.
Habit is probably the most powerful tool in your brain’s toolbox. The good habits come from thinking repeatedly in a principled way; the good thinking comes from exploring the reasoning behind the principles. It´s essential to build your most important principles into habits and help others do so as well. Algorithms are principles in action on a continuous basis.
Look for the patterns of those things that affect you in order to understand the cause-effect relationships that drive them and to learn principles for dealing with them effectively. Have clear goals. Don’t confuse goals with desires. Logic, reason, and common sense are your best tools for synthesizing reality and understanding what to do about it. Use principles. Using principles is a way of both simplifying and improving your decision making. Convert your principles into algorithms and have the computer make decisions alognside you.
Seek out the smartest people who disagreed with you so 1) you could try to understand their reasoning, 2) know when no to have an opinion, and 3) develop, test and systemize timesless and universal principles.
Work principles is written for those for whom work is primarily the game that you play to follow your passion and achieve your mission.
The Idea of Success#
If you can think for yourself while being open-minded in a clearheaded way to find out what is best for you to do, and if you can summon up the courage to do it, you will make the most of your life. The key to success lies in knowing how to both strive for a lot and fail well. One is inevitably going to be painfully wrong a lot, so knowing how to do that well is critical so one’s success.
Imagine that in order to have a great life you have to cross a dangerous jungle. You can stay safe where you are and have an ordinary life, or you can risk crossing the jungle to have a terrific life. How would you approach that choice?
Five decisions:
Don’t confuse what you wish were true with what is really true.
Don’t worry about looking good-worry instead about achieving your goals.
Don’t overweight first-order consequences relative to second- and thirdorder ones.
Don’t let pain stand in the way of progress.
Don’t blame bad outcomes on anyone but yourserlf.
If you work hard and creatively, you can have just about anything you want, but not everything you want. Instead of feeling frustrated or overwhelmed, see the pain as nature’s reminder that there is something important to learn.
Embrace reality and deal with it. Realize that you are simultaneously everything and nothing and decide what you want to be. What you will be will depend on the perspective you have. It is a fundamental law of nature that in order to gain strength one has to push one’s limits, which is painful. No pain, no gain.
The things are just the bait. To help you stay centered and effective, pretend that your life is a martial art or a game, the object of which is to get around a challenge and reach a goal.
Desing a plan and write down your plan for everyone to see and to measure your progress against. Remember that great planners who don’t execute go nowhere, and don’t forget to establish clear metrics to make certain that you are following your plan.
Five step process to get what you want out of life:
Identifying our goals,
Encountering our problems,
Diagnosing those problems to get at their root causes,
Designining changes to get around the problems, and
Doing what is needed.
Everyone has at least one big thing that stands in the way of their success; find yours and deal with it. The two biggest barriers to good decision making are your ego and your blind spots.
Don’t mistake posibilities for probabilities. Any damn fool can make it complex. It takes a genius to make it simple. In order to have the best life possible, you have to: 1) know what the best decisions are and 2) have the courage to make them.
The courage that’s needed the most isn’t the king that drives you to prevail over others, but the kind that allows you to be true to your truest self, no matter what other people want you to be. Recognize that 1) the biggest threat to good decision making is harmful emotions, and 2) decision making is a two-step process (first learning and then deciding). Remind yourself that it’s never harmful to at least hear an opposing point of view.
The Idea Meritocracy#
The greatest success you can have as the person in charge is to orchestrate others to do things well without you. There are far fewer types of people in the world than there are people and far fewer different types of situations than there are situations, so matching the right types of peoples to the right types of situations is key.
Recognize that knowing what someone (including you) is like, will tell you what can expect from them. Never let pass by the importance of selection, training, testing, evaluation, and sorting out people. Focus on the «what is» before deciding «what to do about it». Don’t get hung up on your views of how things «should» be because you will miss out on learning how they really are. In thoughtful disagreement, your goal is not to convince the other party that you are right it is to find out which is true and decide what to do about it. It is powerful, because it helps both parties see things they’ve been blind to.
The greatest gift you can give someone is the power to be successful. To help people succeed you have to do two things: 1) let them see their failures so clearly that they are motivated to change them, and then show them how to either change what they are doing or rely on others who are strong where they are weak.
Our fates are intertwined. Each influences the other, because the people who make up an organization determine the kind of culture it has, and the culture of the organization determines the kinds of people who fit it.
The stereotypical leader often sees questioning and disagreement as threatening and prefers people do what they’re told. As an extension of this paradigm, the leader bears the main burden of decision making. But because such leaders are never as all-knowing as they try to appear, disenchantment and even anger tends to set in. That’s why people who once loved their charismatic leaders often want to get rid of them. Associate mistakes with opportunities, not with failure. People who are just succeeding must not be pushing their limits. Start by writing down your mistakes and connecting the dots between them. Then write down your «one big challenge» the weakness that stands the most in the way of your getting what you want.
There is no greater failure than to fail to escalate a responsibility you cannot handle. Remember that a ninja manager is somebody who can sit back and watch beauty happen-i.e. an orchestrator. To make training as easy to leverage as possible, document the most common questions and answers through audio, video or writen guidelines, and then assign someone to organize them and incorporate them into a manual, which is updated on a regular basis. Also results should be documented that the appropriate people can go to if you should be hit by a bus.
The way one brings people together to do this-radical truth and radical transparency- is key. What differentiates people who can do a lot from those who can´t is creativity, character and wisdom. It won’t happen-anything- until the proper habits are developed. In organizations, that happens with the help of tools and protocols. The people doing the auditing should report to people outside the department being audited, and auditing procedures should not be made known to those being audited. (this is one of our few exceptions to radical transparency)
Steps to creating good metrics:
Know what goal your business is achieving,
Understand the process for getting to the goal (your “machine” with is people and design),
Identify the key parts in the process that are the best places to measure, so you know how your machine is working to achieve that goal, and
Explore how to create levers, tied yoy to adjust your process and change your outcomes.
Money is a byproduct of excellence, not a goal. Conlfict in the pursuit of excellence is a terrific thing. There should be no hierarchy based on age or seniority. Power should lie in the reasoning, not the position, of the individual. The best ideas win no matter who they come from.
The goals of an idea meritocracy are meaningful work and meaninful relationships while radical truth and radical transparency are the ways of achieving them.
An idea meritocracy requires people to do three things:
Put their honest thoughts on the table for everyone to see,
Have thoughtful disagreeements where there are wuality back-and-forths in which people evolve their thinking to come up with the best collective answers posibles, and
Abide by idea-meritocratic waysof getting past the remaining desagreements (such as believability-weighted decision making).
Formulas#
Dreams + Reality + Determination = A Successful Life
Idea Meritocracy = Radical Truth + Radical Transparency + Believability weighted desition making
Pain + Reflection = Progress
Performance = Learning + ability
Expected value = (reward * probability of success) - (cost * probability of fail)
Nota
The prices reflect people’s expectations, so they go up when actual results are better than expected and they go down when they are worse than expected.