Successful people are guided by principles, i.e. fundamental truths that guide our actions to help us achieve what we want in life. In this book, billionaire Ray Dalio shares the Principles that have helped him to succeed in life and work, in hope of helping you to uncover and apply your principles. In this Principles summary, we’ll briefly outline Ray Dalio’s principles for life and work. For the full details, examples and tips, do get a copy of the book, or get a detailed overview with our complete book summary bundle.
After his early career success as an investment trader and broker, Ray Dalio started his own brokerage firm, Bridgewater, in 1975. His achievements led him to become overconfident of his ability to predict the financial market. After suffering several major setbacks—including losing everything in the 1980s’ market crash—he humbled himself, learned from his failures, and consistently documented and tested his decision-making criteria to gain powerful insights about work and life.
Dalio stopped running Bridgewater top-down as the sole expert and authority, and shifted to an idea meritocracy where the wisdom of every person in the organization can be harnessed. He sought to deepen/widen his perspectives, understand how humans think and behave, and how to leverage strengths toward specific goals. He also relentlessly refined his approach to investments (which will be elaborated in another book on investment principles).
This is a thick book organized into 3 sections: (i) a detailed account of Dalio’s personal journey plus a breakdown of his (ii) Life Principles and (iii) Work Principles. Dalio covers more than 500 high-level principles, mid-level principles and sub-principles. You can get the list of high- and mid-level principles here. In our complete Principles summary, we’ve distilled and organized these principles into an easy-to-digest format presented in 2 parts: Life Principles and Work Principles. We’ll now give a high-level overview of the these ideas. Do get a copy of our full 18-page summary for more details or get the full mojo from the Principles book.
Part 1: Life Principles
All of us encounter setbacks. How you respond to those setbacks will determine your outcomes. The overarching principle in life is to think for yourself: decide (i) what you want, (ii) what’s the truth, and (iii) what you should do. Get clear on your principles and write them down so you can live with clarity and integrity. The key idea is summarized graphically here:So how do you get on that upward evolutionary curve? Ray Dalio discusses >150 principles under these 5 broad Life Principles:
1. Embrace reality & deal with it
You can’t create your desired outcomes unless you see the truth about yourself, others and what’s going on. In our complete Principles summary [get full summary here], we break down what it means to be a “Hyperrealist” and the key lessons to learn from Nature and evolution.
2. Use the 5-Step Process to get what you want in life
(1) Set clear, audacious goals => (2) Don’t tolerate problems => (3) Diagnose the root causes => (4) Design a plan before you act => (5) Execute to completion.
3. Be radically open-minded
We all have egos and blind spots that cloud our perspectives and judgement. In our full 18-page summary, we explain how to watch for signs of closed-mindedness vs open-mindedness, and practices for develop radical open-mindedness (including thoughtful disagreement, triangulating with believable people etc.)
4. Understand how people are wired differently
To manage people, you must first understand them. In our full Principles summary [click here for full summary], we explain how humans are wired differently, some of the inner conflicts we experience and how to understand yourself/others better.
5. Learn to make decisions effectively
To make good decisions, you must have facts/knowledge about the situation, visualize possible paths forward, then choose the best path. Get the book / full book summary to learn (i) how you can synthesize the situation & different levels of reality, plus (ii) the key practices and principles to make good decisions.
Part 2: Work Principles
Here’s the big idea behind Ray Dalio’s Work Principles: Building a great organization is about having great people + a great culture, and having the machines to ensure your outcomes consistently match your goals. Ideally, align your work with your passions, and to do it with people you want to build a future with.
In our complete Principles summary [get full summary bundle here], we’ll condense >300 work principles and their sub-principles as follows:
Get the Culture Right
We’ll outline 6 principles (and related sub-principles) on how to build a great culture where problems and disagreements are surfaced and resolved, and original solutions are generated. These include: (i) adopting Radical Truth and Radical Transparency, (ii) nurturing Meaningful Work and Meaningful Relationships, (iii) making it a cultural norm to learn from mistakes, (iv) getting people in sync, (v) using Believability-Weighted Decision-Making, and (vi) having an agreed resolution process.
Get the People Right
We’ll share the 3 main principles and tips on why/how to (i) put WHO before WHAT, (ii) hire right, and (iii) fit the right people into your organizational design by continually training, testing, evaluating and sorting them.
Build & Evolve your Machine
Finally, we summarize the 7 principles (and sub-principles) to help you apply the 5-Step Process at an organizational level to refine your machine. These include principles for (i) running your machine as a manager/designer, (ii) not tolerating problems, (iii) diagnosing problems root causes, (iv) continually improving your machine design, (v) executing your plans, (vi) using tools and protocols to shape habits, and (vii) paying attention to governance.
Other Details in Principles: Life and Work
This is a voluminous book. Dalio covers more than 500 principles, broken down into higher-level principles, mid-level principles and sub-principles, many of which are inter-related. We’ve consolidated the key principles and ideas in our summary, though you can certainly get deeper insights by reading the principles alongside Dalio’s detailed personal journey in the book.
These Principles are not meant to be a magic formula, but a resource to help you develop your own Life and Work Principles. For more details, tools and resources, please visit www.principles.com.
Uncover and apply your principles to achieve massive success in life and work!