Principles: Life and Work

by Ray Dalio

Embrace tough love.

Weigh second- and third-order consequences.

Own your outcomes.

Look at the machine from the higher level.

Think of yourself as a machine operating within a machine and know that you have the ability to alter your machines to produce better outcomes.

By comparing your outcomes with your goals, you can determine how to modify your machine.

Distinguish between you as the designer of your machine and you as a worker with your machine.

The biggest mistake most people make is to not see themselves and others objectively, which leads them to bump into their own and others’ weaknesses again and again.

Successful people are those who can go above themselves to see things objectively and manage those things to shape change.

When encountering your weaknesses you have four choices: 1. You can deny them (which is what most people do). 2. You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change). 3. You can accept your weaknesses and find ways around them. 4. Or, you can change what you are going after.

Asking others who are strong in areas where you are weak to help you is a great skill that you should develop no matter what, as it will help you develop guardrails that will prevent you from doing what you shouldn’t be doing.

Because it is difficult to see oneself objectively, you need to rely on the input of others and the whole body of evidence.

If you are open-minded enough and determined, you can get virtually anything you want.

Don’t confuse what you wish were true with what is really true. 2. Don’t worry about looking good—worry instead about achieving your goals. 3. Don’t overweight first-order consequences relative to second- and third-order ones. 4. Don’t let pain stand in the way of progress. 5. Don’t blame bad outcomes on anyone but yourself.

Use the 5-Step Process to Get What You Want Out of Life It seems to me that the personal evolutionary process—the looping I described in the last chapter—takes place in five distinct steps. If you can do those five things well, you will almost certainly be successful. Here they are in a nutshell: 1. Have clear goals. 2. Identify and don’t tolerate the problems that stand in the way of your achieving those goals. 3. Accurately diagnose the problems to get at their root causes. 4. Design plans that will get you around them. 5. Do what’s necessary to push these designs through to results.

Have clear goals. a. Prioritize: While you can have virtually anything you want, you can’t have everything you want.

Don’t confuse goals with desires.

Decide what you really want in life by reconciling your goals and your desires.

Don’t mistake the trappings of success for success itself.

Never rule out a goal because you think it’s unattainable.

Remember that great expectations create great capabilities. If you limit your goals to what you know you can achieve, you are setting the bar way too low.

Almost nothing can stop you from succeeding if you have a) flexibility and b) self-accountability.

Knowing how to deal well with your setbacks is as important as knowing how to move forward.

Identify and don’t tolerate problems.

View painful problems as potential improvements that are screaming at you.

Don’t avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at.

Be specific in identifying your problems.

Don’t mistake a cause of a problem with the real problem.

Distinguish big problems from small ones.

Once you identify a problem, don’t tolerate it.

Diagnose problems to get at their root causes.

Focus on the “what is” before deciding “what to do about it.”

Distinguish proximate causes from root causes.

Recognize that knowing what someone (including you) is like will tell you what you can expect from them.

Design a plan.

Go back before you go forward.

Think about your problem as a set of outcomes produced by a machine.

Remember that there are typically many paths to achieving your goals.

Think of your plan as being like a movie script in that you visualize who will do what through time.

Write down your plan for everyone to see and to measure your progress against.

Recognize that it doesn’t take a lot of time to design a good plan.

Push through to completion.

Great planners who don’t execute their plans go nowhere.

Good work habits are vastly underrated.

Establish clear metrics to make certain that you are following your plan.

Remember that weaknesses don’t matter if you find solutions.

Look at the patterns of your mistakes and identify at which step in the 5-Step Process you typically fail.

Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.

Understand your own and others’ mental maps and humility.

Be Radically Open-Minded