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Principles by Ray Dalio

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The book:
Ray Dalio, billionaire investor and founder of Bridgewater Associates, explains his proven systematic approach to life and business. 

He thinks of himself and the organization he manages as hypothetical goal-oriented machines and develops algorithms (or principles) to achieve the "machine's" goals.

It is very information heavy if you consider all the principles he shares (100+). The main idea, however, is to understand how to build an idea meritocracy, which he explains, and to guide your personal decisions based on your own values and principles.

Takeaways and Paths of Action:

1. Planning:

The planning process is pretty mainstream; you set goals, identify problems, identify the root of the issues, consider alternatives, choose, act, and evaluate at the end. However, some things are often missed.

a. Don't tailor the mission to the available people but find the right people to accomplish the mission.
b. Use checklists and measurable objectives (which should be based on goals, not tasks).
c. Find ways to measure progress and completion.
d. Ring the bell: include time to rest as this is part of the process.
e. Link compensation to success. Reward yourself and reward others. Celebrate.

2. Idea meritocracy:

An idea meritocracy is an organization on which decisions are made not by the majority nor by the group in power. Everybody involved in the discussion is encouraged to express their opinions and has the right to vote, however, more experienced/believable people have greater voting power.

The decision process consists of (1) putting ideas on the table, (2) having thoughtful, open, and honest discussions to solve disagreements, and (3) using weighed decision making to come up with a solution.

The results can be compared to those from a democratic decision-making process, on which all votes are considered equally. Ideally, the results should be roughly the same. But go with the idea meritocracy result in case of doubt.

3. Radical honesty and transparency, especially with yourself:

You must have the humility to admit your weaknesses and the courage to improve on them. Take 10 minutes to write your three biggest weaknesses or faults. Since you will be biased, use other people to double-check.

Tomorrow, focus on improving one of the three. (check the planning process)

In an organization, issues should be addressed similarly. You will need to find what went wrong and why it did so. To come up with a solution, you must first find the root of the problem, for example, by using the five whys rule.

Bridgewater is very radical in its approach and has created publicly available "employee scorecards" that show their weaknesses and strengths.

4. Triangulation:

No matter how sure you are of your beliefs, it is possible that you are wrong. Always seek for believable people's opinions, especially if they have already succeeded in what you are trying to accomplish and are able to reason how they did it.

Repeat what they say and ask questions to make sure you understand them. Always start by assuming that you are missing something.

5. Convert your principles into algorithms:

This is the hearth of the book. You are likely to find similar problems several times throughout your life, so it would be beneficial to develop paths of action to guide you during moments of stress and high pressure.

After making a difficult decision, slow down and note the criteria you used, write the criteria as a principle, and refine them with each following decision. You will notice that you use the same principles to solve seemingly different problems, and they will start to appear more familiar and easier to solve. It is recommended to use an electronic tool to keep your principles organized.

This habit is tough to acquire. Start small and reward yourself every time you do it.

Similarly, for an organization, write down principles as guidelines that people can follow.

6. Control your meetings:

Each meeting should be led by a single person, who must also set the goal for the meeting. Focus on the goals and avoid "shiny objects (topics)". If unrelated discussions arise, do not ignore them but write them down and try to address them at the end of the meeting.

Favourite quote:

"Success consists of going from failure to failure without losing enthusiasm" - Winston Churchill


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