Principles: Life and Work by Ray Dalio - Book Summary
This is my summary of ‘Principles: Life and Work’ by Ray Dalio. My notes are informal and tailored to my own interests at the time of reading. They mostly contain quotes from the book as well as some of my own thoughts. I enjoyed this book and would recommend you read it yourself (check it out on Amazon).
Principles is an amazing book. It covers such a breadth and depth of topics that no book summary could do it justice. Personally, I mostly learned about decision making. This summary is organized as follows:
What are principles?
Principles for effective decision making
Principles to gather better information before making a decision
Principles that taught me about other domains such as resilience, hiring, or leadership
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What are principles?
Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals.
To be principled means to consistently operate with principles that can be clearly explained.
Discover your own principles from wherever you think is best and ideally write them down. Doing that will allow you and others to be clear about what your principles are and understand each other better. It will allow you to refine them as you encounter more experiences and to reflect on them, which will help you make better decisions and be better understood.
Having good principles for dealing with the realities we encounter is the most important driver of how well we handle them.
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Principles for effective decision making
The first pitfall of bad decision making is to subconsciously make the decision first and then cherry-pick the data that supports it.
Deciding is the process of
First, learning - choosing which knowledge should be drawn upon, the facts of this particular “what is”: your broader understanding of the cause-effect machinery that underlies it.
Second, deciding - weighing the facts to determine a course of action, the “what to do about it”.
Pay more attention to whether the decision-making system is fair than whether you get your way.
Make sure people don’t confuse the right to complain, give advice, and openly debate with the right to make decisions.
The goal of open debate is to provide the decision maker with alternative perspectives. It doesn’t mean that decision-making authority is transitioned to those who are probing them.
Be radically open-minded.
Shift from having a perspective of “I know I’m right” to having one of “How do I know I’m right?”
Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you do know.
You can’t make a great decision without swimming for a while in a state of “not knowing.” What exists within the area of “not knowing” is so much greater and more exciting than anything any one of us knows.
To gain the perspective that comes from seeing things through another’s eyes, you must suspend judgment for a time - only by empathizing can you properly evaluate another point of view. You need to be so open to the possibility that you could be wrong that you encourage others to tell you so.
Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself. The probability of you always having the best answer is small.
You can never be sure of anything: There are always risks out there that can hurt you badly, even in the seemingly safest bets, so it’s always best to assume you’re missing something.
Embrace reality and deal with it.
Truth - an accurate understanding of reality - is the essential foundation for any good outcome. Understand, accept, and work with reality.
Most people fight seeing what’s true when it’s not what they want it to be. That’s bad, because it is more important to understand and deal with the bad stuff since the good stuff will take care of itself.
Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are. It’s important not to let our biases stand in the way of our objectivity.
You must let not let your need to be right be more important than your need to find out what’s true. If you are too proud of what you know or how good you are at something you will learn less and make inferior decisions.
Don’t worry about looking good; worry about achieving your goal. People typically try to prove that they have the answer even when they don’t. Why? It’s generally because they believe the senseless but common view that great people have all the answers and don’t have any weaknesses. Not only does this view not square with reality, it stands in the way of their progress.
Reflect on and write down your decision-making criteria whenever you make a decision.
Think through your principles for making decisions, write them out in both words and computer algorithms, back-test them if possible, and use them on a real-time basis to run in parallel with your brain’s decision making.
Almost all “cases at hand” are just “another one of those.” Identify which “one of those” it is, and then apply well-thought-out principles for dealing with it.
Think about your criteria when you have an outcome to asses, and refine them before the next “one of those” comes along.
Sometimes it’s smart to take a chance even when the odds are overwhelmingly against you if the cost of being wrong is negligible relative to the reward that comes with the slim chance of being right. “It never hurts to ask.”
Know when not to bet. Knowing when not to bet is as important as knowing what bets are probably worth making. Only make the bets you are most confident will pay off.
Think creatively.
When faced with the choice between two things you need that are seemingly at odds, go slowly to figure out how you can have as much of both as possible. There is almost always a good path that you just haven’t figured out yet, so look for it until you find it rather than settle for the choice that is then apparent to you.
