Book review: Principles by Ray Dalio

Coming in at a whopping 500+ pages, Principles by Ray Dalio certainly feels like the end-all, be-all read on being a meaningful human and worker; whether as an entrepreneur, CEO of a company, or as a well-oiled cog in the machine (and by Dalio's book, there is absolutely nothing wrong with being a well-oiled cog in a well-oiled machine).

The fundamental lesson in Dalio's book is simple - that if we operate the way we live and work by a simple set of governing principles that are consistent but capable of efficiently updating whenever it meets new obstacles/learnings/growth, then we will always be at optimal performance.

Without principles we would be forced to react to all the things life throws at us individually, as if we were experiencing each of them for the first time. If instead, we classify these situations into types and have good principles for dealing with them, we will make better decisions more quickly and have better lives as a result.

Simple enough, and perhaps when it comes to our everyday lives, we may all to some degree operate by a set of principles subconsciously i.e. never cross the road without looking left or right; pay your taxes on time; don't do wrong by your loved ones, etc. but Dalio takes up it to eleven by suggesting we be more deliberate with what those principles for life and work are - crystallizing them in words - and continuously sharpening them over time.

As an undercurrent for an incredible read on a very specific way of operating, you can sense Dalio's true philosophy on being human which is that objectivity/realism wins over emotion every time - and understanding that, will both elevate you (to greatness) and protect you (from unavoidable circumstances, bad happenstances, etc.)

I was beginning to see things happening over and over again, which led me to see that most everything is "another one of those": Most everything has happened repeatedly before for logical cause-effect reasons. Of course, being able to both properly identify which one of those are happening and to understand the cause-effect relationships behind them ... I could come up with decision rules I could model.

The book as whole is an exercise in understanding how to accelerate your operational capabilities both as a human being and as a modern day worker through 5 clear steps. I've summarized them below with quotes:

1. Embrace reality and deal with it: "Don't get hung up on your views of how things 'should' be, because you will miss out on learning how they really are... I now realize that nature optimizes for the whole, not for the individual, but most people judge good and bad only on how it affects them."

2. Use the 5-Step Process to Get What You Want out of Life: "More than anything else, what differentiates people who live up to their potential from those who don't is their willingness to look at themselves and others objectively and understand the root causes standing in their way."

3. Be Radically Open-Minded: "Even experts can make mistakes; my point is simply that it pays to be radically open-minded and triangulate with smart people... you can significantly raise your probabilities of making the right decisions by open-mindedly triangulating with believable people."

4. Understand that people are wired very differently: "The courage that's needed the most isn't the kind that drives you to prevail over others, but the kind that allows you to be true to your truest self, no matter what other people want you to be."

5. Learn how to make decisions effectively: "To do [decision-making] well, be sure to avoid the common perils of: 1) valuing your own believability more than is logical and 2) not distinguishing between who is more or less credible."

Personal reflection: Of all the books I've read so far this year, Dalio's is probably the one that fulfills my deepest hunger for a clear, powerful step-by-step guide to creating operating processes for life and work that will accelerate me towards my desires, interests, goals. 

But I venture there is something to take away here for everyone - whether you're like me, looking for process to life and work, or someone interested in reading the musings of a hugely successful magnate (I didn't really know much about Bridgewater till I read the book), an economics major interested in a historical slice of market movements from a macro and micro perspective, or someone keen for a different philosophical take on life.

As the book is split into two halves: Principles for Life and Principles for Work, you can really get at the aspects you need to quickly - though I recommend reading it as a whole, to understand how the former informs the latter.

The Work half is more an extension of Life, geared towards workers, business owners, CEOs, and entrepreneurs, looking to make radical organizational/structural changes. Dalio speaks of these Work principles through the lens of his own company Bridgewater - which he ran like an ongoing experiment, which includes doing things like:

1. Developing an idea meritocracy culture, in which the best, most accurate idea wins; and overrides hierarchy; 

2. Implementing radical transparency like having score cards on each individual in the company, that everyone can access and pass around so they can get to the heart of how everyone works and with one another; as a means to reduce "harmful office politics and the risks of bad behavior";

3. Incalculating rigorous and continual excellence within everyone in the company (himself included);

4. Using data-driven decision-making systems for everything, including believability-weighting (heavily favoring those with more success in the areas within which decisions are being made for, etc); 

5. Seeing the organization and its processes from high up as if it were a machine, and to see people (including himself) as if they were operators of this well-oiled machine.

As someone who has "done it all", so to speak - started a company, grew it massively, led hundreds of employees, experienced a fair bit of what life has had to offer personally (both ups and downs), Dalio's believability metric is off-the-charts - and thus makes Principles critical reading. What's more, by the end of the book, I got a strong sense that although he expounds on the virtues of operating life and work as a machine, it is infused with a heart that beats strong with love and meaning.

Everything important in your life needs to be on a trajectory to be above the bar and headed toward excellent at an appropriate pace. [At the same time] realize that you are simultaneously everything and nothing, [so] decide what you want to be... The question is how [you] matter and evolve.