Principles: Life and Work

by Ray Dalio

Your reports have to believe that you’re not their enemy—that your sole goal is to move toward the truth; that you are trying to help them and so will not enable their self-deception, perpetuate a lie, or let them off the hook.

Recognizing and communicating people’s weaknesses is one of the most difficult things managers have to do.

Anything that requires change can be difficult. Yet in order to learn and grow and make progress, you must change.

Emotions tend to heat up during most disagreements, especially when the subject is someone’s weaknesses. Speak in a calm, slow, and analytical manner to facilitate communication.

Think of people’s performance as being made up of two things: learning and ability,

When you reach an agreement, it’s a good sign you’ve arrived at truth, which is why getting to that point is such a great achievement.

When you do agree, make a formal record of it. This information will be a critical building block for future success.

You should be able to roughly assess someone’s abilities after six to twelve months of close contact, numerous tests, and getting in sync.

Train, guardrail, or remove people; don’t rehabilitate them.

Rehabilitation is an attempt to create significant changes in people’s values and/or abilities.

Since people generally change slowly, you should expect slow improvement (at best). Instead, you need to change the people or change the design.

It is much worse to keep someone in a job unsuitable for them than it is to fire or reassign them.

Recognize that if they failed in that job, it is because of some qualities they have. You will need to understand what those qualities are and make sure they don’t apply to any new role.

Whenever someone fails at a job, it’s critical to understand why they failed and why those reasons won’t pose the same problems in a new job.

Keeping them is generally viewed as the preferable short-run decision but in the long run it’s probably the wrong thing to do.

there should be no active recruiting prior to getting in sync with the existing manager.

There should always be follow-through, not interruption, unless a pressing reason exists (when, say, a person would be a great click for another job that needs to be filled immediately).

As a guideline, a year in a job is sufficient before having conversations about a new role,

9.11 Don’t lower the bar.

Now that you’ve learned the best ways to approach your machine’s two key components—its culture and its people—I’d

5-Step Process I described as 1) identifying our goals, 2) encountering our problems; 3) diagnosing those problems to get at their root causes; 4) designing changes to get around the problems; and 5) doing what is needed.

Most importantly, you must orchestrate your people. How well you do this will determine your success.

Constantly compare your outcomes to your goals.

the higher up you are in an organization, the more important vision and creativity become, but you still must have the skills required to manage/orchestrate well.

In constructing your metrics, imagine the most important questions you need answered in order to know how things are going and imagine what numbers will give you the answers to them.

you need enough evidence to establish patterns.

for every case you deal with, your approach should have two purposes . . . . . . 1) to move you closer to your goal, and 2) to train and test your machine (i.e., your people and your design). The second purpose is more important than the first because it is how you build a solid organization that works well in all cases. Most people focus more on the first purpose, which is a big mistake.

Exceptions should be extremely rare because policies that have frequent exceptions are ineffective.

Great managers orchestrate rather than do. Like the conductor of an orchestra, they do not play an instrument, but direct their people so that they play beautifully together.

The real sign of a master manager is that he doesn’t have to do practically anything.

Know what your people are like and what makes them tick, because your people are your most important resource.

Develop a full profile of each person’s values, abilities, and skills.

If you don’t know your people well, you don’t know what you can expect from them. You’re flying blind and you have no one to blame but yourself if you don’t get the outcomes you’re expecting.

Probe your key people and urge them to bring up anything that might be bothering them.

Learn how much confidence to have in your people—don’t assume it. No manager should delegate responsibilities to people they don’t know well.

Clearly assign responsibilities. Eliminate any confusion about expectations and ensure that people view their failures to complete their tasks and achieve their goals as personal failures.

The most important person on a team is the one who is given the overall responsibility for accomplishing the mission. This person must have both the vision to see what should be done and the discipline to make sure it’s accomplished.

Watch out for “job slip.”

Job slip often leads to the wrong people handling the wrong responsibilities and confusion over who is supposed to do what.

Constantly probe the people who report to you while making sure they understand that it’s good for them and everyone else to surface their problems and mistakes.

The people who work for you should constantly challenge you, so that you can become as good as you can be.

In doing so, they will understand that they are just as responsible for finding solutions as you are.

It’s much easier for people to remain spectators than to become players. Forcing them onto the fiel...

I ask each person who reports to me to take about ten to fifteen minutes to write a brief description of what they did that day, the issues pertaining to them, and their reflections.

Probe to the level below the people who report to you. You can’t understand how the person who reports to you manages others unless you know their direct reports and can observe how they behave.

Have the people who report to the people who report to you feel free to escalate their problems to you. This is a great and useful form of upward accountability.

For example, listen for the anonymous “we” as a cue that someone is likely depersonalizing a mistake.

Welcome probing. It’s important to welcome probing of yourself because no one can see themselves objectively.

Your emotional “lower-level you” will probably react to probing with something like, “You’re a jerk because you’re against me and making me feel bad,”

Small negative situations can be symptomatic of serious underlying problems;