Don’t let fears of what others think of you stand in your way. You must be willing to do things in the unique ways you think are best - and to open-mindedly reflect on the feedback that comes inevitably as a result of being that way.
Weigh second- and third-order consequences.
First-order consequences often have opposite desirabilities from second-order consequences, resulting in big mistakes in decision making.
It’s almost as though nature sorts us by throwing us trick choices that have both types of consequences and penalizing those who make their decisions on the basis of the first-order consequences alone.
Example: The first-order consequence of exercise (pain and time spent) are commonly considered undesirable, while the second-order consequences (better health and more attractive appearance) are desirable.
Example: Food that tastes good is often bad for you and vice versa.
Triangulate your view with believable people who are willing to disagree.
You can significantly increase your probabilities of making the right decisions by open-mindedly triangulating with believable people.
It pays to have access to believable people. Be discerning about whom you triangulate with and skilled in the way you do it.
Don’t pay as much attention to people’s conclusions as to the reasoning that led them to their conclusions. When someone says, “I believe X,” ask them: what data are you looking at? What reasoning are you using to draw your conclusion?
Inexperienced people can have great ideas too, sometimes far better ones than experienced people.
If someone hasn’t done something but has a theory that seems logical and can be stress-tested, then by all means test it.
Be sure to avoid the common pitfalls of:
Valuing your own believability more than is logical
Not distinguishing between who is more or less credible
Don’t optimize for options without drawbacks:
The best choices are the ones that have more pros than cons, not those that don’t have any cons at all. Watch out for people who argue against something whenever they can find something - anything - wrong with it, without properly weighing all the pluses and minuses. Such people tend to be poor decision makers.
Believability weight your decision making:
Remember that everyone has opinions and they are often bad. Opinions are easy to produce; everyone has plenty of them and most people are eager to share them - even to fight for them. Unfortunately many are worthless or even harmful, including a lot of your own.
Look down on yourself and your team when a decision needs to be made and consider who is most likely to be right.
Compare the believability-weighted decision making of the crowd to what you believe. When they’re at odds, you should work hard to resolve the disagreement. If you are about to make a decision that the believability-weighted consensus thinks is wrong, think very carefully before you proceed. It’s likely that you’re wrong, but even if you’re right, there’s a good chance that you’ll lose respect by overruling the process. Try hard to get in sync, and if you still can’t do that, you should be able to put your finger on exactly what it is you disagree with, understand the risks of being wrong, and clearly explain your reasons and logic to others.
Constantly evaluate the marginal benefit of gathering more information against the marginal cost of waiting to decide.
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Principles to gather better information before making a decision
Learning well comes down to:
Being able to synthesize accurately
Knowing how to navigate levels
Synthesis:
The process of converting a lot of data into an accurate picture. The quality of your synthesis will determine the quality of your decision making.
Synthesize the situation at hand:
One of the most important decisions you can make is who you ask questions of. Make sure they’re fully informed and believable. Listening to uninformed people is worse than having no answers at all.
Don’t believe everything you hear. Opinions are a dime a dozen and nearly everyone will share theirs with you. Don’t mistake opinions for facts.
Everything looks bigger up close. In all aspects of lie, 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.
Don’t oversqueeze dots. A dot is just one piece of data from one moment in time. Sort big from small. Sort what’s happening in the moment from overall patterns. Know how much learning you can get out of any one dot without overweighing it.
Simplify. Get rid of irrelevant details so that the essential things and the relationships between them stand out.
Synthesize the situation through time:
Keep in mind both the rates of change and the levels of things, and the relationships between them. I often see people lose sight of this. They say, “it’s getting better” without noticing how far below the bar it is and whether the rate of change will get it above the bar in an acceptable amount of time. Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace.
Be imprecise. Understand the concept of “by-and-large” and use approximations. “By-and-large” is the level at which you need to understand most things in order to make effective decisions. Whenever a big-picture “by-and-large” statement is made and someone replies “not always,” my instinctual reaction is that we are probably about to dive into the weeds - i.e. into a discussion of the exceptions rather than the rule, and in the process we will lose sight of the rule.
