Principles by Ray Dalio
1.1 Be a hyperrealist
People who create great things aren't idle dreamers. They are totally grounded in reality.
1.1a Dreams + Reality + Determination = A Successful Life
People who achieve success and drive progress deeply understand the cause-effect relationships that govern reality and have principles for using them to get what they want.
1.3 Be radically open-minded and radically transparent
1.3a Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change
1.3b Don't let fears of what others think of you stand in your way. You must be willing to do things in unique ways you think are best - and to open-mindedly reflect on the feedback that comes inevitably as a result of being that way.
1.4 Look to nature to learn how reality works.
1.4a Don't get hung up on your views of how things "should" be because you will miss out learning how they really are.
1.5a Reality is optimizing for the whole - not for you. Contribute to the whole and you will likely be rewarded.
1.7 Pain + Reflection = Progress
1.10a Think of yourself as a machine operating within a machine and know that you have the ability to alter your machine to produce better outcomes. It consists of a design (the things that have to get done) and the people (who will do the things that need getting done).
1.10b By comparing your outcomes with your goals, you can determine how to modify your machine. This evaluation and improvement process exactly mirrors the the evolutionary process I described earlier. It means looking at how to improve or change the design or people to achieve your goals.
1.10e When encountering your weaknesses you have four choices:
1. You can deny them (which is what most people do).
2. You can accept them and work at them in order to convert them into strengths (which might not work depending on your ability to change).
3. You can accept your weaknesses and find ways around them.
4. Or, you can can change what you are going after.
1.10f Asking others who are strong in areas where you are weak is a great skill 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. All successful people are good at this.
1.10h If you are open-minded enough and determined, you can get virtually anything you want. So I certainly don't want to dissuade you from going after whatever you want. At the same time, I urge you to reflect on whether what you are going after is consistent with your nature.
Ultimately, it comes down to the following five decisions:
1. Don't confuse what you wish were true with what is really true.
2. Don't worry about looking good - worry instead about achieving your goals.
3. Don't overweight first-order consequences relative to second-and-third-order ones.
4. Don't let pain stand in the way of progress.
5. Don't blame bad outcomes on anyone but yourself.
2 Use the 5-Step Process to Get What You Want Out of Life
1. Have clear goals.
2. Identify and don't tolerate the problems that stand in the way of your achieving those goals.
3. Accurately diagnose the problems to get at their root causes.
4. Design plans that will get you around them.
5. Do what's necessary to push these designs through to results.
You will need to do all five steps well to be successful and you must do them one at a time and in order.
2.1 Have clear goals
a. Prioritize: While you can have virtually anything you want, you can't have anything you want. Choosing a goal often means rejecting some things you want in order to get other things that you want or need even more.
b. Don't confuse goals with desires. A proper goal is something you really need to achieve. Desires are things that you want that can prevent you from reaching your goals. Typically, desires are first-order consequences. For example, your goal might be physical fitness, while your desire is to eat good-tasting but unhealthy food. Don't get me wrong, if you want to be a couch potato, that's fine with me. You can pursue whatever goals you want. But if you don't want to be a couch potato, then you better not open that bag of chips.
c. Decide what you really want in life by reconciling your goals and your desires.
d. Don't mistake the trappings of success for success itself. Achievement orientation is important, but people who obsess over a $1,200 pair of shoes or fancy car are very rarely happy because they don't know what it is they really want and hence what will satisfy them.
e. Never rule out a goal because you think it is unattainable. Be audacious. There is always a best possible path. Your job is to find it and have the courage to follow it. What you think is attainable is just a function of what you know at the moment. Once you start your pursuit you will learn a lot, especially if you triangulate with others; paths you never saw before will emerge. If course there are some impossibilities, such as playing center on a professional basketball team if you are short, or running a four-minute mile at age 70.
f. Remember that great expectations create great capabilities. If you limit your goals to what you know you can achieve, you are setting the bar way too low.
g. Almost nothing can stop you from succeeding if you have a) flexibility and b) self-accountability. Flexibility is what allows you to accept what reality teaches you; self accountability is essential because if you really believe that failing to achieve a goal is your personal failure, you will see your failing to achieve it as indicative that you haven't been creative or flexible or determined enough to do what it takes. And you will be that much more motivated to find the way.
h. Knowing how to deal well with your setback is as important as knowing how to move forward. Sometimes life will throw you such challenges, some of which will seem devastating at the time. In bad times, your goal might be to keep what you have, to minimize your rate of loss, or simply to deal with a loss that is irrevocable. Your mission is to always make the best possible choices, knowing that you will be rewarded if you do.
