5 Lessons from Principle | Ray Dalio
Overview
This book has been on my reading wishlist for quite a while now since it has been recommended many many times by different sources, but I was hesitant to pull the trigger because I wasn’t sure if it is just hype and good marketing or it is actually a good book. I finally made up my mind and bought a copy as a birthday present for myself. To say the least, I do not regret reading this book one bit and I would go as far as listing this book as one of the best books I read in 2020. The format of the book is more like a huge guidebook made up of bullet points of lessons Dalio learned throughout his life and the mental models he uses to make decisions. The book consisted of three parts: Dalio’s life stories, life principles, and work principles. I found the first two parts very helpful and insightful in guiding my daily life. The last section on work principles is also full of wisdom, but since I am not in a stage in life where I can use all the managerial principles, I do intend to come back to it once I advance in my professional career. With that being said, I believe there are some common themes throughout all three parts of the book that I will go into more detail in the next section.
Score: 5/5
Who should read it: Anyone who wants to become more effective in life and work.
Lessons
1. Be Radically Open-minded
There are two things that blind people from realizing the truth and making good decisions: ego and blind spots. Ego is the refusal to admit the fact that you could be wrong, and blind spots are the areas that should be but are not in your consideration. There are ways to address both of them.
To overcome ego, the cliche is to just “drop your ego” but the truth is not always that simple. The first step is to simply acknowledge the fact that you do not know it all, and those who are willing to disagree with you might have some useful information that you don’t. In other words, appreciate thoughtful disagreements. In order to achieve this, approach conversations as a way to understand and contribute to the pool of information you and the other side established.
To cover blind spots, you should consult credible people, or what Dalio calls, “believable” people, which are people who can consistently and successfully accomplish something, and have great explanations for doing so. The concept of believability will appear again later in the lessons since it is a crucial part of decision making. The most optimal way is to triangulate views from believable people. In other words, you should consult two more credible people, hear their reasonings, and generate results of your own. In doing so, you can cover areas that you might previously not consider or mistaken.
2. Pain + Reflection = Progress
The old saying “no pain no gain” does not paint the whole picture. Pain is good in the sense that you are stepping outside your comfort zone. However, repeatedly failing in the same exact way is just stupidity. For example, if you want to go through a wall, you decide to bump your head against the wall until it opens up a hole. After your first try, your head hurts and nothing happens. After your second and third try, you do the exact same thing and your head is bleeding but the surface of the wall doesn’t even have a crack. If you continue to do the same thing, you will most likely injure yourself without any significant progress. This is where reflection comes into the picture. You need to take a break, consider your effort up to this point, and come up with a modified strategy. In brief, it is important to fail, because it means you are being challenged, but it just as important to reflect on your failure so that you don’t fail the same way twice.
2. The 5 Steps Process
Does this image look strange? If it does, as it does for me in the beginning, don’t worry, let me explain. This is, in my opinion, is one of the most important pictures in the book. It illustrates an iterative process of becoming better and achieving your goals. Most people progress through life like this: goal → problems → solutions → DONE. As you may realize, compare to the picture above, the process I just mentioned is linear with a beginning and an end. If you can adopt the iterative mindset, you will be able to see a dramatic improvement in your effectiveness to achieve goals. Here are some key points of this mental model.
- Goals: Design a clear goal. It is critical that the goal is well defined since it will guide you toward a specific direction next.
- Problems: Identify all the problems that you might encounter during your quest, but don’t solve them yet!
- Diagnosis: Get to the root causes of the problem. This step differentiates high effective people from ordinary people. Very often the problems that you encounter are just the surface of a deep-rooted problem. If you solve that one particular problem, other problems of the same root will keep coming up and slow down your productivity.
- Design: This step is closely associated with the diagnosis step. Once you identify the true cause of the problem, design a plan to get around or overcome them.
- Doing: Once you have an elaborated goal and a well laid out plan, you will do what is necessary to be done to reach your goal.
- Goals: Yes, you heard it right, its goals again. Since the process is iterative, once you execute an entire loop of process, you move to the next phase equipped with lessons from the previous process and ready to do the same thing again.
3. Understand People are Different
It may sound like common sense until you realize it is not. The truth is, people are different. Even though we share incredibly similar DNA, but if you use the same tactic or speech to different people, it will work for some people but not other people. This applies to marketing, leadership, and all areas of life. Something I started doing after understanding this lesson is to read through personality tests. My favorite one, and in my personal experience, the most accurate one is the 16 Personality Test. It categorizes people into 16 types from 4 parameters (Extrovert vs. Introvert, Intuitive vs. observant, thinking vs. feeling, Judging vs. prospecting). By reading through this, or any science-based personality test, you can get an understanding of what types of people are there, what their strengths and weaknesses are, and how to deal with them.
4. Believability Weight Your Decisions
As mentioned previously, believable people are people who can consistently and successfully accomplish something and have great explanations for how they did it. This is especially important in a work setting. This is repeatedly emphasized in the work principles because the ability to do so directly affects the quality of the decision. The theory is very similar to the first lesson on being radically open-minded. When you are making a decision, have conversations with believable people, and hear their reasoning. The best way to get an education and improve the probability of making the right decision is to have open-minded conversations with believable people.
5. Embrace Reality
The original chapter title in the book is “Embrace reality and deal with it,” and I was very dismissive of the chapter because it sounds like a cliche. After I delve deeper into the book, I realize that the content is not nearly as superficial as I thought it would be. There are two things I found especially profound in this chapter.
- Look at nature and learn how reality works: nature is a never-ending cycle of evolution, just like the 5-step process mentioned earlier. Nature optimizes as a whole, not for an individual species. Many people get caught up in determining if a certain object or event is good or bad based on how it affects them instead of how it fits in the larger picture of nature. Instead of trying to advance personal goods, try to advance for the good of nature. In fact, the greatest inventions are those that directly contribute to the evolution of human kinds such as the internet, airplanes etc.
- Evolve: There is no such thing as perfection, only constant cycles of evolution. Those species that do not adapt and evolve eventually become extinct and the same rule applies to humans. We must follow the 5 step process above and improve ourselves iteratively.
Thank you for reading my summary. If you enjoy it, feel free to check out my other book reviews at https://jackyangzzh.medium.com/