Remember the 80/20 rule and know what the 20% is. You get 80% of the value out of something like 20% of the information or effort.
Be an imperfectionist. Perfectionists spend too much time on little differences at the margins at the expense of the important things. There are typically just 5 to 10 important factors to consider when making a decision.
Navigate levels effectively:
Use the terms ‘above the line’ and ‘below the line’ to establish which level a conversation is on:
The high-level big picture: I want meaningful work that’s full of learning
Subordinate concept: I want to be a doctor
—————————————————————--
Sub-point: I need to go to med school
Sub-sub-point: I need to get good grades in the sciences
Sub-sub-sub-point: I need to stay home tonight and study
An above-the line conversation addresses the main pints and a below-the-line conversation focuses on the sub-points.
When a line of reasoning is jumbled and confusing, it’s often because the speaker has gotten caught up in below-the-line details without connecting them back to the major points.
An above-the-line discourse should progress in an orderly and accurate way to its conclusion, only going below the line when it’s necessary to illustrate something about one of the major points.
Decisions need to be made at the appropriate level, but they should also be consistent across levels.
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Now follow more principles on a variety of other domains. They are ordered according to the alphabetical order of the topic they belong to.
Celebrating wins
When you and your team have successfully pushed through to achieve your goals, celebrate! (“Ring the bell.”)
Cognitive biases
Blind spot barrier:
You have blind spots - areas where your way of thinking prevents you from seeing things accurately.
For example, some people naturally see big pictures and miss small details while others naturally see details and miss big pictures; some people are linear thinkers while others think laterally; and so on.
People can’t appreciate what they can’t see. A person who can’t identify patterns and synthesize doesn’t know what it’s like to see patterns and synthesize any more than a color-blind person knows what it’s like to see color.
If you’re like most people, you have no clue how other people see things and aren’t good at seeking to understand what they are thinking, because you’re too preoccupied with telling them what you yourself think is correct.
Get to know your blind spots. Take some time to record the circumstances in which you’re consistently made bad decisions because you failed to see what others saw. Ask others - especially those who’ve seen what you’ve missed - to help you with this.
Ego barrier: your subliminal defence mechanisms that make it hard for you to accept your mistakes and weaknesses.
Communication
Leverage your communication. While open communication is very important, the challenge is to do it in a time-efficient way - you can’t have individual conversations with everyone. Identify easy ways of sharing, like open emails posted on an FAQ board or sending around videotapes or audio recordings of key meetings.
Dealing with mistakes on a team
Having a process that ensures problems are brought to the surface, and their root causes diagnosed, assures that continual improvements occur.
My rule was simple: If something went badly, you had to put it in the log, characterize its severity, and make clear who was responsible for it. If a mistake happened and you logged it, you were okay. If you didn’t log it, you would be in deep trouble.
Everyone makes mistakes. The main difference is that successful people learn from them and unsuccessful people don’t. By creating an environment in which it is okay to safely make mistakes so that people can learn from them, you’ll see rapid progress and fewer significant mistakes.
When considering the kinds of mistakes you are willing to allow in order to promote learning through trial and error, I say, “I’m willing to let you scratch or dent the car, but I won’t put you in a position where there’s a significant risk of you totalling it.”
Delegation
Clearly assign responsibilities. Eliminate any confusion about expectations and ensure that people view their failures to complete their tasks and achieve their goals as personal failures.
If you didn’t make an expectation clear, you can’t hold people accountable for it not being fulfilled. Don’t assume that something was implicitly understood. Common sense isn’t actually all that common - be explicit.
Use “double-do” rather than “double-check” to make sure mission-critical tasks are done correctly:
Double-checking has a much higher rate of errors than double-doing, which is having two different people do the same task so that they produce two independent answers. This not only ensures better answers but will allow you to see the differences in people’s performance and abilities. I use double-do’s in critical areas such as finance, where large amounts of money are at risk.
Firing
Don’t collect people.
It is much worse to keep someone in a job unsuitable for them than it is to fire or reassign them.
