Principles - Ray Dalio

🚀 The Book in 3 Sentences

1. Run your life the same way you run your work guided by a life principles and work principles.
2. People grow faster when they’re willing to stay radically open minded and genuinely transparent with each other.
3. Ideas matter more than ego and it naturally leads to a more meaningful life and deeper relationships.

🎨 Impressions

This is an interesting book that slowly reshapes how you think about life, work, and the way you show up every day. It feels like someone sharing lessons they’ve tested over and over, then inviting you to do the same. The book is arranged in a way that constantly shifts between personal life and working life, which makes it easy to relate.What stands out is how strongly it centers on meaningful work and meaningful relationships.

When ideas are judged by their quality rather than titles or ego, both decisions and relationships improve naturally. Honesty, clarity, and fairness can reduce friction in both life and work. Ray Dalio develops his principles with a long-term mindset. These principles are meant to be revisited, rethought, and reused whenever life throws something new at you. His choice to be radically open minded and radically transparent isn’t about being harsh. It’s about forcing real issues to surface so real solutions can finally happen.

📀 How I Discovered It 

Through Ali Abdaal book suggestion

🦉 Who Should Read It? 

I would recommend this book to anyone who wants to improve their own actions, behaviour, and mindset. The ideas naturally extend into work and everyday life and make sense for anyone who’s trying to grow, make better decisions, and feel more fulfilled along the way. In the later part of the book, the focus shifts to how a business can be run around meaningful work and meaningful relationships. It shows how creating the right environment encourages people to do better, speak up, and contribute their best ideas. Everything stays grounded in idea meritocracy, so progress comes from good thinking rather than titles or ego.

☘️ How the Book Changed Me 

• When things go badly, write it down, note how serious they were, and be honest about who owned what.
• Trading feels like an ongoing wrestle with the market where I think independently, place my bets, make mistakes, bring them into the open, find the root cause, improve the system, then repeat the cycle.
• Looking at Myers-Briggs data and linking it to real outcomes can reveal hidden patterns in how people behave in business.
• I don’t back away from trying new things and instead aim to stay in the game long enough to learn from my mistakes.
• I choose to stay radically open minded and radically transparent, even when it feels uncomfortable.
• Changing habits and mindset takes time, often around 18 months, so I remind myself that consistency matters more than intensity.
• People, careers, relationships, and environments are always evolving, and change is the one constant driving everything forward.
• Failing is allowed, but I need to learn and improve fast.
• I’ve come to accept that I am both everything and nothing, and I choose to fill my life with meaningful experiences and real value.
• Growth comes from choosing difficulty, because strength only develops when I push my limits, even when I’m tired, unmotivated, and running low on sleep.
• When chasing goals, I try to resist short-term temptations and push through the discomfort that wants to pull me off course.
• I remind myself not to assume I’m always the best person to make decisions for myself, because often I’m not.
• Nothing can stop me if i have flexibility and self-accountability.
• I need discipline, strong work habits, and a focus on results if I run my own company.
• Matter to others isn’t about being remembered, but about how well I remember and value them.
• I aim to understand others first before expecting to be understood.
• I see myself as a shaper;
  • Intense curiosity.
  • Compulsive need to make sense of things.
  • Independent thinking on the verge of rebelliousness.
  • Dream big and unconventional.
  • Have practicality and determination to push through effort to achieve goals.
  • Have knowledge of my own and other's weaknesses and strengths and use it to orchestrate teams to achieve goals
  • Can hold conflicting thoughts simultaneously and look at it from different angle.
• I avoid jumping at the first option and instead ask questions and explore before deciding.
• A good life comes from knowing the right decision and having the courage to act on it.
• Once a decision is made through voting, I commit to it fully even if I initially disagreed.
• I’m selective about who I place my confidence in and build it slowly with people I know well.
• Strong leaders search openly for the best solution and bring others along in the discovery process.
• I need to train people and future successors who live by the same principles.
• I judge past decisions based on what I reasonably knew at the time, not what became obvious later.
• I am motivated by my sense of responsibilities.
• I do my best work when I combine creative thinking with the character to handle difficult things.
• I make sure my loyalty to my boss never conflicts with my loyalty to the company.
• Having a co-manager at the same level can create healthy checks and balances.

