Let me begin by noting that it has the finest opening sentence in the history of business books. The fantastic billionaire creator of Bridgewater, the largest global hedge fund, Ray Dalio, had this to say:
"Before I begin telling you what I think, I want to establish that I'm a "dumb s-word" who doesn't know much relative to what I need to know."
Bridgewater's growth from a little flat in Manhattan to a financial powerhouse? It is amazing. His method of doing so and the reasons for his accomplishment are even more extraordinary.
"Whatever success I've had in life has had more to do with my knowing how to deal with my not knowing than anything I know. The most important thing I learned is an approach to life-based on principles that helps me find out what's true and what to do about it."
Life Principles and Work Principles are the two sections of this book. Because we don't have enough time to cover both in this overview, we'll concentrate on his Life Principles, which are, in the end, accountable for his Work Principles.
I will go out on a limb and claim that this is one of the top ten business and personal development books ever published.
Apart from our synopsis, I strongly advise you to go out and get three copies. One to keep on your bedside at home, one to keep on your desk at work, and one to give to someone who really needs it.
What are we trying to do?
Start by Thinking for Yourself
Three basic stages, according to Dalio, are at the heart of creating the life you want.
- Consider your goals.
- Identify the truth.
- With humility and open-mindedness, determine what you should do to attain #1 in consideration of #2 so that you can examine the finest thinking accessible to you.
Keep these three basic actions at the forefront of your life's journey, and you'll discover that you'll grow better at achieving your goals.
What Principles Are and How to Create Them
According to Dalio, we should think of our lives as a game in which each difficulty we meet is a puzzle to be solved. We gain a precious nugget - a principle - every time we solve one, and we may utilize it to prevent the same difficulties in the future.
You'll grow better at making the appropriate judgments in your business and life as you gather more and more of them.
According to Dalio, principles are essential truths that serve as the framework for actions that help you achieve your goals in a company and in life.
An excellent set of principles is similar to a collection of recipes, except that these recipes guide you towards the life you want rather than a chocolate cake.
The majority of life's events are "another one of them," which indicates that practically everything that occurs to you has happened before, and the outcomes are predictable.
That's why it's so beneficial to have a set of clear rules that can be applied to various scenarios.
The difficulty is to recognize "what's going on" and apply the appropriate principle(s) to the circumstance at hand.
We must pick our own ideals to meet our own aims because we all have our own goals. As a result, we should not blindly follow the principles of others.
If you're going to take someone else's ideas and apply them to your own life, be sure you've thought about them thoroughly and put them to the test.
Lastly, to be a principled person, you must always follow well-articulated principles.
Dalio advises that the easiest way to achieve this is to jot them down. You do not even know what your principles are, or you can't explain them well enough to put them into practice if you can't write them down.
Dalio's overall method for formulating the concepts that guide his life and career is based on this formula.
Let's take a look at his five primary principles for living now to put the meat on those bones.
Principle #1: Embrace Reality and Deal With It
We weren't taught how to deal with the realities of life in school. It's his first principle of life, though, for a reason: it's extremely essential to your future success.
The more accurate your perception of reality is, the better you will be able to deal with it, and the more likely you will achieve your life goals.
We can remember this simple formula by taking note of Mr. Dalio's advice.
Dreams + Reality + Determination = A Successful Life
You will fail if you have great enough ambition. It's in those situations that being a realist is crucial. When individuals fail, most don't want to see a terrible truth. They don't comprehend that your failures are where you learn the most.
The finest learning comes when you accept your mistakes, investigate why they happened, and then work hard to prevent them from happening again.
Remember the following formula:
Pain + Reflection = Progress
There are a few things you can do to ensure that your lifelong learning journey progresses as rapidly as possible:
- Transparency is essential. It will be easier for others to assist you if you let them know exactly what you're attempting to accomplish.
- Never let your fear of what other people think of you keep you from achieving your goals;
- Rapidly evolve. Failure, learning, and rapid improvement are the keys to attaining what you desire. The easiest way to get there is by trial and error; and
- Take responsibility for your actions. It's pointless to whine about things beyond your control.
Principle #2: Use the 5-Step Process to Get What You Want Out of Life
If we follow the 5-step process Dalio outlines and execute it properly, he claims we'll certainly succeed.
Have clear goals.
Setting objectives entails setting priorities. According to Dalio, we can have almost whatever we desire, but we can't have everything we want.
Be bold while setting your objectives. There is a way to get there unless your goal is outside nature's rules (for example, running a four-minute mile at the age of seventy).
You will know more and accomplish more if you set your objectives higher.
Identify and don't tolerate the problems that stand in the way of your achieving those goals.
You'll face many challenges if you set your ambitions high enough. A lot of them are a bit of a pain. It's up to you to see these difficult challenges as opportunities to boost your chances of eventually accomplishing your objective.
Just make sure you're clear about what you're looking for when recognizing your issues and don't mix the problem's cause with the problem itself.
Finally, once you've discovered an issue, don't let it go unnoticed. Always do what it takes to get rid of it.
