Principles: Life and Work

by Ray Dalio

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.

There are two paths to success: 1) to have what you need yourself or 2) to get it from others. The second path requires you to have humility.

Understand your own and others’ mental maps and humility.

If you have good mental maps and low open-mindedness, that will be good but not great. You will still miss a lot that is of value. Similarly, if you have high open-mindedness but bad mental maps, you will probably have challenges picking the right people and points of view to follow.

The person who has good mental maps and a lot of open-mindedness will always beat out the person who doesn’t have both.

Be Radically Open-Minded

Recognize your two barriers. The two biggest barriers to good decision making are your ego and your blind spots.

Understand your ego barrier. When I refer to your “ego barrier,” I’m referring to your subliminal defense mechanisms that make it hard for you to accept your mistakes and weaknesses.

Once you understand how your a) logical/conscious you and b) emotional/subconscious you fight with each other, you can imagine what it’s like when your two yous deal with other people and their own two “thems.” It’s a mess. Those lower-level selves are like attack dogs—they want to fight even when their higher-level selves want to figure things out.

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

Understand your blind spot barrier. In addition to your ego barrier, you (and everyone else) also have blind spots—areas where your way of thinking prevents you from seeing things accurately.

teaching their brains to work in a way that doesn’t come naturally (the creative person learns to become organized through discipline and practice, for instance),

Practice radical open-mindedness.

if you can recognize that you have blind spots and open-mindedly consider the possibility that others might see something better than you—and that the threats and opportunities they are trying to point out really exist—you are more likely to make good decisions.

replace your attachment to always being right with the joy of learning what’s true.

Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know.

Radically open-minded people know that coming up with the right questions and asking other smart people what they think is as important as having all the answers.

Recognize that decision making is a two-step process: First take in all the relevant information, then decide.

Don’t worry about looking good; worry about achieving your goal.

they believe the senseless but common view that great people have all the answers and don’t have any weaknesses.

People interested in making the best possible decisions are rarely confident that they have the best answers.

Recognize that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—

Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.

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.

Appreciate the art of thoughtful disagreement.

In thoughtful disagreement, your goal is not to convince the other party that you are right—it is to find out which view is true and decide what to do about it. In thoughtful disagreement, both parties are motivated by the genuine fear of missing important perspectives.

approach the conversation in a way that conveys that you’re just trying to understand.26 Use questions rather than make statements.

Remember, you are not arguing; you are openly exploring what’s true.

To me, it’s pointless when people get angry with each other when they disagree because most disagreements aren’t threats as much as opportunities for learning. People who change their minds because they learned something are the winners, whereas those who stubbornly refuse to learn are the losers.

A good exercise to make sure that you are doing this well is to describe back to the person you are disagreeing with their own perspective. If they agree that you’ve got it, then you’re in good shape. I also recommend that both parties observe a “two-minute rule” in which neither interrupts the other, so they both have time to get all their thoughts out.

What’s really counterproductive is spinning in your own head about what’s going on, which most people are prone to do—or wasting time disagreeing past the point of diminishing returns. When that happens, move on to a more productive way of getting to a mutual understanding, which isn’t necessarily the same thing as agreement. For example, you might agree to disagree.

The reluctance to disagree is the “lower-level you’s” mistaken interpretation of disagreement as conflict.

Triangulate your view with believable people who are willing to disagree.

By questioning experts individually and encouraging them to have thoughtful disagreement with each other that I can listen to and ask questions about, I both raise my probability of being right and become much better educated.

I find that most people don’t do that—they prefer to make their own decisions, even when they’re not qualified to make the kinds of judgments required.

Plan for the worst-case scenario to make it as good as possible.