✍️ My Top Quotes

• Capable people are those who sit there worrying about the future.
• Dreams + Reality + Determination = A Successful Life.
• Evolution is the single greatest force in the universe; it is the only thing that is permanent and it drives everything.
• The key is to fail, learn, and improve quickly.
• Contribute to the whole and you will likely be rewarded.
• Realize that you are simultaneously everything and nothing—and decide what you want to be.
• Love and work are the cornerstone of our humanness.
• Man needs difficulties. They are necessary for health.
• If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential.
• People who choose what they really want, and avoid the temptations and get over the pains that drive them away from what they really want, are much more likely to have successful lives.
• Most of life’s greatest opportunities come out of moments of struggle.
• Great expectations create great capabilities.
• You could have all the money you’ve ever wanted, a successful career, and be in good physical health, but without loving relationships, you won’t be happy. The good life is built with good relationships.
• Power should lie in the reasoning, not the position or individual.
• Let’s agree that I am a dumb shit but I still need to make sense of this, so let’s move slowly to make sure that happens.
• Celebrate finding out what is not going well so you can make it go better.
• It is your job as a manager to get at truth and excellence, not to make people happy.
• The main reason is that I can visualize the results of pushing through so intensely that I experience the thrill of success even while I’m still struggling to achieve it.
• Most of success comes from doing the mundane and often distasteful stuff, like identifying and dealing with problems and pushing hard over a long time.
• Success consists of going from failure to failure without loss of enthusiasm.

🔎 Read The Full Summary + Notes

📒 Summary + Notes

• Failing well by experiencing paiful failures that leads to massive learning curve but not bad enough to get knocked out of the game.
• Changing mindset from “I know i am right” to “How do i know i’m right?”
• Thinking for yourself thorough these question;
  • What do you want?
  • What is true?
  • What are you going to do with it?
• When government policy makers are ensuring on no currency devaluation, it just means that they are desperate in the situation it self and most likely the devaluation will take place.
• Trading should involve being aggressive and defensive at the same time. Aggressive to ensure you're making money and defensive to keep your money.
• Keep self believe check by;
  1. Seek out the smartest person that disagreed with me and understand their reasoning.
  2. Know when not to have opinion.
  3. Develop, test, and systemise timeless and universal principle.
  4. Balance risk that keep the big upside and reduce while reducing the downside.
• Encourage thoughtful disagreement and explores people’s opinion proportion onto their merit.
• Reject good alternative to pursue a better way.
• Create an environment where people are not considered as your employees but a human being that long for a life that fill by meaningfull work and meaningfull relationship which encourage people to be straight with each other.
• Good reflection during bad times provide meanigful lessons on my business and relationship.
• Experience is not as worthy comparison to character, creativity and common sense.
• In investment, better to have uncorrelated return stream to ensure each stream can support damaged stream during trying times, however combining return stream is much more effective than depending only on the good ones.
• Individual assets in the same class (technology class) are related 60% of the times and doesn't provide much diversification.
• Handling disagreement without resentment
  1. Put honest thought on the table.
  2. Have thoughtful disagreement in which the situation able to shift people opinion as they learn.
  3. Have agreed deciding mechanism such as voting/clear authorities
• Train others adequately to ensure responsibilities can be delegated properly in times when you're not able to do it by yourself.
• Try anything that, survive long enough, and learn from mistake and improve over time. I changed fast enough, become sustainable, then built on it to flourish.
• Wise businessman and leaders
  1. Independent thinkers that do not let anyone stand in their way to achieve their goals.
  2. Have strong mental maps on how things should be done.
  3. Willing to test their mental maps in real world and change it up to ensure it works better.
  4. Extremely resilient because they know their vision is stronger than the pain they will experience as they struggle to achieve it.
  5. Have wider range of vision than most people because they have the vision themselves or they know how to obtain it from others who can see it better from himself.
  6. Able to see the big pictures and granular details and properly synthesise it where others only see it as what it is.
  7. Creative, systematic and practical.
  8. Assertive and open minded at the same time.
  9. Passionate on what they are doing and intollerant to people who are incompetent.
  10. Want to have a big, beneficial impact to the world.
  11. Chose to achieve goals rather than pleasing people
• What is a hero
  1. Hero is not a perfect person, he is someone who found or did something beyond the normal range of achievement and who has given his life to something bigger than himself or other than himself.
  2. He inevitably experiences one very big failure that test his resilience to come back and fight smarter with more determination.
  3. If they do, they undergone a change called metamorphosis in which they experience the fear that protects them, without losing their aggressiveness that propels them forward.
  4. Hero’s didn't realise that their trial reward is “boon”, a special knowledge about how to succeed that the hero earned during his journey.
• Ensuring offspring survivability earning enough to afford exceptional health care, excellent education and an initial boost to help my offspring’s career started.
• Ensure there are capable CEO to run the company and have a good governance system to replace the CEO if he is not capable.
• Pain is the greatest teacher and reminder that there will be something far more important in the future that we need to endure and survive out of it.
• Nobody is extraordinary, and become successful because of it. They like Good relationship
• The most important basic part in life
  1. Good bed to sleep in
  2. Good relationship
  3. Good food
  4. Good sex
• Handing down principles and knowledge is much more important than the individual because it outlive the individual itself.

