PRINCIPLES | RAY DALIO

Amongst all non-fiction books I’ve read, this is unarguably the best in terms of insights and valuable guidance, which has utterly transformed my everyday life, from leading me to pursue my goals with more excitement to enjoying every failure and coming to see it as a unique opportuinty for self and collective growth, it has given me more confidence and open-mindedness, which I all owe to Ray Dalio in fleshing out his principles.

In his superb book he not only taught me and guided me through personally-uncharted territory related to success, but he also shed light on some issues I was having at the time, and gave me the answer to the problem I was facing by identifying the main cause of trouble.

He sees his life as a game, and to level up a character has to evolve and get stronger, learn from painful and uncomfortable situations so that they don’t ever happen again. “I have found it helpful to think of my life as if it were a game in which each problem I face is a puzzle I need to solve. By solving a puzzle I get a gem in the form of a principle that helps me avoid the same sort of problem in the future”. Throughout all his life he has used his own method for evolution, creating his own principles and recording them so that if a similar situation pops up he only has to go back to that categorised principle, thus having more time to focus on more important things. “Collecting these gems continually improves my decision making, so I’m able to ascend higher levels of play in which the game gets harder and the stakes become ever greater”.

To structure his principles he mainly divides them into two sections:

Life Principles (My takeaways) :

1.It is best to embrace reality and deal with it, understand how it works, what is true and figure out what to do about it in order to achieve your goals. We have to be objective and not let our biases stand in the way of our objectivity, we have to avoid being emotional. (Dreams+Reality+Determination= A Successful Life)

2.Be radically open-minded and transparent with you and with people so that there are no misunderstandings in what you are doing. This will allow you to receive more honest feedback from other people, have more meaningful relationships, speed up your learning and improve your effectiveness.

3.Pain+Reflection=Progress. Most people celebrate small successes excessively, and when harsh realities or problems arise, they avoid them or pay no attention to them, that is a huge mistake, this brings them no good, because if pain is confronted calmly and with reflection evolution occurs and an upgrade of yourself takes place. Spend more time dealing with problems successfully rather than celebrating. By struggling well you’ll come to see improvement.

3.1.Embrace tough love, honesty and criticism. If you learn to appreciate those, they will give you insights on who you are, to be able to identify your weaknesses, accept them and work to improve them. Acceptance of criticism is especially difficult in humans, that is due to how we are programmed, Ray Dalio refers to this as we have within our own selves a lower-level you and a higher-level you. The first one comprises our emotional side, which involves the amygdala, for instance, controller of emotional responses. When we receive criticism our immediate body biological response is to impose the lower-level you over the higher-level you (logical,rational,analytical side), provoking us to react as we are being attacked by the critic, being difficult for us to see the other person’s view, we instead have to identify the imposal, so if recognised try to replace the emotional side for the logical one. This has helped my a lot in my evolutionary path, especially in triangulating my views with believable people.

4.Triangulate your view with Believable People. As a ceaseless learner you always try to seek out the truth, no matter whom it comes from or the whereabouts because you know that the truth matters way more than any other thing in our decision making, taking into account that effectiveness and efficiency are also key factors to improve our decision-making Ray Dalio suggests us (appart from being open-minded) to meet up or exchange information with more believable people, that is the people whose area of expertise is that of what you are looking for. That is of invaluable importance as these people are going to give you perspectives that you had perhaps never thought of or considered, sometimes they will provide you with the truth, but in any case you will gather precious data, and your knowledge on the topic will broaden, which is key to a better decision-making alongside with being analytical and objective.

4.1. Understand that People are Wired Very Differently. People have different perspectives from each other, basically because they have grown in an entirely different environment, exposed to different stimuli, and with different genes from one another, thus probably not having the same vision of things as you do. This is worth considering because it will teach you how to approach different people, understand their view, and be able to get the most out of them and if you know them well to be able to create an organisation in which each person is suited in the right role, therefore maximizing their potential.

