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Principles - Book summary

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 free Principles summary, we’ll briefly outline Ray Dalio’s principles for life and work.

Introduction: Principles

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.  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.

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:Ray Dalio Principles summary_life principles overviewSo how do you get on that upward evolutionary curve? Ray Dalio discusses >150 principles under these 5 broad Life Principles:Ray Dalio Principles summary_life principles summary

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, 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

In a nutshell, take 1 step at a time and keep repeating the loop to conquer bigger and more ambitious goals. Do get more details and tips on each step from our complete book summary.

(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, 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. Do get our 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.

Ray Dalio Principles summary_work principles overviewIn our complete Principles summary, 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.

Getting the Most from Principles: Life and Work

In this article, we’ve briefly outlined some of the key insights and strategies you can use to achieve desired change. For more examples, details, and actionable tips to apply these strategies, do get our complete book summary bundle which includes an infographic, 18-page text summary, and a 30-minute audio summary.Principles summary - book summary bundle

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. You can purchase the book here. or visit  visit www.principles.com for more details, tools and resources.

You can get the list of Bridgewater’s high- and mid-level principles here.

About the Author of Principles: Life and Work

Principles: Life and Work is written by Ray Dalio–an American billionaire investor, hedge fund manager, and philanthropist. He’s the founder, co-chairman and co-chief investment officer of investment firm Bridgewater Associates, one of the world’s largest hedge funds. In Feb 2020, Dalio was ranked by Bloomberg as the world’s 79th-wealthiest person. Dalio began investing at the age of 12. He received a bachelor’s degree in finance from Long Island University and an MBA from Harvard Business School. Thereafter, he worked as a trader, as the Director of Commodities at Dominick & Dominick LLC, then a futures trader and broker at Shearson Hayden Stone, before starting Bridgewater Associates.

Principles: Life and Work Quotes

“To be principled means to consistently operate with principles that can be clearly explained.”

“Don’t worry about whether you like your situation or not. Life doesn’t give a damn about what you like.”

“Perfection doesn’t exist; it is a goal that fuels a never-ending process of adaptation.”

“Maturity is the ability to reject good alternatives in order to pursue even better ones.”

“View painful problems as potential improvements that are screaming at you.”

“Everyone makes mistakes. The main difference is that successful people learn from them and unsuccessful people don’t.”

“Listening to uninformed people is worse than having no answers at all.”

“Anything is possible. It’s the probabilities that matter.”

“In order to be great, one can’t compromise the uncompromisable.”

“Every mistake that you make and learn from will save you from thousands of similar mistakes in the future.”

“It’s more important to do big things well than to do the small things perfectly.”

Click here to download the Principles summary & infographic

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