LIFE PRINCIPLES LIST

1. Embrace Reality And Deal With It

• Keep struggle and pain in perspective, reflect back on it and you will learn valuable life lesson
• Habit comes with practices.
• Be hyperrealist. Understand the reality, accept, and working with it is practical. Despise impractical idealism.
  • Dreams + Reality + Determination = A Successful Life.
  • Successful people achieve their success and drive progress understand the cause effect relationship that affect reality, therefore they are using it to get what they want.
  • Idealist who are not grounded in reality create problems, not progress.
  • Choose and apply working effectively rather than working hard because effective work multiply capacity hundred of times.
• Any good outcomes comes from accurate understanding of reality.
• Be radically open minded and radically transparent.
  • Nobody is born to know the real truth. Its either by discovering it or follow others. The key is to know which part yield the best result.
  • Being radically open minded and transparent creates rapid learning and effective change.
• Being transparent is hard because it open the floodgate of criticism.
• Ignore the fears of what people think of you and dont let it be an obstacle.
• Radical truth and transparency will bring more meaningful work and meaningful relationship, but this take practices. (18 month’s time)
• Nature teaches how reality works
  • Don’t cling on how things should be because it hampers learning how they are really are.
    • Be analytical instead of emotional
  • To be ‘good’, something must operate consistently with laws of reality.
  • Evolution is permanent and drives everything
    • Perfection doesn’t exist, its actually a never ending goals that fuels continuous process of adaption.
  • Evolve or die.
• Evolve or die.
  • Evolving is life greatest reward and accomplishment.
  • In PPA/individual incentive must be aligned with thr group’s goal.
  • Reality is optimising the whole, not only for you.
  • Adaptation through rapid trial and error is super valuable.
  • Realise that i am simultaneously everything and nothing, and decide what i want to be.
  • What i will be depends on my own perspective.
    • Where I will go in life is dependant on how I see things in life, who and what i feel connected to. (Family, community, country, everything.
    • Decide to what other’s interest extent above my own personal interest.
• Understand nature’s practical lessons
  • Maximise my evolution because I am concious, learnt through memory and can evolve faster than any other species
  • Man’s innate desire is to improve by connecting it to meaningful work. Relationship are natural connections that make me relevant to each other and to the society.
  • No pain, no gain.
    • In order to gain strenght, one’s has to push its limit, which is painful.
• Pain + Reflection = Progress.
  • Reflect pain and learnt from it instead of avoiding it.
  • Failing means you’ve push your limits, and pushing limits means you’re maximising you’re potential.
  • Embrace tough love
    • Give people the power to deal with reality to get what they want.
    • Give them struggle so they can develop.
  • Do well on reflection because it can change my psychological reaction fo what was painful can become something that i crave.
• Weigh second - and third order consequences
  • Consequences
    • First order consequences of exercise = pain and time spent.
    • Second order consequences = better health, more attractive appearances.
• Own my outcomes
  • Take responsibility of my actions instead of complaining about thing out of my control.
  • Life don’t give a damn about about what i like, its up to me to connect the things i need to do to get the things that i want in life and find the courage to carry it through.
• Look at the machine from higher level.
  • Higher level thinking allows me to study and influence the cause - effect relationship and reach the outcome that i want.
  • It is important to put the right people in each position.
  • Compare outcomes and goals and then determine how to improve my actions.
  • Life is like machine. Act like i am the designer and manage of this machine. Don't remain stuck of being a worker in the machine.
  • See oneselves and others objectively to prevent from encountering each other’s weaknesses again and again.
  • Successful people can go and see beyond themselves to see things objectively and manage those things to shape change.
  • Life greatest opportunity comes out of moments of struggle.
  • When encountering weaknesses, accept and work at it to convert it to strenght.
  • Develop skills of asking others who are strong in areas that i am weak, as it will build imaginary guard rails that will prevent me from doing things that shouldnt be doing.
  • Rely on the input of others because it’s difficult to see oneself objectively.
  • Be open minded enough and be determined, eventually i can get virtually anything that i want.
  • Never assume i am the best person to make decision for myself because often i am not.
  • Reflect on my problems, problems will shrink or dissappear or i will find a better way to handle it rather than running away from it.

