Hey there, Dean here. I run content and SEO at AppSumo. Here, I write and share about productivity, leadership, money, psychology, marketing, and more.
Principles is the book that packed with truth and wisdom of Ray Dalio. For anyone who doesn’t know yet, Ray Dalio is the Founder, CEO of Bridgewater Associates, a Connecticut based Hedge Fund with over $160 billion under management.
Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals.
For any group or organization to function well, its work principles must be aligned with its members’ life principles.
Think for yourself to decide (1) what you want, (2) what is true, and (3) what you should do to achieve #1 in light of #2, and do that with humility and open-mindedness so that you consider the best thinking available to you.
Look at the patterns of those things that affect you in order to understand the cause-effect relationships that drive them and to learn principles for dealing with them effectively.
Truth—or, more precisely, an accurate understanding of reality—is the essential foundation for any good outcome.
Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change.
Embracing radical truth and radical transparency will bring more meaningful work and more meaningful relationships.
Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are.
Evolution is the single greatest force in the universe; it is the only thing that is permanent and it drives everything. To be “good,” something must operate consistently with the laws of reality and contribute to the evolution of the whole; that is what is most rewarded.
What you will be will depend on the perspective you have. Realize that you are simultaneously everything and nothing—and decide what you want to be.
It is a fundamental law of nature that in order to gain strength one has to push one’s limits, which is painful.
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.
Successful people are those who can go above themselves to see things objectively and manage those things to shape change.
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.
Use the 5-step process to get what you want out of life:
Prioritize: While you can have virtually anything you want, you can’t have everything you want.
Never rule out a goal because you think it’s unattainable.
Almost nothing can stop you from succeeding if you have (a) flexibility and (b) self-accountability.
Knowing how to deal well with your setback is as important as knowing how to move forward.
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.
Great planners who don’t execute their plans go nowhere. Establish clear metrics to make certain that you are following your plan.
Remember that weaknesses don’t matter if you find solutions. Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.
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.
Don’t worry about looking good; worry about achieving your goal.
Recognize that to gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time—only by empathizing can you properly evaluate another point of view.
Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.
Appreciate the art of thoughtful disagreement and triangulate your view with believable people who are willing to disagree.
If a number of different believable people say you are doing something wrong and you are the only one doesn’t see it that way, assume that you are probably biased.
Meaningful work and meaningful relationships aren’t just nice things we chose for ourselves—they are genetically programmed into us.
Realize that the conscious mind is in a battle with the subconscious mind, and train your “lower-level you” with kindness and persistence to build the right habits.
Getting the right people in the right roles in support of your goal is the key to succeeding at whatever you choose to accomplish.
One of the most important decisions you can make is who you ask questions of.
Remember the 80/20 Rule and know what the key 20 percent is.
Use the term “above the line” and “below the line” to establish which level a conversation is on. Remember that decision need to be made at the appropriate level, but they should also be consistent across levels.
Raising the probability of being right is valuable no matter what your probability of being right already is.
Knowing when not to bet is as important as knowing what bets are probably worth making.
The best choices are the ones that have more pros than cons, not those that don’t have any cons at all.
All of your “must-dos” must be above the bar before you do your “like-todos.” Chances are you won’t have time to deal with the unimportant things, which is better than no having time to deal with the important things.
An organization is a machine consisting of two major parts: culture and people.
A great organization has both great people and a great culture. Great people have both great character and great capabilities. Great cultures bring problems and disagreements to the surface and solve them well. And they love imagining and building great things that haven’t been built before.
Tough love is effective for achieving both great work and great relationships. In order to be great, one can’t compromise the uncompromisable.
Make your passion and your work one and the same and do it with people you want to be with.
Never say anything about someone that you wouldn’t say to them directly and don’t try people without accusing them to their faces.
Create an environment in which everyone has the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up.
Provide transparency to people who handle it well and either deny it to people who don’t handle it well or remove those people from the organization.
