Principles: Life and Work

by Ray Dalio

They fear adverse consequences from admi...

Keep in mind that diagnoses should produce outcomes.

Use the following “drill-down” technique to gain an 80/20 understanding of a department or sub-department that is having problems.

Step 1: List the Problems.

Step 2: Identify the Root Causes.

remember that people tend to be more defensive than self-critical.

It is your job as a manager to get at truth and excellence, not to make people happy.

Step 3: Create a Plan.

They should have specific tasks, outcomes, Responsible Parties, tracking metrics, and timelines.

Not everyone needs to agree on the plan but the Responsible Parties and other key people must be in sync.

Step 4: Execute t...

At least monthly, report on the planned and actual progress to date and the expectations for the coming period, and hold people publicly accountable for deliver...

diagnosis is foundational to both progress and quality relationships.

If you and others are open-minded and engage in a quality back-and-forth, not only will you find better solutions, you will also get to know each other better.

Designs need to be based on deep and accurate understandings (which is why diagnosis is so important);

That’s why having systematic ways of tracking issues (the Issue Log) and what people are like (the Dot Collector) is so useful: Instead of just relying on your best guesses of what might go wrong, you can look at data from prior “at bats” for yourself and others and come to the design process with understanding rather than having to start from scratch.

Instead, build a machine by observing what you’re doing and why, extrapolating the relevant principles from the cases at hand, and systemizing that process.

If you have good principles that guide you from your values to your day-to-day decisions but you don’t have a systematic way of making sure they’re regularly applied, they’re not of much use.

I believe that systemized, evidence-based decision making will radically improve the quality of management.

Remember that a good plan should resemble a movie script.

Put yourself in the position of pain for a while so that you gain a richer understanding of what you’re designing for. Either literally or vicariously (through reading reports, job descriptions, etc.), temporarily insert yourself into the workflow of the area you’re looking at to gain a better understanding of what it is that you are dealing with.

Regularly scheduled meetings add to overall efficiency by ensuring that important interactions and to-do’s aren’t overlooked, eliminating the need for inefficient coordination, and improving operations (because repetition leads to refinement).

In nature, cleansing storms are big infrequent events that clear out all the overgrowth that’s accumulated during good times. Forests need these storms to be healthy—without them, there would be more weak trees and a buildup of overgrowth that stifles other growth.

Build the organization around goals rather than tasks.

Keep scale in mind. Your goals must be the right size to warrant the resources that you allocate to them. An organization might not be big enough to justify having both a sales and an analytics group,

the efficiency of an organization decreases as the number of people and/or its complexity increases, so keep things as simple as possible.

j. Consider succession and training in your design. This is a subject I wish I had thought about much earlier in my career. To ensure that your organization continues to deliver results, you need to build a perpetual motion machine that can work well without you.

Use “double-do” rather than “double-check” to make sure mission-critical tasks are done correctly. Double-checking has a much higher rate of errors than double-doing,

Use “public hangings” to deter bad behavior.

So when you catch someone violating your rules and controls, make sure that everybody sees the consequences.

Dual reporting causes confusion, complicates prioritization, diminishes focus on clear goals, and muddies the lines of supervision and accountability—especially when the supervisors are in two different departments.

Technology is another great tool for providing leverage. To make training as easy to leverage as possible, document the most common questions and answers through audio, video, or written guidelines, and then assign someone to organize them and incorporate them into a manual, which is updated on a regular basis.

Remember that almost everything will take more time and cost more money than you expect.

Work for goals that you and your organization are excited about . . .

How to do more than we think we can is a puzzle we all struggle with. Other than working harder for longer hours, there are three ways to fix the problem: 1) having fewer things to do by prioritizing and saying no, 2) finding the right people to delegate to, and 3) improving your productivity.

Ring the bell. When you and your team have successfully pushed through to achieve your goals, celebrate!

Assuming people will do what they intellectually want to do is like assuming that people will lose weight simply because they understand why it’s beneficial for them to do it.

To produce real behavioral change, understand that there must be internalized or habituated learning.

But experiential learning is so much more powerful.

Foster an environment of confidence and fairness by having clearly-stated principles that are implemented in tools and protocols so that the conclusions reached can be assessed by tracking the logic and data behind them.

To be successful, all organizations must have checks and balances. By checks, I mean people who check on other people to make sure they’re performing well, and by balances, I mean balances of power.

Some people have the ability and the courage to hold people accountable, while most don’t; having such ability and courage is essential.

It is possible to have subcommittees who have access to sensitive information and make recommendations to the board that are substantiated with enough information to make good judgments, but without disclosing the highly sensitive particulars.

At Bridgewater the CEOs are overseen by a board largely via the executive chairman or chairmen.

We work with others to get three things:

Leverage

Quality relationships

Money

an idea meritocracy is the best.

An idea meritocracy requires people to do three things: 1) Put their honest thoughts on the table for everyone to see, 2) Have thoughtful disagreements where there are quality back-and-forths in which people evolve their thinking to come up with the best collective answers possible, and 3) Abide by idea-meritocratic ways of getting past the remaining disagreements (such as believability-weighted decision making).