It allows them to live in a false reality while holding back their personal evolution, and it is terrible for the community because it compromises the meritocracy and everyone pays the price.
Be willing to shoot the people you love.
It is very difficult to fire people you care about. Cutting someone that you have a meaningful relationship with but who isn’t an A player in their job is necessary for the long-term excellence of the company.
Forecasting
While almost everyone expects the future to be a slightly modified version of the present, it is usually very different.
Truth be known, forecasts aren’t worth very much, and most people who make them don’t make money in the markets… This is because nothing is certain and when one overlays the probabilities of all of the various things that affect the future in order to make a forecast, one gets a wide array of possibilities, not one highly probable outcome.
Goal-setting
Prioritize: while you can have virtually anything you want, you can’t have everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones.
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.
Habits
(keystone habit) The most valuable habit I’ve acquired is using pain to trigger quality reflections.
Hiring
The WHO is more important than the WHAT
Hire someone better than you.
Don’t hire people just to fill the first job they will do; hire people you want to share your life with.
No matter how good you are at hiring, some of your hires won’t work out.
Look for people who have lots of great questions. Great questions are a much better indicator of future success than great answers.
Show candidates your warts. Show them the real picture, especially the bad stuff. That way you will stress-test their willingness to endure the real challenges.
Find people with whom you are compatible but who will also challenge you. You need people who share your tastes and style but who can also push and challenge each other.
Be like a conductor of people, many of whom (if not all) can play their instruments better than I can.
Don’t design jobs to fit people; over time, this almost always turns out to be a mistake. This often happens when someone you are reluctant to let go doesn’t work out, and there is an inclination to try to find out what else that person can do.
Think through which values, abilities, and skills you are looking for (in that order):
Values are the deep-seated beliefs that motivate behaviors and determine people’s compatibilities with each other. People will fight for their values, and they are likely to fight with people who don’t share them.
Abilities are ways of thinking and behaving. Some people are great learners and fast processors; others possess the ability to see things at a higher level. Some focus more on the particulars; still others think creatively or logically or with supreme organization.
Skills are learned tools, such as being able to speak a foreign language or write computer code.
While values and abilities are unlikely to change much, most skills can be acquired in a limited amount of time (e.g. software proficiency can be learned) [note from Seb: to an extent yes, but it’s limited]
Look for people who are willing to look at themselves objectively. Everybody has strengths and weaknesses. The key to success is understanding one’s weaknesses and successfully compensating for them. People who lack that ability fail chronically.
Pay attention to people’s track records:
Check references. Don’t rely exclusively on the candidate for information about their track record. Talk to believable people who know them, look for documented evidence, and ask for past reviews from their bosses, subordinates, and peers.
Recognize that performance in school doesn’t tell you much about whether a person has the values and abilities you are looking for:
Largely because they are the easiest to measure, memory and processing speed tend to be the abilities that determine success in school, so school performance is an excellent gauge of these qualities. School performance is also a good gauge of a person’s determination to succeed, as well as their willingness and ability to follow directions.
When it comes to assess a candidate’s common sense, vision, creativity, or decision-making abilities, school records are of limited value. Since those traits are the most important, you must look beyond school to ascertain whether an applicant has them.
Beware of the impractical idealist. People who have moralistic notions about how people should behave without understanding how people really do behave do more harm than good.
Don’t assume that a person who has been successful elsewhere will be successful in the job you’re giving them.
Make sure your people have character and are capable.
The person who is capable but doesn’t have good character is generally destructive, because they have the cleverness to do you harm and will certainly erode the culture. (‘clever assholes’)
The person with good character and poor abilities also creates problems. While likable, they won’t get the job done and will be painfully difficult to fire because doing so feels like shooting the loyal dog you can’t afford to keep anymore.
Watch out for people who confuse goals and tasks:
If they can’t make that distinction, you can’t trust them with responsibilities.
One way to test this: If you ask a high-level question like “How is goal XYZ going?” a good answer will provide a synthesis up-front of how XYZ is going overall and, if needed, will support it by accounting for the tasks that were done to achieve it. People who see the tasks and lose sight of the goals will just describe the tasks that were done.