Meaningful relationships and meaningful work are mutually reinforcing, especially when supported by radical truth and radical transparency.
Be loyal to the common mission and not to anyone who is not operating consistently with it.
Treasure honorable people who are capable and will treat you well even when you’re not looking.
Recognize that mistakes are a natural part of the evolutionary process, and create a culture in which it is okay to make mistakes and unacceptable not to learn from them. Then, fail well.
Get over “blame” and “credit” and get on with “accurate” and “inaccurate”
Observe the patterns of mistakes to see if they are products of weaknesses.
Know what types of mistakes are acceptable and what types are unacceptable, and don’t allow the people who work for you to make the unacceptable ones.
Recognize that conflicts are essential for great relationships because they are how people determine whether their principles are aligned and resolve their differences.
Spend lavishly on the time and energy you devote to getting in sync because it’s the best investment you can make.
When you have alignment, cherish it. If you find you can’t reconcile major differences—especially in values—consider whether the relationship is worth preserving.
If you can’t successfully do something, don’t think you can tell others how it should be done.
Find the most believable people possible who disagree with you and try to understand their reasoning.
Remember that believable opinions are most likely come from people:
Think about whether you are playing a role of teacher, a student, or a peer and whether you should be teaching, asking questions, or debating.
Pay more attention to whether the decision-making system is fair than whether you get your way.
Make sure people don’t confuse the right to complain, give advice, and openly debate with the right to make decisions.
Once a decision is made, everyone should get behind it even though individuals may still disagree.
Recognize that if the people who have the power don’t want to operate by principles, the principled way of operating will fail.
Recognize that the most important decision for you to make is who you choose as your Responsible Parties. And know that the ultimate Responsible Party will be the person who bears the consequences of what is done.
Hire right, because the penalties for hiring wrong are huge.
Remember that people are built very differently and that different ways of seeing and thinking make people suitable for different jobs.
Think of your teams the way that sports managers do: No one person possesses everything required to produce success, yet everyone must excel.
Don’t hire people just to fit the first job they will do; hire people you want to share your life with.
When considering compensation, provide both stability and opportunity.
Focus more on making the pie bigger than on exactly how to slice it so that you or anyone else gets the biggest piece.
Great people are hard to find so make sure you think about how to keep them.
Understand that you and the people you manage will go through a process of personal evolution.
Recognize that personal evolution should be relatively rapid and a natural consequence of discovering one’s strengths and weaknesses; as a result, career path is not planned at the outset.
Use evaluation tools such as performance surveys, metrics, and formal reviews to document all aspects of a person’s performance.
Learn about your people and have them learn about you through frank conversations about mistakes and their root causes.
Knowing how people operate and being able to judge whether that way of operating will lead to good results is more important than knowing what they did.
Remember that for every case you deal with, your approach should have two purposes:
Know what your people are like and what makes them tick because your people are your most important resource.
Probe deep and hard to learn what you can expect from your machine.
Think like an owner, and expect the people you work with to do the same.
Hold yourself and your people accountable and appreciate them for holding you accountable.
Escalate when you can’t adequately handle your responsibilities and make sure that the people who work for you are proactive about doing the same.
If you’re not worried, you need to worry—and if you’re worried, you don’t need to worry.
Assign people the job of perceiving problems, give them time to investigate, and make sure they have independent reporting lines so that they can convey problems without any fear of recrimination.
Be very specific about problems; don’t start with generalizations. Avoid the anonymous “we” and “they,” because they mask personal responsibility.
To 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?
Create great decision-making machines by thinking through the criteria you are using to make decisions while you are making them.
Consider second- and third-order consequences, not just first-order ones.
Recognized that design is an iterative process. Between a bad “now” and a good “then” is a “working through it” period.
Don’t just pay attention to your job; pay attention to how your job will be done if you are no longer around.
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 and think about how your tasks connect to those goals.
Allow time for rest and renovation.
To produce real behavioral change, understand that there must be internalized or habitualized learning.
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.