Sunday, March 25, 2018

Principles - Ray Dalio

Ray Dalio is described as one of the great investors and entrepreneurs of our time who founded Bridgewater Associates in 1975 and built it into the largest hedge fund in the world in 40 years. Dalio shares his principles - in life and at work. Here are some that I found useful.


On Reality
Embrace reality and deal with it. Don't get caught in how things should be instead of how they are - you'll miss out reality.

To be good, something must operate consistently within the laws of reality and contribute to the evolution of the whole. that is what is most rewarded.

The individuals incentives must be aligned with the group's goals. Reality is optimising for the whole - not for you.

Dreams + Reality + Determination = A Successful Life.

Open Mindedness and Transparency
Be Radically Open minded and Radically Transparent for effective change. If you are open minded and determined, you can get anything you want.

Ask others who are strong in areas where you are weak to help you. It's a great skill you should develop as it ill help you prevent you from doing what you should not be doing.

Look to nature to learn. Evolution drives everything - evolve or die.
To gain strengths one has to push over limits which is painful. Pain + Reflection = Progress
Go to pain rather than avoid it.

Embrace tough love - deny them what they want.

Ownership is Happiness
Own your outcomes (happiness is owning it). Compare outcomes with goals - modify your process.
If you do not see yourself and others objectively you will bump into your own and others weaknesses again and again.

Successful people go above themselves to see things objectively and manage things to shape change.

5 Step process to get what you want

  • Have clear goals
  • Identify and do not tolerate problems that stand in the way of your goals
  • Accurately diagnose the problem t get at the root causes
  • Design plans that will get you around them
  • Do what is necessary to get through to results

Clear goals - Prioritise, Don't confuse goals with desires, Don't mistake the trappings of success with success, Never rule out a goal, Great expectations create great capabilities

Nothing can stop you if you have 1) Flexibility 2) Self accountability

How to Design a plan 

  • Go back before you go forward 
  • There are many paths to reach your goal
  • Plan like a movie script - Visualise
  • Write it for everyone to see and measure against
  • It does not take a lot

How to Overcome Problems
  • Weaknesses do not matter if you find solutions
  • Recognise your two barriers - Ego and Blind spots. 
  • The most constant struggle is between feeling and thinking. Reconcile them. 
  • Choose habits well.
  • Right people in the right role is key.
  • Making decisions effectively. Watch for 1) Harmful emotions 2) Learn and then decide
  • Know your 80/20
  • Simplify - Use principles - Algorithms
  • For the best life - 1) Know what the best decisions are 2) have the courage to make them


Organisations are about
1) Culture a) work at problems and disagreements and solve them b) build things that haven't been built before)
2) People a) character b) capabilities

Great partnerships are built on
1) common values and interests
2) similar approaches
3) being reasonable
4) having consideration

Tough love - Great work,  Love - getting the best out of people

Building an Idea Meritocracy
Ideal meritocracy = Radical truths + Radical transparency + Believability
Radical truth (talk openly about our vision) and Radical transparency (ability for others to see energy)
Make your passion and work the same, for you and people around you

To have an ideal meritocracy 
1) Put your honest thoughts on the table
2) Have thoughtful disagreement
3) Abide by agreed upon ways of getting past disagreement

Trust in Radical Truth and Radical Transparency

Radical Truth
  • You have nothing to fear from the truth
  • Have integrity and demand it from others
  • Never say anything about people you cannot directly tell them
  • Don't let loyalty to people stand int he way of Truths and well being of the orgnanisation
  • Create an environment where everyone has the right to understand and no one has a critical opinion without speaking up
  • Speak up, own it or get out
  • Don't be naive about dishonesty
Radical Transparency
  • Use transparency to help enforce justice
  • Share things that are hardest to share
Cultivate meaningful work and meaningful relationships
"Is one where people care enough about each other to be there whenever someone needs support and they enjoy each others company so they have a great time together both inside and outside of work

  • Be loyal to the common mission and not to those not in sync
  • Be crystal clear or what the deal is
  • Make sure that people will give more consideration for others than they demand for themselves

People have different motives
- but strive for meaningful relationships
- treasure honorable people who are capable and who treat you well even when you're not