2. Steps Process to Get What You Want In Life

• Summary of 5 Steps Process to Get What You Want In Life
  • Have clear goals
    • Just set goals
    • Don't think about how you will achieve it
  • Identify and don't tolerate obstacles that are hindering from me achieving my goals
  • Diagnose problems to get to the root causes.
    • Only diagnose the problem
    • Don't think about solving it
  • Forms plans that can get around the problems.
  • Do what necessary it takes to push the plan to achieve the result.
• Have clear goals
  • Priotise things that you want into 2-3 things.
  • Dont confuse goals with desire
    • Goal: something that i really need to achieve. ex: physical fitness.
    • Desire: Things that I want but/can prevent me from reaching my goals. Usually in the form first order consequence. Ex-eat good tasting but unhealthy food.
  • Decide what i really want in life by reconciling my goals and desire.
  • Don't mistake trappings of success with success itself.
  • Be audacious/bold and never rule out a goal that i think unattainable.
    • Thinking of unatainable thing is just a function of what i know in the moment.
    • Just pursue the goals, and i will learn a lot.
  • Great expectation create great capabilities.
  • Almost nothing can‘t stop me if i have flexibility and self accountability.
  • Knowing how to deal with setbacks is as important as knowing how to move forward.
• Identify and don’t tolerate problems.
  • View painful problems as potential improvement.
  • Dont avoid confronting problem.
    • Acknowledging weakness is not he same as surrendering
  • Be specific in identifying problems
  • Don’t mistake a cause of a problem with the real problems.
  • Distinguish big problem and small problems.
  • Don't tolerate identified problems.
• Diagnose problems to get the root cause.
  • Focus on what is before deciding what to do about it.
    • A good diagnosis may takes 15mins to 1 hour.
  • Distinguish proximate causes from root cause
    • Proximate cause: action/lack of action that lead to problems (i missed the train because i didn't check the schedule)
    • Root cause: run much deeper and describe with adjective (I didnt check the train schedule because i am forgetful)
  • Recognise that knowing somewhat is like will tell what you can expect from them.
• Design a plan
  • Go back before you go forward.
  • Problem is the outcome produced by a machine.
  • There are many alternative to achieve my goals
  • My plan is like a movie script that i visualise who will do what through time.
  • Write down my plan for everyone to see and measure my progress.
  • A good plan can be sketch out in an hour or spread out over days and week.
• Push through completion
  • Planners that dontt execute goes nowhere.
    • Remember the relationship between your task and your goals, if it doesn't make sense, stop and ask why.
  • Good work habits are underated.
  • Create clear metrics and follow it religiously.
• Weakness don’t matter if you find a solution.
  • Goal Setting
    • Requires me to have good higher level thinking (visualisation and prioritisation)
  • Identifying and not tolerating problems
    • Requires me to be perceptive, good at synthesis and maintaining high standards.
  • Diagnosis
    • Requires me to be logical, able to see multiple possibilities and willing to have hard conversation with others.
  • Designing
    • Requires visualisation and practicality
    • Essentially need good self discipline, work habits and result oriented.
  • Identify at what point you typicalli fail in the 5 step process
    • Have goals > identify obstacle > diagnose problems > identify solution > put effort into the solution and push through.

