Review: Principles: Life and Work

Principles: Life and Work by Ray Dalio
My rating: 4 of 5 stars

Ray Dalio has been the founder of one of the most successful hedge funds in history to date - Bridgewater Associates. It is a story of a self-made billionaire - and the principles guiding him in this journey.

This book is an autobiography, a personal development guide and a course on management - all in one.

The main idea of the book - that you should lead your life and lead your organisation / team according to the set of principles that you constantly develop and refine - is powerful, albeit not new. Dalio is extremely methodical as to how to develop these principles. His idea is to minimise exceptions and categorise decisions to be made according to the algorithms.

I cannot agree with all of these principles. Many of them felt too stretched and reminiscent of "the brave new world" of a perfect organisation of corporate soldiers where everyone is expected to work 60-hours weeks. The praised idea meritocracy (the best ideas win) at times reminded autocracy (in the end, the big boss still decides). "Sorting" people according to their psychological personas felt too stretched as well.

The book of this size (more than 500 pages) is at times repetitive and not always that novel. However, it contains a lot of powerful insights - from a person who has indeed gotten very successful in business. Not sure you can always be that methodical and mathematical in ways you deal with people... but there is truly a good bit of wisdom and impressive work behind these Principles.

On tackling pain:

There is no avoiding pain, especially if you’re going after ambitious goals.

Pain + Reflection = Progress.

On being on top of the events:

Distinguish between you as the designer of your machine and you as a worker with your machine. Most people remain stuck in the perspective of being a worker within the machine.

On what is a valuable argument:

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.

Be open-minded and assertive at the same time. Open-minded = seeing things through the other’s eyes. Assertive = communicating clearly how things look through your eyes.

On dealing with emotions:

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 emotional hijackings.

On making decisions:

Everything looks bigger up close. In all aspects of life, what’s happening today seems like a much bigger deal than it will appear in retrospect. That’s why it helps to step back to gain perspective and sometimes defer a decision until some time passes.

On approximation:

Be imprecise: understand the concept of “by-and-large” and use approximation.

Be an imperfectionist. Perfectionists spend too much time on little differences at the margins at the expense of the important things.

On believability-weighted decision making:

The best decisions are made [when] the most capable people work through their disagreements with other capable people.

The most believable opinions are those of people who 1) have repeatedly and successfully accomplished the thing in questions, and 2) have demonstrated that they can logically explain the cause-effect relationships behind their conclusions.

On random decision making:

Everyone has opinions and they are often bad. Opinions are easy to produce and most people are eager to share them – even fight for them. Unfortunately many are worthless or even harmful, including a lot of your own.

If you ask someone a question, they will probably give you an answer, so think through to whom you should address your questions.

On management:

Great managers are not philosophers, entertainers, doers, or artists. They are engineers. They see their organisations as machines and work to maintain and improve them.

Regularly take the temperature of each person who is important to you and to the organisation.

On constant evolution:

Watch out for the “Frog in the Boiling Water Syndrome”. People have a strong tendency to slowly get used to unacceptable things that would shock them if they saw them with fresh eyes.

On leverage in organisations:

Constantly think about how to produce leverage. For each hour you spend with each person you work with, they should spend 5-10-20 hours working on their tasks.

On staying positive:

Don’t get frustrated. If nothing bad is happening to you now, wait a bit and it will. That is just reality. It’s important to figure out what to do about it and not spend time moaning about how you wish it were different. Winston Churchill said, “Success consists of going from failure to failure without loss of enthusiasm.”

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