Leadership
The greatest success you can have as the person in charge is to orchestrate others to do things well without you. A step below that is doing things well yourself, and worst of all is doing things poorly yourself.
Tell the truth.
Not telling people what’s really going on so as to protect them from the worries of life is like letting your kids grow into adulthood believing in the tooth fairy or santa claus. While concealing the truth might make people happier in the short run, it won’t make them smarter or more trusting in the long run.
It’s a real asset that people can trust what we say. For that reason I believe that it’s almost always better to shoot straight, even when you don’t have all the answers or when there’s bad news to convey. As Churchill said, “There is no worse course in leadership than to hold out false hopes soon to be swept away.”
People need to face harsh and uncertain realities if they are going to learn how to deal with them - and you’ll learn a lot about the people around you by seeing how well they do.
Have integrity.
Integrity comes from the Latin word integritas, meaning “one” or “whole.” People who are one way on the inside and another way on the outside - i.e. not whole - lack integrity; they have duality instead.
Having nothing to hide relieves stress and builds trust. Aligning what you say with what you think and what you think with what you feel will make you much happier and much more successful. Thinking solely about what’s accurate instead of how it is perceived pushes you to focus on the most important things.
Never say anything about someone that you wouldn’t say to them directly. There is never a good reason to bad-mouth people behind their backs. It is counterproductive and shows a serious lack of integrity, it doesn’t yield any beneficial change, and it subverts both the person being badmouthed and the environment as a whole.
Don’t let loyalty to people stand in the way of truth and the well-being of the organization.
Disagree and commit.
Open-mindedly exploring what’s true with others is not the same thing as stubbornly insisting that only you are right, even after the decision-making machine has settled an issue and moved on. There will inevitably be cases where you must abide by some policy or decision that you disagree with.
Avoid staying too distant.
Know what your people are like and what makes them tick, because your people are your most important resource. Regularly take the temperature of each person who is important to you and the organization.
You need to know your people extremely well, provide and receive regular feedback, and have quality discussions. And while you don’t want to get distracted by gossip, you have to be able to get a quick download from the appropriate people.
Learning
If you look back on yourself a year ago and aren’t shocked by how stupid you were, you haven’t learned much.
Mental models
Believable parties: Believable parties are those who have repeatedly and successfully accomplished something, and have demonstrated that they can logically explain the cause-effect relationships behind their conclusions.
Mentoring
Asking others who are strong in areas where you are weak to help you is a great skill that you should develop no matter what.
Navigating conflict
There are two ways alignment can go wrong:
Cases resulting from simple misunderstandings
Cases stemming from fundamental disagreements
Many people mistakenly believe that papering over differences is the easiest way to keep the peace. They couldn’t be more wrong. By avoiding conflicts one avoids resolving differences. People who suppress minor conflicts tend to have much bigger conflicts later on, which can lead to separation, while people who address their mini-conflicts head on tend to have the best and longest-lasting relationships.
The main test of a great partnership is not whether the partners ever disagree - people in all healthy relationships disagree - but whether they can bring their disagreements to the surface and get through them well. They key is in knowing how to move from disagreement to decision making.
Remember that every story has another side. Wisdom is the ability to see both sides and weigh them appropriately.
If either party to a disagreement is too emotional to be logical, the conversation should be deferred.
There is no reason to get angry because you still disagree. People can have a wonderful relationship and disagree about some things; you don’t have to agree on everything.
Problem solving
Identify and don’t tolerate problems.
View painful problems as potential improvements that are screaming at you. Each and every problem you encounter is an opportunity; for that reason, it is essential that you bring them to the surface.
Don’t avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at.
When a problem stems from your own lack of talent or skill, most people feel shame. Get over it.
Diagnose problems to get at their root causes:
Focus on the “what” before deciding “what to do about it”. It is a common mistake to move in a nanosecond from identifying a tough problem to proposing a solution for it.
Identify the root causes of problems - the specific people or designs that caused them - and see if these people or designs have a pattern of causing problems
Distinguish proximate causes from root causes. Proximate causes are the reasons or actions that led to the problem. When you start describing the qualities behind these reasons or actions, you are getting closer to the root cause.
