Principles: Life and Work

by Ray Dalio

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

Treasure honorable people who are capable and will treat you well even when you’re not looking.

Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn from Them

Everyone makes mistakes. The main difference is that successful people learn from them and unsuccessful people don’t.

in managing others who make mistakes, it is important to know the difference between 1) capable people who made mistakes and are self-reflective and open to learning from them, and 2) incapable people, or capable people who aren’t able to embrace their mistakes and learn from them.

Intelligent people who embrace their mistakes and weaknesses substantially outperform their peers who have the same abilities but bigger ego barriers.

You must not let your need to be right be more important than your need to find out what’s true.

That is because failing is a painful experience while succeeding is a joyous one, so it requires much more character to fail, change, and then succeed than to just succeed. People

Don’t worry about looking good—worry about achieving your goals.

If you want to evolve, you need to go where the problems and the pain are.

Embracing your failures—and confronting the pain they cause you and others—is the first step toward genuine improvement;

Remember: Pain + Reflection = Progress.

We all have blind spots; people are by definition subjective. For this reason, it is everyone’s responsibility to help others learn what is true about themselves by giving them honest feedback,

Know what types of mistakes are acceptable and what types are unacceptable, and don’t allow the people who work for you to make the unacceptable ones.

people must be open-minded and assertive at the same time.

No matter how much they know, closed-minded people will waste your time. If you must deal with them, recognize that there can be no helping them until they open their minds.

Worry more about substance than style.

Be clear in assigning personal responsibilities.

the “two-minute rule” to avoid persistent interruptions.

To do the right thing at the right moment you need to really listen to the people you’re playing with so that you can understand where they’re going.

the best decisions are made by an idea meritocracy with believability-weighted decision making, in which the most capable people work through their disagreements with other capable people who have thought independently about what is true and what to do about it.

“believability weighting.”

1) have repeatedly and successfully accomplished the thing in question, and 2) have demonstrated that they can logically explain the cause-effect relationships behind their conclusions.

Recognize that having an effective idea meritocracy requires that you understand the merit of each person’s ideas.

Find the most believable people possible who disagree with you and try to understand their reasoning.

c. Recognize that you don’t need to make judgments about everything.

When the decision-making system is consistently well-managed and based on objective criteria, the idea meritocracy is more important than the happiness of any one of its members—even

Remember: Principles can’t be ignored by mutual agreement.

Principles are like laws—you can’t break one simply because you and someone else agree to break it.

When challenging a decision and/or a decision maker, consider the broader context.

Don’t leave important conflicts unresolved.

Once a decision is made, everyone should get behind it even though individuals may still disagree.

If you choose the right people with the right values and remain in sync with them, you will play beautiful jazz together.

Remember the goal. 2. Give the goal to people who can achieve it (which is best) or tell them what to do to achieve it (which is micromanaging and therefore less good). 3. Hold them accountable.

Know that the ultimate Responsible Party will be the person who bears the consequences of what is done.

Hire Right, Because the Penalties for Hiring Wrong Are Huge

Values are the deep-seated beliefs that motivate behaviors and determine people’s compatibilities with each other.

character, common sense, and creativity.

Remember that people are built very differently and that different ways of seeing and thinking make people suitable for different jobs.

The key to success is understanding one’s weaknesses and successfully compensating for them.

Don’t assume that a person who has been successful elsewhere will be successful in the job you’re giving them.

Don’t hire people just to fit the first job they will do; hire people you want to share your life with.

When considering compensation, provide both stability and opportunity.

Great people are hard to find so make sure you think about how to keep them.

An idea meritocracy requires objectivity.

manager. This data is essential in cases where a manager and a report are out of sync on an assessment and others are called in to resolve the dispute.

Teach your people to fish rather than give them fish, even if that means letting them make some mistakes.

a. In the end, accuracy and kindness are the same thing.

Learn from success as well as from failure.

Know that most everyone thinks that what they did, and what they are doing, is much more important than it really is.