Create a culture in which it is okay to make mistakes and unacceptable to learn form them
- mistakes are a natural part of the evolutionary process


  • Fail well. Love your mistakes.
  • Don't worry about looking good.
  • Observe patterns of mistakes and see if they are coming from weakness / limitations

On Weakness and Pain

  • The fastest path to success starts with knowing what your weaknesses are and staring hard at them.
  • Find the one big challenge - the weakness that gets in the way of your getting what you want
  • Reflect when you experience pain - confront the pain. In pain instead of fight or flight, reflect.
  • Confession precedes forgiveness

Feedback - Helping Others Grow

  • Help others learn about themselves by giving them honest feedback
  • Hold them accountable
  • Solve their disagreements in an open minded way
  • Know what mistakes are acceptable / unacceptable
  • Conflicts are essential for great relationships
  • Spend lavishly on the time and energy you devote to getting in sync

To Practice

  • Be open minded and assertive at the same time
  • Distinguish between open minded / closed minded. See how open minded are those in charge.
  • Paraphrasing helps to communicate better - did I get it right
  • Go to great lengths to hire the right people - they should have the ability to self assess - including one's weakness
  • Have someone to report to

  • Be clear about people / Develop systems for evaluating people
  • People who can think independently/ argue open mindedly
  • Those who value pursuit of truth and excellence
  • Rapid improvement of self and orgn
  • Match person to the design
  • Values / Abilities / Skills
  • Choose systematically and scientifically
  • Look for right fit between role and persons (understand role first)
  • People are built differently
  • Look for people who are willing to look at themselves objectively
  • Teams are like sports teams
  • Character - capability
  • Pay enough - north of fair
  • Tie performance metrics to compensation
  • Consideration and generosity are more important than money

Train, Test and Evaluate

  • Assess Strengths and weaknesses, mitigate through training and role
  • Personal evolution should be rapid
  • Teach them to fish
  • Experience is better than learning
  • Provide constant feedback
  • Evaluate accurately, not kindly
  • Don't hide your observations about people
  • Clear metrics/ let them reflect objectively about their performance
  • Frank conversations about mistakes / root causes
  • Help people through the pain of exploring weaknesses
  • Know how people operate
  • Poor performance - either about learning or ability
  • People with less values / abilities
  • Don't lower the bar

Think like an owner

  • A good leader seeks the best answers / bring others along as part of the process
  • Hold yourself and your people accountable
  • Be specific about problems
  • Force yourself and your people to do difficult things
  • Don't treat everyone the same - treat them appropriately 
  • Care about your team 
  • beware of Group Think - if no one seems concerned it does not mean there is no problem
  • Ask for regular and honest feedback
  • Fix difficult things
  • Diaignose problems to get to the root cause 
On why managers fail
- They are too distant
- have problems perceiving bad quality
- lost sync of how bad things are, have got used to ti
- Big egos and cannot ask for help
- Fear adverse consequence of failure

On Justice, Responsibility and Quality

  • Principles cannot be ignored by mutual agreement. the same standards apply to everyone.
  • If people who have the power don't want to operate by principle, it will fail.
  • Who is more important than what. Who have you chosen as your responsible parties - the one where the buck stops.
  • Know what your people are like and what makes them tick because people are your most important resource. Develop profiles of your people based on their values, abilities and skills.
  • Clearly assign responsibilities.

To not lose the team - don't be too distant, use daily updates and check if you are an approachable person
Build organisation around goals than tasks
Build top down
Pay attention to how your job will be done when you are not around
Work for goals you and your organisation are excited about

My conclusion
Most principles are stuff you have heard about. But to build an idea meritocracy, one must be clear about the culture and the people. Building the culture requires one to adopt the practices of Radical Truth and Radical Transparency, both of which are easier said than practiced. Dalio talks of pain, of looking at weaknesses, at asking for help, at being accountable, at being flexible and open minded and at being non judgmental and being open to listening.

Interesting. I somehow felt it could have been structured better. But it's simple and easy to read. Except that one part about Decision Making which i could not get. Sometimes I got the feeling that maybe certain things are being repeated. But its all there.

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