Reflections on the Principles

Principles (by Ray Dalio) Reflection#

TL;DR#

This book consists of three parts. The first part tells the story of the author Ray Dalio's entrepreneurial experience, the second part is about the author's personal principles in life, and the third part is about the author's principles in managing and operating a company.

Here are the key principles I have summarized:

Clearly understand what you want and what the reality is.
Failure + pain + reflection = progress.
Maintain an extremely open mind and mindset. No one is perfect, and people generally have difficulty accepting their own mistakes and weaknesses. We need the help of complementary abilities.
Select the best ideas - the ideal state of democracy.
Understand the differences between people and let the right people do the right things.
View right and wrong from a higher perspective.

Clearly understand what you want#

The author presents the first principle right at the beginning, which is to clearly understand what you really want. Some people always say they just want more money, but the author mentions that money is not what you truly want. It is just one of the things you need to achieve your desires. By first understanding what you truly want, you can clarify your goals and avoid unnecessary detours.

A smarter approach is to first determine what you truly want, what your true goals are, and then think about what you need to do to achieve those goals. Money is just one of the things you need, but when you already have the money you need to achieve what you truly want, money is no longer the only thing you need, and certainly not the most important thing.

Think independently and decide: (1) what you want; (2) what the facts are; (3) how to achieve your desires in the face of the facts.

Overcoming inherent weaknesses#

I believe that the core principles mentioned by the author later can be summarized as understanding and overcoming human weaknesses. The author believes that no one is perfect, and everyone has their own strengths and weaknesses. It is almost impossible for anyone to consistently make the right decisions on their own.

Usually, when we work according to our natural inclinations, we may not consider our own weaknesses, which will lead us to failure.

Failure + pain + reflection = progress#

If you have not experienced failure, it means you have not made efforts to push your limits. And if you do not make efforts to push your limits, you cannot fully tap into your potential. Pushing your limits sometimes leads to failure, sometimes to success, but it always brings benefits.

Failure and pain are not scary. Pursuing excellence requires challenging your limits, and challenging your limits may lead to failure and pain. What matters is what you do after failure. The saying "failure is the mother of success" also applies here.

Successful people change their approach, which allows them to continue to leverage their strengths and compensate for their weaknesses. Unsuccessful people do not do this.

Most people are unwilling to reflect during times of pain, and once the pain subsides, their attention shifts, making it difficult for them to derive lessons from reflection.

The author also mentions that it is a common weakness for most people to be unwilling to reflect, accept their own mistakes and failures. The author proposes the concept of "failing well," which means being able to learn important lessons from painful failures and avoid "failing badly," which means being kicked out because of failure. If you fail without reflection, you are likely to fail in the same way again.

Five-step process to achieve desires#

How do we take action? The author provides a five-step process that he believes can help us gradually approach our goals by continuously identifying problems and changing our approach:
1. Have clear goals.
2. Identify the problems that hinder you from achieving these goals.
3. Diagnose the problems and find their root causes.
4. Plan solutions to solve the problems.
5. Implement the solutions and achieve results.

Maintaining extreme openness#

The author believes that everyone has two major obstacles: "self-awareness barriers" and "mental blind spot barriers," which make it difficult for people to accept their own mistakes and understand what they cannot see.
To overcome these two barriers, relying solely on oneself is difficult. The author suggests that we should maintain an extremely open mindset and seek the help of trustworthy individuals and complementary abilities to handle the "unknown."

Sincerely believe that you may not know the best solution and realize that it is more important to handle the "unknown" than what you know.

First, "know that you don't know," think about whether we are only looking at the problem from our own perspective, and assess our credibility regarding the problem.
The author mentions the criteria for trustworthy individuals: they have repeatedly found answers in related fields (at least three times) and can explain their views well when held accountable.

Examine your views with trustworthy individuals who are willing to express differences.

Disagreement is not conflict. The purpose of our discussion is not to make others believe that we are right, but to figure out who is right and decide what to do.

How to achieve extreme openness#

Based on what the book says, I personally summarize as follows:
1. Recognize and record your common mental blind spots.
2. Listen to others' advice. If many trustworthy people have different opinions from you, consider whether you have biased thinking.
3. Present evidence and logic instead of defending yourself.
4. Discuss with trustworthy individuals to clarify the truth.
5. Meditation (uncertain: The author highly recommends meditation, but its effectiveness varies).

Understanding the differences between people and letting the right people do the right things#

Conceptual thinkers roughly envision what needs to be done and expect detail-oriented thinkers to figure out how to do it. When the latter cannot figure it out, the former thinks the latter lacks imagination, while the latter thinks the former hasn't figured it out themselves.