Understand my own and others mental maps and humility.

3. Be Radically Open Minded

• Recognise my barrier for good decision making
  • Ego: Subliminal defense mechanism that makes me hard to accept mistakes and weaknesses.
  • Logical (concious) vs emotional (subconcious) are fighting inside you.
  • Blind spots
• Practice radical open-mindednes
  • Deal well with what i dont know is more important than whatever i do know.
    • Come up with the right question and ask to smart people is as important as having all the answers.
  • Decision making is having the releant information then decide on it.
    • Asking for advice doesn't degrade your freedom of thinking independently
  • Worry about achieving goals instead of looking good.
  • I can only put out (convey ideas and be productive) in what i take in (learning).
  • Suspend judgement when receiving ideas or reasoning from others, understand them by emphatisizing through their POV. Be so open to the possibility that i might be wrong and encourage others to tell me about it.
  • The best answer has the highest chance of being right when it comes from outside of me instead of by me.
  • Be clear on when you are arguing or seeking to understand.
• Appreciate the art of thoughtful disagreement.
  • Its more about finding whats right instead of convincing other people that Im right.
  • Disagreement are opportunities for learning.
• Triangulate believable people who are willing to disagree.
  • Plan for worst case scenario and plan it to be good as possible.
• Recognise the sign of close mindedness and open mindedness

• Understand how to be radically open minded.
  • Uses pain in life to reflect.
  • Making a habit of being open minded
  • Knowing my blindspots
  • Prevent from having biased views
  • Meditate
  • Be evidence based.
  • Put max effort to help others be open minded (its not an argument its to find out whats true)
  • Use evidence based decision making tool
  • Know when to stop fighting and trust my decision making process.

4. People Are Wired Differently

• Understand the powers when I understand how people are wired.
  • Different ways of thinking led to poor communication.
  • Creative genius exist at the edge of insanity.
  • We are born with attributes that can help or hurt us depending in its application.
• Meaningful work and meaningful relationship are genetically programmed into us
• Understand the great brain battles and how to control them to obtain what i want.
  • Realise that the concious mind is always in battle with the subconcious mind.
    • Clearing my head is a way to make progress
  • The most constant struggle is between thinking and feeling
    • Reacting spontaneously will lead to overreact.
    • Any psychological pain will go away eventually
  • Reconcile feeling and thinking.
  • Choose the correct habit
    • Making a habit stick forever is by doing it continuously for 18 month.
  • Train my “lower level me” with kindness and persistence to build the right habits.
  • Understand how right brained and left brained think.
  • Understand how much the brain can and cannot change.
• Find out what i am and what they are
  • Introvert vs extrovert
  • Intuiting vs sensing
    • Sensing focus and details and can be thrown off by simple mistake. Ex typo in letter.
    • Intuiting focus on the context first than detail. Ex wont notice any mistake in letter
  • Thinking and feeling
  • Planning/judger and perceiving
    • Planner/judgers like to focus on plan and stick with it.
    • Perceivers prone to focus on what’s happening around them and adapt to it.
  • Creators, refiners, advancers, executors, flexors.
  • Focusing on task vs focusing on goals
  • Workplace personality inventory.
  • Shapers = Visionary + Practical thinker + determined.
• Get the right people in the right roles to support me achieve my goals
  • Manage others and myself and orchestrate them to get what i want.
    • Good life is built with good relationship.

