Founder of Bridgewater Associates, author of Principles
Ray Dalio wrote Principles: Life and Work and founded Bridgewater Associates in 1975, where he is chairman and co-chief investment officer. He was once so broke he had to borrow $4,000 from his dad. Everything happens over and over again, he argues, so he writes down the criteria behind each decision as principles and turns them into algorithms. His holy grail of investing is 15 good uncorrelated return streams.
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Decision Making
Not the boss deciding, not one-person-one-vote. Opinions weighted by repeated track record plus explainable cause and effect.
there's either autocratic decision-making or democratic decision-making autocratic decision-making means that the boss knows best democratic decision-making is one equal vote
Ray Dalio
locates the problem in the system. Believability-weighted decision making inside an idea meritocracy designs thoughtful disagreement into the room and sets the weight of each opinion by track record, not seniority or confidence.
locates it in the individual. Resulting, motivated reasoning and hindsight bias are the primary source of decision errors, so the work is personal process: pre-set criteria, kill conditions, and separating decision quality from outcome.
The 5-Step Process for Getting What You Want
A five-step iterative loop for achieving any goal. Each step must be done sequentially and independently. The process cycles: goals lead to problems, problems require…
Idea Meritocracy
A decision-making system where the best ideas win regardless of who proposes them. It is defined by the equation: Idea Meritocracy = Radical Truth + Radical Transparency…
The Dot Collector System
A real-time feedback tool used during meetings where participants continuously rate each other on dozens of attributes (e.g., open-mindedness, assertiveness, creative…
Principles: Life and Work (2017), TED Talk: 'How to build a company where the best ideas win' (2017)
Do the 5-step process steps one at a time and in order. Never blend steps (e.g., don't think about solutions while diagnosing problems).
When pursuing any goal using the 5-step process. Blurring steps leads to suboptimal outcomes because it interferes with uncovering the true problems.
Choosing what NOT to do is as important as choosing what to do. You can have just about anything you want, but not everything you want.
When setting goals. People who chase too many goals at once spread their attention thin and achieve few of them.
The most believable opinions come from people who (1) have repeatedly and successfully accomplished the thing in question, and (2) can logically explain the cause-effect relationships behind their conclusions.
When weighting opinions in any decision-making process. Use this two-part test to assess whose input deserves more weight.
If you're not failing, you're not pushing your limits, and if you're not pushing your limits, you're not maximizing your potential.
When assessing whether you or your team are being ambitious enough. Absence of failure may indicate complacency rather than excellence.
If someone's opinion seems outrageous to you, that is precisely the moment to investigate their reasoning most carefully, because your dismissal may be a blind spot.
When evaluating ideas that conflict with your worldview. The outrage response is often the ego barrier preventing learning.
If you find you keep diagnosing the same problem repeatedly, the root cause is likely in the machine design, not in the people operating it.
When performing organizational diagnosis. Recurring problems point to systemic design flaws, not individual failures.
Think for yourself about what is true. Decide (i) what you want, (ii) what is true, and (iii) what you should do about it.
This is the overarching meta-principle. Finding truth is the best foundation for making good decisions. Ego, emotion, and blind spots prevent you from discovering truth,…
Embrace reality and deal with it. Truth -- an accurate understanding of reality -- is the essential foundation for producing good outcomes.
Operating consistently with reality produces good outcomes; operating inconsistently with reality produces bad ones. Most people resist reality when it is uncomfortable,…
Pain + Reflection = Progress. Pain is nature's signal that something needs to change, and reflection converts it into learning.
Without pain, there is no signal to change. Without reflection, there is no learning from the signal. Evolution -- personal and organizational -- is driven by this…