Sometimes, our disagreements are not caused by poor communication, but by fundamentally different ways of thinking.
Sometimes we think others' decisions are outrageous, but in reality, they are just making decisions based on their own way of thinking. They may also think we are outrageous. There may not necessarily be a right or wrong. We need to understand each other and view things from a higher perspective, objectively understanding the situation.
Different ways of thinking may be inherent, such as the division of labor between the left and right brain. Some people have left-brain thinking, while others have right-brain thinking. For example, the recently popular Myers-Briggs Type Indicator (MBTI) personality test shows that people in different categories have different tendencies in decision-making.
The author mentions some tests they often use: MBTI, Workplace Personality Inventory, Team Orientation Inventory, and Stratification System Theory.

Regardless of your goals, letting the right people do the right things to support your goals is the key to success.

The superiority of idea meritocracy#

The author highly praises the idea meritocracy implemented at Bridgewater, which he calls "idea meritocracy": weighted democracy, where everyone makes decisions together, but those who are good at decision-making have higher weight.
I personally think this is an ideal state of democracy, especially within a small scope. It solves the problem of mistakes made by autocratic decision-making and the difficulty of reaching consensus and the influence of people who are not good at decision-making in one person, one vote. Essentially, it is similar to the decision-making process of a few elites in mainland China and Singapore during the reform and opening-up period, which the author admires, such as Deng Xiaoping and Lee Kuan Yew.

Viewing right and wrong from a higher perspective#

For some things, even trustworthy individuals may not be able to reach a consensus, or there may not be a theoretical right or wrong. The author presents his perspective on how to view such things, which I personally agree with.
The author believes that we should view things from the perspective of evolution in nature to determine what is good or bad. The goodness or badness of things should not be based on our own perspective or the perspective of a certain group of people, but from the perspective of humanity and even nature as a whole. If it conforms to objective laws and promotes overall evolution and progress, then it is good.

Most people consider things that are not beneficial to themselves or those they care about as bad things, while ignoring the greater good.

For something to be "good," it must conform to the laws of reality and promote overall evolution, which brings the greatest rewards.

Other reflections#

Why do we need principles and machines?#

Every day, each of us faces a variety of situations that require us to react. Without principles, we will be forced to react in isolation to the various unexpected things we encounter in life, as if we are encountering them for the first time.

Good principles are effective methods for dealing with reality.

If you have good principles that can guide you in implementing your values into daily operational decisions, but you have not systematized them to implement them regularly, their impact will be minimal. You must turn your most important principles into habits and help others do the same. Bridgewater has such a culture, and we have also designed some tools to promote it.

The so-called principles, in my opinion, are essentially "summarizing lessons learned + life philosophy, values," and the so-called machines are systematizing principles and practicing them in life and work.

Knowing oneself, understanding others, and cooperating with each other#

From the author's entrepreneurial experience and the third part about his work principles, I feel the importance of knowing oneself and others. Achieving great things requires a good team, and team members need to be able to complement each other's shortcomings. In our communication and cooperation, we also need to consider who we are, what our thinking style is, and what the other person's thinking style is, which makes communication easier and reduces unnecessary conflicts.

Accepting failure and anxiety with a positive mindset#

It is important to have the right mindset when facing failure and anxiety. "The Feeling Good Handbook" is a good book to help people overcome anxiety.

In the career of every investor, there are moments of anxiety when your expectations for the future do not match the reality. You don't know whether you are facing a great opportunity or a catastrophic mistake.

I found that if you want to pursue excellence, you must challenge your limits. Challenging your limits may sometimes make you feel overwhelmed, which will cause great pain. You may feel that you have failed, but it is not a failure unless you give up. Believe it or not, your pain will gradually dissipate, and you will have many other opportunities in the future, even if you cannot see them at the moment. The most important thing you can do is to summarize the lessons provided by these failures, learn humility and extreme openness, increase your chances of success, and then continue to challenge your limits.

When I started looking at reality from the perspective of understanding the laws of reality, rather than thinking that reality is wrong, I found that almost everything that initially seemed "bad," such as rainy days, shortcomings, and even death, was due to my preconceived notions of what I wanted to have. I gradually realized that I had these initial reactions because I did not put things into the context of the larger picture, that is, the structure of reality is designed to achieve the best overall, not to try to achieve my desires.

Conclusion#

Overall, this book is very good. The author's logic is very rigorous. It can be said to be a summary and reflection of his entrepreneurial experience throughout his life. In addition to the principles mentioned in this article, the book also contains many detailed explanations of various principles. Of course, I believe that everyone has different opinions and may not fully agree with his views, but he has achieved great success, and I believe his principles are definitely worth reading and worth our consideration.
As for the third part about work principles, I have limited resonance because I do not have much work experience. It may resonate more with executives and entrepreneurs. I hope to revisit it when I have the opportunity to become a manager myself.
Many of the principles are actually common sense and intuitive truths, so they are not difficult to understand. However, reflecting on myself, although I understand these common sense principles, I have not systematically recorded and reminded myself of them, nor have I truly understood them, let alone put them into practice. For example, everyone knows that people are different, but how many of us study these personality tests, apply their theories in life, and how many conflicts do we have because we do not understand others' ways of thinking?