2.2 Identify and don't tolerate problems.
a. View painful problems as potential improvements that are screaming as you. Though it won't feel that way at first, each and every problem you encounter is an opportunity; for that reason it is essential that you bring them to the surface.
b. Don't avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at. Thinking about problems that are difficult to solve may make you anxious, but not thinking about them (and hence not dealing with them) should make you more anxious still. When a problem stems from your own lack of talent or skill, most people feel shame. GET OVER IT. Acknowledging your weaknesses is not the same as surrendering to them. It's the first step toward overcoming them.
c. Be specific in identifying your problems.
d. Don't mistake the cause of a problem with the real problem. "I can't get enough sleep" is not a problem. To clarify your thinking, try to identify the bad outcomes first; i.e. I am performing poorly in my job." Not sleeping enough might be the cause of that problem, or the cause may be something else - but in order to determine that, you need to know exactly what the problem is.
e. Distinguish big problems from small ones. You have only so much time and energy; make sure you are investing them in exploring the problems that, if fixed, will yield you the biggest returns. But at the same time, make sure you spend enough time with the small problems to make sure they are not symptoms of larger ones.
f. Once you identify a problem, don't tolerate it. Tolerating a problem has the same consequences as failing to identify it. Whether you tolerate it because you believed it cannot be solved, because you don't care enough to solve it, or because you can't muster enough of whatever it takes to solve it, if you don't have the will to succeed, then your situation is hopeless. YOU NEED TO DEVELOP A FIERCE INTOLERANCE OF BADNESS OF ANY KIND, REGARDLESS OF ITS SEVERITY.
2.3 Diagnose problems to get at their root causes.
a. Focus on the "what is" before deciding "what to do about it."
b. Distinguish proximate causes from root causes. Proximate causes are typically the actions (or lack of actions) that lead to problems. Root causes run much deeper.
c. Recognise that knowing what someone (including you) is like will tell you what you can expect from them.
2.4 Design a plan.
a. Go back before you can go forward. Replay the story of where you have been (or what you have done) that led up to where you are now, and then visualize what you and others must do in the future so you will reach your goals.
b. Think about your problem as a set of outcomes produced by a machine. Practise higher-level thinking by looking down on your machine and thinking how it can be changed to produce better outcomes.
c. Remember that there are typically many paths to achieving your goals. You only need to find one that works.
d. Think of your plan as being like a movie script that you visualize who will do what through time. Sketch out broadly at first (i.e. "hire great people") and then refine it. You should go from the big picture and drill down to specific tasks and estimated time lines (e.g. "In the next two weeks, choose headhunters who will find those great people.
e. Write down your plan for everyone to see and to measure your progress against. This includes all the granular details about who needs to do what tasks and when. The tasks, the narrative and the goals are different, so don't mix them up. Remember, the tasks are what connect the narrative your goals.
f. Recognize that it doesn't take a lot of time to design a good plan. A plan can be sketched out and refined in just hours or spread over days or weeks. But the process is essential because it determines what you will have to do to be effective. Too many people make the mistake of spending virtually no time on designing because they are pre-occupied with execution. Remember: Design precedes doing!
2.5 Push through to completion.
a. Great planners who don't execute their plans go nowhere. You need to push through and that requires self-discipline to follow your script. It's important to remember the connections between your tasks and the goals that they are meant to achieve. When you feel yourself losing sight of that, stop and ask yourself "why?" Lose sight of the why and you will surely lose sight of your goals.
b. Good work habits are vastly under-rated. People who push through successfully have to-do lists that are reasonably prioritized, and they make certain each item is ticked off in order.
c. Establish clear metrics to make certain that you are following your plan. Ideally, someone other than you should be objectively measuring and reporting on your progress. If you are not hitting your targets, that's another problem that needs to be diagnosed and solved.
You will need to synthesize and shape well. The first three steps - setting goals, identifying problems, and then diagnosing them - are synthesizing. Designing solutions and making sure that the designs are implemented are shaping.
2.6 Remember that weaknesses don't matter if you find solutions. Everyone has weaknesses. They are generally revealed in the patterns of mistakes they make. Knowing what your weaknesses are and staring hard at them is the first step on the path to success.
a. Look at the patterns of your mistakes and identify which step in the 5-Step Process you typically fail.
b. Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.