Principles: Life and Work

by Ray Dalio

I define believable people as those who have repeatedly and successfully accomplished the thing in question—who have a strong track record with at least three successes—and have great explanations of their approach when probed.

If you have a different view than someone who is believable on the topic at hand—or at least more believable than you are (if, say, you are in a discussion with your doctor about your health)—you should make it clear that you are asking questions because you are seeking to understand their perspective. Conversely, if you are clearly the more believable person, you might politely remind the other of that and suggest that they ask you questions.

There are lots of people who will disagree with you, and it would be unproductive to consider all their views. It doesn’t pay to be open-minded with everyone. Instead, spend your time exploring ideas with the most believable people you have access to.

when they were on the phone together, they sought to minimize their disagreement and make the other look good, putting professional courtesy ahead of thrashing things out to get at the best answer.

got the results. They were shocking to say the least. After analyzing the tissue, it turned out there wasn’t any high-grade dysplasia at all!

Closed-minded people don’t want their ideas challenged. They are typically frustrated that they can’t get the other person to agree with them instead of curious as to why the other person disagrees. They feel bad about getting something wrong and are more interested in being proven right than in asking questions and learning others’ perspectives.

I’m sure you’ve been in contentious disagreements before—ones where people have different points of view and can’t agree on what’s right. Good people with good intentions get angry and emotional; it is frustrating and often becomes personal. Most companies avoid this by suppressing open debate and having those with the most authority simply make the calls.

Our differences weren’t a product of poor communication; it was the other way around. Our different ways of thinking led to our poor communications.

As I went through that terrible journey with him, I experienced the frustration and anger of trying to reason with someone who wasn’t thinking well.

a highly creative, goal-oriented person good at imagining new ideas might undervalue the minutiae of daily life, which is also important; he might be so driven in his pursuit of long-term goals that he might have disdain for people who focus on the details of daily life.

Imagine how you would feel if you were asked to force-rank all your colleagues on creativity, determination, or reliability. Most people at first find that prospect frightening.

I never intended, our trial-and-error discovery process has put us at the cutting edge of academic thinking about personal development within organizations.

When we are born our brains are preprogrammed with learning accumulated over hundreds of millions of years.

While I had always assumed that logical conversation is the best way for people to get at what is true, armed with this new knowledge about the brain, I came to understand that there are large parts of our brains that don’t do what is logical.

also came to understand that while some subconscious parts of our brains are dangerously animalistic, others are smarter and quicker than our conscious minds.

They believe that the way to accomplish more is to cram more into the conscious mind and make it work harder, but this is often counterproductive.

The biggest difference between people who guide their own personal evolution and achieve their goals and those who don’t is that those who make progress reflect on what causes their amygdala hijackings.

accepting your weaknesses is contrary to the instincts of those parts of your brain that want to hold on to the illusion that you are perfect.

our self-assessments (and our assessments of others) tend to be highly inaccurate. Psychometric assessments are much more reliable.

The four main assessments we use are the Myers-Briggs Type Indicator (MBTI), the Workplace Personality Inventory, the Team Dimensions Profile, and Stratified Systems Theory.

introverts often prefer communicating in writing (such as email) rather than speaking in group settings and tend to be less open with their critical thoughts.

Some people make decisions based on logical analysis of objective facts, considering all the known, provable factors important to a given situation and using logic to determine the best course of action. This approach is an indicator of a preference for thinking and is how you’d hope your doctor thinks when he makes a diagnosis.

Task-oriented people tend to make incremental changes that reference what already exists.

They are slower to depart from the status quo and more likely to be blindsided by sudden events. On the other hand, they’re typically more reliable. Although it may seem that their focus is narrower than higher-level thinkers, the roles they play are no less critical.

the Crusher who runs through brick walls to get things done;

I’ve found that shapers tend to share attributes such as intense curiosity and a compulsive need to make sense of things, independent thinking that verges on rebelliousness, a need to dream big and unconventionally, a practicality and determination to push through all obstacles to achieve their goals, and a knowledge of their own and others’ weaknesses and strengths so they can orchestrate teams to achieve them.

One of the most important decisions you can make is who you ask questions of.

Listening to uninformed people is worse than having no answers at all.

Don’t mistake opinions for facts.

Whenever a big-picture “by-and-large” statement is made and someone replies “Not always,” my instinctual reaction is that we are probably about to dive into the weeds—i.e., into a discussion of the exceptions rather than the rule,

“When you ask someone whether something is true and they tell you that it’s not totally true, it’s probably by-and-large true.”

Prioritize by weighing the value of additional information against the cost of not deciding.

I believe that people will increasingly do this and that computer coding will become as essential as writing.

consider it intolerable if I couldn’t argue the logic behind any of my decisions.

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.

Remember that everyone has opinions and they are often bad.

Evaluate accurately, not kindly. a. In the end, accuracy and kindness are the same thing.

b. Put your compliments and criticisms in perspective.

Beware of paying too much attention to what is coming at you and not enough attention to your machine.

Managing the people who report to you should feel like skiing together.

An excellent skier is probably going to be a better ski coach than a novice skier.

Probe to the level below the people who report to you. f. Have the people who report to the people who report to you feel free to escalate their problems to you.

Think like an owner, and expect the people you work with to do the same.

Recognize and deal with key-man risk.

Don’t give orders and try to be followed; try to be understood and to understand others by getting in sync.

Watch out for the “Frog in the Boiling Water Syndrome.

The fact that no one seems concerned doesn’t mean nothing is wrong.

diagnose well, ask the following questions: 1. Is the outcome good or bad? 2. Who is responsible for the outcome? 3. If the outcome is bad, is the Responsible Party incapable and/or is the design bad?

Don’t confuse the quality of someone’s circumstances with the quality of their approach to dealing with the circumstances.

Use standing meetings to help your organization run like a Swiss clock.