A good diagnosis typically takes between fifteen minutes and an hour. It involves speaking with the relevant people and looking at the evidence together to determine the root causes.
Everything is a case study:
Think about what type of case it is and what principles apply to that type of case. By doing this and helping others to do this you’ll get better at handling situations as they repeat over and over again through time.
Receiving feedback
It’s important to know who is believable. If they are believable people, you will learn a lot from them.
You shouldn’t be upset if you find out that you’re bad at something - you should be happy that you found out, because knowing that and dealing with it will improve your chances of getting what you want.
Think about accuracy, not implications. It’s often the case that someone receiving critical feedback gets preoccupied with the implications of that feedback instead of whether it’s true.
Resilience
Don’t give up.
To do exceptionally well you have to push your limits and if you push your limits, you will crash and it will hurt a lot. You will think you have failed - but that won’t be true unless you give up. Believe it or not, your pain will fade and you will have many other opportunities ahead of you, though you might not see them at the time. The most important thing you can do is to gather the lessons these failures provide and gain humility and radical open-mindedness in order to increase your chances of success. Then you press on.
At some point in your life you will crash in a big way. You might fail at your job or with your family, lose a loved one, suffer a serious accident or illness, or discover the life you imagined is out of reach forever. At such times, you will be in pain and might think that you don’t have the strength to go on. You almost always do, however; your ultimate success will depend on you realizing that fact, even though it might not seem that way at the moment.
The most powerful personal transformations come from experiencing the pain from mistakes that a person never wants to have again - known as “hitting bottom”
Remember to reflect when you experience pain.
Pain + Reflection = Progress
If you can develop a reflexive reaction to psychic pain that causes you to reflect on it rather than avoid it, it will lead to your rapid learning/evolving.
Embrace the suck.
No pain, no gain. Go to the pain rather than avoid it. If you don’t let up on yourself and instead become comfortable always operating with some level of pain, you will evolve at a faster pace.
The pain is all in your head. If you want to evolve, you need to go where the problems and the pain are.
I learned to love my struggles, which I suppose is a healthy perspective to have, like learning to love exercising.
Most people instinctively avoid pain. This is true whether we are talking about building the body (e.g. weight lifting) or the mind (e.g. frustration, mental struggle, embarrassment, shame) - and especially true when people confront the harsh reality of their own imperfections.
Recognize that mistakes are a natural part of the evolutionary process.
If you don’t mind being wrong on the way to being right you’ll learn a lot - and increase your effectiveness. You must not let your need to be right be more important than your need to find out what’s true.
Fail well. “I once had a ski instructor who had also given lessons to Michael Jordan, the greatest basketball player of all time. Jordan, he told, reveled in his mistakes, seeing each of them as an opportunity to improve.
Be willing to do the work that success requires.
While there might be more glamour in coming up with brilliant new ideas, most of the success comes from doing the mundane and often distasteful stuff, like identifying and dealing with problems and pushing hard over a long time.
Don’t get frustrated.
If nothing bad is happening to you now, wait a bit and it will. That is just reality.
Winston Churchill: “Success consists of going from failure to failure without loss of enthusiasm.”
Running meetings
Watch out for assertive fast talkers.
Fast talkers are people who articulately and assertively say things faster than they can be assessed as a way of pushing their agenda past other people’s examination or objections.
Say something like, “Sorry for being stupid, but I’m going to need to slow you down so I can make sense of what you’re saying.” Then ask your questions. All of them.
Self-awareness
Self-assessments:
At Bridgewater, they use:
Myers-Briggs Type Indicator (MBTI)
Workplace personality inventory
Team Dimensions Profile
Stratified Systems Theory
Weaknesses:
Acknowledge and even embrace your weaknesses. Knowing what your weaknesses are and staring hard at them is the first step on the path to success.
Everyone has at least one big thing that stands in the way of their success; find yours and deal with it.
Look at the patterns of your mistakes and identify where you failed. Ask others for their input too, as nobody can be fully objective about themselves. Start by writing down your mistakes and connecting the dots between them.