5. Learn How to Make Decisions Effectively

• Threats to decision making is harmful emotions and decision making involve learning and deciding.
  • Its never harmful to at least hear opposing point of view.
  • Never seize the first available option. Asked question and explored first.
  • Learn enough to make decision.
  • To synthesize well
    • Synthesize situation at hand
    • Synthesize through time
    • Navigate levels effectively
• Synthesize the situation at hand.
  • Who I ask is the most important decision
  • Don’t believe everything i hear.
  • Everything looks bigger up close.
    • Thats why I need to take a step back to gain new perspective
  • New is overvalued relative to great.
    • Always choose great instead of new.
  • Dont oversqueeze dots.
    • Never over analyse a single point of data.
• Synthesize the situation through time.
  • Understand relationship between rate of change and level of things.
    • Its getting better have its own acceptable bar in relation to rate of change in an amount of time.
    • Everything in life need to be on a trajectory headed toward excellent at an appropriate pace.
  • Be imprecise
    • Making decision doesn't mean i have to know all the details, enough to gauge and understand a large part of it. Ex 42x12., instead round to 40x10.
  • Remember and use 80/20 rule.
    • 20% of effort resulted to 80% of the final value.
    • Its also true getting the remaining 20% of final value requires 80% effort.
  • Be imperfectionist
• Navigate levels effectively
  • Establish a conversation using above the line (main point) and below the line (sub point) term.
  • Decision need to be made accordingly to the level whether you want to address the main point/sub point but need to be consistent accross the level.
• Logic, reasons and common sense is the best synthesizing tools.
• Make your decision as expected value calculations.
  • Raising the probability of being right is valuable
  • Knowing when to not bet is as important as placing the right bets
  • The best choice have lot more pros than cons.
• Prioritise by weighing the value of additional information against the cost of not deciding.
  • Must do list need to complete first. Never slip like to do into must do list.
  • Put time into important things eventhough it means no time for unimportant list.
  • Never mistake possibilities with probability
• Simplify and get rid of irrelevant details.
• Use principles
• Believability give weight on decision making.
  • Believable people who are willing to have thoughtful disagreement is crucial in decision making.
• Convert principles into algorithm and have the computer make decision alongside me.
• Cautious using AI without having deep knowledge about it.

*Notes

• To have the best life possible, know what is the best decision and have courage to make it.
• Have radical open mindedness; ability to explore every solution and possibilities without letting ego and blind spots in my way.
• Learning and having courage to make decision comes from
  • Going after what i want
  • Failing and reflecting through radical open mindedness.
  • Evolving to become capable and less fearfull.

WORK PRINCIPLES LIST

Bridgewater Philosophy

• Its about putting effort to achieve extraordinary standards, and then getting the satisfaction that comes out from the super achievement.
• Objective of bridgewater; excellence, constant improvement
• Conflict in the pursuit of excellence is terrific.
• Power should lie in the reasoning, not the position or individual. The best ideas wins no matter where it comes from.
• Critism should be handled objectively. No hierachy in giving or receiving critism. Teamwork and team spirit is essential, including intolerance of substandards performance.
• Willingness to helps others.
• Long term relationship should be intentionally built because it is gratifying and efficient.
• Money is a by product of excellence. Not goal and i should expect a lot of it.
• Each person should act like an owner, responsible for him and other to operates in a certain way.
• Make my passion and work one and do it with people that you want to be with.

1. Trust in Radical Truth and Transparency

• Adapting will takes around 18 month.
  • I don't have to run from knowing the truth.
  • Have integrity and demand from others.
    • Never say about someone that i would say it directly to him.
    • Managers should not talk about people they are not in the room.
    • Criticism is good and welcome but never a good reason to bad mouth people behind their back.
    • Dont let loyalty stand in the way of truth and well being of organisation
  • Create an environment which allow people understand what makes sense and everyone can speak up critical opinion.
    • Speak up, own it or get out.
    • Be extremely open.
    • Don’t be naive about dishonesty
  • Be radically transparent
• Radical transparency forces issues to the surface, shows what people are dealing with, how they are dealing it and allow people in he organisation to solve them.
• Radical transparency is much more transparency than typical transparency.
  • Use transparency to help enforce justice.
  • Share the things that are hardest to share
    • Sharing it allows people to trust you and partner with them efficiently
  • Keep exception to radical transparency very rare.
  • Ensure people who apply radical transparency recognise their responsibility to handle it well and weight things intelligently.
  • Provide transparency to people who handle it well and deny it to people who can’t handle it and remove them from the company.
  • Don’t share sensitive info with organisation enemies.
• Meaningful relationship and work are mutually reinforcing when it is supported by radical truth and transparency