5.Don’t Worry about appearing good, Worry about achieving your goals. One of the most important principles I have applied to my life, I’ll make it more clear with an example of mine. I was training in the football pitch on a summer day, trying to improve my close ball control with both feet, I had to weave the cones in and out, it was the turn of my non-dominate foot when suddenly a group of people passed by the pitch and started watching me. I, instead of taking the cones with my non-dominate foot did it with my dominate one to look good in front of the people, that is a huge mistake because I lost some repetitions with the foot I need to improve the most, my weaker foot. I put looking good above achieving my goals, which I now regret and have learned.

6.1.Have clear goals

a)Prioritize, you can’t have everything you want, you’ll be overwhelmed if you try to pursue an extense amount of goals, that has happened to me, I wanted to learn piano, upgrade my football skills, learn to code, take up calisthenics,become better at chess, read a book a month. It was just impossible! I just ended up doing less work because as the Spanish saying goes “Quien mucho abarca poco aprieta”. I have now prioritized my goals and I’m much more happy and enthusiastic.

b)Great expectations create great capabilities. Don’t set the bar too low, go challenge yourself with big goals that require effort and dedication.

6.2.Identify and don’t tolerate problems. A tolerated problem could appear in a future in which you could make the same mistake.

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

6.3. Diagnose problems to get at their Root Causes. Dig in as deep as you can to understand the real reason there was a problem.

i.e. My mum reprimanded me for not making my bed. Why? Because I didn’t make my bed. Why? Because I’m a lazy person. See, that’s the real problem, that is the Root cause.

6.4. Design a Plan. Find out how to get better.

i.e. Create a morning routine, have healthier habits.

6.5. Push through Completion.

Work Principles: Work Principles are, as I come to see it Life Principles applied to “work”, but I do want to emphasize some of those, especially the idea for success that Ray Dalio has been praising since the first pages of his book.

-An Idea Meritocracy should be applied to every organisation. This is perhaps the most important takeaway of all, I’ll explain myself.

An organisation will be confronting lots of different issues, so it has to work in sync with all the people within it to produce better outcomes, but appart from the economic and growth component, a very important factor also comes into play, this being the well-being or the contentment of the individual in the organisation. To have both of them one needs to seek excellence at all costs and Ray has come up with a system he used to excel and grow from 1 to 17,000 employees, the Idea Meritocracy.

It is too extense to explain it in detail so I will present you with its main characteristics.

1.Have open-minded and transparent people who are willing to always find the truth.

2.Uses methods to know an individual better (what he/she is good at, is he/she a creative person? what are his/her strengths and weaknesses?…) to enroll them into a suitable position to maximize the company’s efficiency end effectiveness.

3.Create an environment in which people don’t hide problems but bring them into the surface, thereby having the chance to always improve and not create a negative environment in which people aren’t sincere with one another, because sincerity is of vital importance in evolution.

4.Transparency is the key, every employee must know what is going on in the company, this will increase trust within the community.

5.When a decision needs to be made bring the most believable people you can, and make sure they don’t usually have similar views with one another so that very different points of view are being considered. Believability weigh your decision-making.

6.It is acceptable to make mistakes but unacceptable not to learn from them.

7.Align the company’s goals with employee’s.

-Look down on your machine from high-up and see how it is working.

Ray sees his company as a machine consisting of people and culture, this machine has the design you have created through years of perseverance and constant improvement, but as new problems arise and new knowledge is acquired your machine has to change, it has to evolve. To do so you need to look down on yourself and your machine every once in a while to see if everything is okay or if there are some refinements that need to be made. We are incredible beings which have the power to look objectively on ourselves, let’s use it to our own advantage!

Finally I always try to look back on myself, let’s say I wanted to improve my grammar skills. If I’m embarassed of how I was writting back then, that is the signal that is telling me I’m getting better.

If interested in further learning:

-TED ED: https://www.youtube.com/watch?v=HXbsVbFAczg

-All Principles Summary: https://inside.bwater.com/publications/principles_excerpt

-Company Culture and the Power of Thoughtful Disagreement: https://www.youtube.com/watch?v=ABB1pfi3ZpE