Instead of expecting yourself or others to change, I’ve found that it’s often most effective to acknowledge one’s weaknesses and create explicit guardrails against them.
Self-management
While we don’t like pain, everything that nature made has a purpose, so nature gave us pain for a purpose: it alerts and helps direct us.
Stakeholder management
Spend lavishly on the time and energy you devote to getting in sync (alignment), because it’s the best investment you can make. Prioritize what you are getting in sync about and who are getting in sync with. Your highest priority should be the most important issues with the most believable and most relevant parties.
(your boss) There is no greater failure than to fail to escalate a responsibility you cannot handle. Escalating means saying you don’t believe you can successfully handle a situation and that you are passing the responsible party job to the person you report to. They can then decide to coach you through it, take control themselves, have someone else handle it, or do something else.
Strategy
A good plan should resemble a movie script. The more vividly you can visualize how the scenario you create will play out, the more likely it is to happen as you plan. Visualize who will do what when and the result they’ll produce.
System I vs. System II thinking
When someone asks, “Why did I let myself eat all that cake?” the answer is “Because the lower-level you won out over the thoughtful, higher-level you.”
Systems thinking
When I began to look at reality through the perspective of figuring out how it really works, instead of thinking things should be different, I realized that most everything that at first seemed “bad” to me - like rainy days, weaknesses, and even death - was because I held preconceived notions of what I personally wanted. With time, I learned that my initial reaction was because I hadn’t put whatever I was reacting to in the context of the fact that reality is built to optimize for the whole rather than for me.
Team performance
Watch out for the “frog in the boiling water” syndrome.
Apparently, if you throw a frog into a pot of boiling water it will jump out immediately, but if you put it in room-temperature water and gradually bring it to a boil, it will stay put until it dies.
Whether or not that’s true of frogs, I see something similar happen to managers all the time. People have a strong tendency to slowly get used to unacceptable things that would shock them if they saw them with fresh eyes.
Thoughtful disagreements
When two people believe opposite things, chances are that one of them is wrong. It pays to find out if that someone is you.
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.
Working through disagreements does take time but it’s about the best way you can spend it. What’s important is that you prioritize what you spend time on and who you spend it with. There are lots of people who will disagree with you, and it would be unproductive to consider all their views. It doesn’t pay to be open-minded with everyone. Instead, spend your time exploring ideas with the most believable people you have access to. (note from Seb: if you’re on the other end of that, it sucks. Be careful not to make people feel like you don’t take them seriously, you’ll come across as arrogant and operating behind closed doors.)
Be clear on whether you are arguing or seeking to understand, and think about which is most appropriate based on your and others’ believability:
If both parties are peers, it’s appropriate to argue.
If one person is clearly more knowledgeable than the other, it is preferable for the less knowledgeable person to approach the more knowledgeable as a student and for the more knowledgeable one to act as a teacher.
If you have a different view than someone who is more believable than you on the topic at hand (e.g. if you are in a discussion with your doctor about your health), you should make it clear that you are asking questions because you are seeking to understand their perspective.
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Other interesting quotes
I feared boredom and mediocrity much more than I feared failure. For me, great is better than terrible, and terrible is better than mediocre, because terrible at least gives life flavor.
Dreams + Reality + Determination = A Successful Life
Internal locus of control:
Whatever circumstances life brings you, you will be more likely to succeed and find happiness if you take responsibility for making your decisions well instead of complaining about things being beyond your control.
Don’t blame bad outcomes on anyone but yourself.
Nobody can do everything well. Would you want Einstein on your basketball team? Imagine all the areas in which Einstein was incompetent, and imagine how hard he struggled to excel even in the areas in which he was the best in the world.
Bringing the donuts: I had personally chosen each employee’s holiday gift and written them a lengthy personalized card.
Money is a byproduct of excellence, not a goal. Our overriding objective is excellence and constant improvement at Bridgewater. To be clear, it is not to make lots of money. The natural extension of this is not that you should be happy with little money. On the contrary - you should expect to make a lot. If we operate consistently with this philosophy we should be productive and the company should do well financially.
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