Accurately diagnose the problems to get at their root causes.
Take the time to learn about an issue before leaping to judgments about solving it.
Other individuals, on occasion, will be the source of trouble, and on other events, it will be you. As a result, knowing "what you're like" will greatly assist you in moving forward. In the fourth portion of this overview, we'll address this.
Design plans that will get you around them.
Understand that you don't need an ideal strategy to address your issues if you want to succeed. You only need one that works. It takes a long time to make perfect arrangements. There are no plans that work.
When you've decided on a strategy, make a note of it so that everyone, even you, can see it and track your progress.
Do what's necessary to push these designs through to results.
People who are outstanding planners but don't put their plans into action, as Dalio shows us, are doomed to fail.
Developing strong work habits and building clear metrics to ensure you are executing your plan are two extremely key things you can do to be a consistent finisher.
Principle #3: Be Radically Open-Minded
According to Dalio, this is the most significant chapter in the book since it describes how your ego and blind spots get in the way of attaining what you desire.
You and I and everyone else on the planet are wired in the same manner. The only path ahead is understanding what the obstacles are and how to cope with them.
Your Ego and Blind Spots
Your ego opposes you in two ways: it makes it difficult to acknowledge your flaws and faults. This is an issue because we know that the most effective way to learn is to learn from our failures, and we also understand that no one can excel in all aspects of life.
Your blind spots are the result of your style of thinking. You've been cultivating it for as long as you've been alive. It keeps you from seeing the world as it actually is, as well as the world as it is seen by others.
The Solution - Radical Open-Mindedness
You must be able to accomplish a variety of things successfully to be completely open-minded:
- Consider the possibility that you may not be aware of the appropriate course of action in a certain scenario.
- Recognize that it's more vital to deal with uncertainty than it is to believe you know everything.
- Soak in and examine facts that aren't in line with your previous conclusions.
- It is more important to obtain the proper answer than it is to seem nice.
- Feel empathy for people. You must be able to see clearly from their perspective if you are going to be open to a different point of view.
- Seek other "credible" individuals who are open to disagree with you and who understand the value of meaningful discussion.
- Know how to recognize those that are closed-minded. They will frequently make claims rather than ask questions, or they may begin their queries with "I could be wrong, but..."
- When making choices, use information that is backed up by evidence.
You must also recognize when it is time to quit arguing an issue and make a choice - with the knowledge that you have done your best.
Principle #4: Understand That People Are Wired Very Differently
As Dalio puts it, we all see reality differently due to the obvious way our brains work. Thus any one method of seeing the world is a distorted representation of the truth.
As a result, to comprehend what is real and what we can do about it, we must first understand our own and our coworkers' minds.
Our brains differ in various ways, and these variances result in differences in common sense, creativity, memory, and attention to detail, among other things.
A few of these things can be improved and modified, while others cannot. How effective you are in your work will depend on how well you understand yourself and the people you work with.
As you attempt to comprehend what you have to work within yourself and others, keep these concepts in mind:
- The most powerful thing you can do to influence yourself and others is to choose which habits to adopt and eliminate. The Power of Habit, which we've already discussed on Readitfor.me, is cited by Dalio.
- Use some or all of the standardized exams to see how you and others compare. The Myers-Briggs Type Indicator, the Workplace Personality Inventory, the Team Dimensions Profile, and the Stratified Systems Theory are used at Bridgewater.
- In certain instances, we are all born with characteristics that benefit us. For others, they cause harm. It's crucial to match people's features to their roles to achieve your objectives.
Principle #5: Learn How to Make Decisions Effectively
It's time to take that knowledge and put it to good use - now that we've learned how to better comprehend the world.
Collecting and Synthesizing Information
First, we must gather the necessary facts to make the essential decision.
Whom you ask questions of is among the most crucial "micro-decisions" you'll end up making. Make sure they're well-informed and convincing on the subject you're dealing with. Take note that not all bits of advice you receive, though it comes from a reputable person, will be credible.
Become fine with being vague if the problem you're dealing with necessitates the use of numbers.
When asked to discover the answer to the equation 38 x 12, Dalio provides an example. The majority of individuals do it the hard way by performing the math themselves.
However, you may approximate the answer by rounding 38 up to 40 and 12 down to 10 and getting 400. His argument is that "by-and-large" is the degree to which you need to grasp things to make the majority of binding judgments.
This is yet another way of expressing that you should make decisions based on the 80/20 rule. You gain 80% of the value from 20% of the work you put into making a decision.
Using Logic, Reason, and Common Sense to Decide
It's a good idea to make your selection based on projected value estimates. The decision with the lowest probability is sometimes optimal if the payout is very large and the cost of failure is insignificant compared to the payoff.
When doing so, keep the following in mind:
- Increasing the likelihood of being correct is beneficial regardless of how high your current probability of being right is.
- It's just as vital to know when not to bet as it is to know when you should bet.
- The greatest options are those with more advantages than disadvantages.