2. Cultivate Meaningful Work and Meaningful Relationship

• Bridgewater
  • Bridgewater act as family business, be excellent or be cut from it.
  • They pay for half of any activity that the family members want to do together, paid food and drinks for anybody that set up a potluck at their house and bought a house for any events or celebrations.
  • Its ok to opt out as long abide the law and are considerate.
• Be loyal to the common mission and intolerant who doesn’t
• Be crystal clear on the mission.
  • Ensure people give more consideration to others than they demand for themselves
  • Ensure people understand and differentiate between fairness and generosity.
  • Know where the line is and be in the far side of fair.
  • Pay for work
• Recognise the size of the organisation can pose a threat to meaningfull relationship.
• Most people will pretend to operate in your interest while operating on their own.
• Treasure honoroble people who are capable and will treat you well when you are not looking.

3. Create a Culture that Accepts Mistake and Unacceptable Not to Learn From It

• Accept mistake and learn from it
  • Associate mistake with opportunity to learn instead of failure.
• Mistake are natural part of evolutionary process.
  • Fail well
  • Love my mistake, dont feel bad about it.
• Don’t worry about looking good, worry about achieving my goals.
  • Get on with accurate and inaccurate instead of over blame and credit.
• Observe the pattern of mistake and identify it whether its a product of weakneses
• Reflect when you experience pain and failure
  • Be self reflective and make sure other in the company are self reflective.
  • Remeber that nobody can see themselves objectively.
  • Teach and reinforce merits of mistake based learning.
    • Penalise people that supress and covering up mistake.
• Know what mistakes are acceptable and unacceptable and don't allow people to make unacceptable mistakes.

4. Get and Stay in Sync

• Get and stay in sync
  • People must be open minded and assertive.
  • Thoughtful disagreement is not to convince who is wrong or right, but to find out what is true and what to do about it. It must be nonhierarchical, criticism must come from bottom up too.
• Recognise conflict are essential for great relationship.
  • Spend lavishly on time and energy to get in sync because its the best investment
• Know how to get in sync and disagree well.
  • Bring out problems that may cause out of sync
  • Distinguish between idle complaints and meaningful complaints
• Be open minded and assertive at the same time.
  • open minded - seeing thing thing through other eyes, assertive - communicating clearly how things look through their eyes
  • Distinguish open minded people from closed minded people
  • Being open minded is much more important than being bright or smart
  • Beware of people who think its embarassing nkt to know
  • Ensure those in charge are open minded about question and comments of others
  • Getting in sync is 2 way street
  • Worry more about substance and style
  • Be reasonable and expect others to be reasonable
  • Suggestion and questioning are different from critisizing, never treat them as equals.
• If it is your meeting, control the conversation.
  • Make it clear who direct the meeting and what its purpose
  • Be precise and avoid confusion
  • Make clear the type of coversation for the discussion in light of the objective and priorities.
  • Lead the discussion by being assertive and open minded.
    • New employee who are building their track record have valuable insight into how they might handle various responsibilities.
  • Navigate between levels of conversation
    • 1st level: case at hand
    • 2nd level: relevant principle to use for decision making
  • Watch out for topic slip
  • Enforce the logic on conversations
  • Be clear on personal responsibilities / action party during group decision making.
  • Utilise 2 minute rule, dont allow any interipption in the first 2 minute when people are explaining their thinking
  • Watch out for assertive fast talker.
    • Remind them “sorry for being stupid, but im going to slow you down so i can make sense what youre saying”
  • Every discussion should end with a decision or action. Its ok to disagree with something
  • Identify easy way of sharing info such as pre read, salient points to save time
• Great collaboration feels like playing jazz.
  • 1+1=3. 2 people who collaborate well will be about 3 times effective
  • 3-5 person is effective for discussion group
• Cherish people who have the same alignment and mindset with you.
• If your values differs with other and cannot reconcile, considers the relationship worth preserving or not

5. Believability Weight Your Decision Making

• Who to believe
  • People that have repeatedly and successfully accomplished the thing in question.
  • Demonstrated they can logically explain the cause effect relationship behind their conclusion.
• Merits each person’s ideas to gain effective ideas.
• Find the most believable who disagree with you and understand their reasoning
  • Think about people believability to assess their opinions
  • People that dont have credibility but have a logical theory, go and test it.
  • Believe reasons before conclusions
  • Inexperienced people can have great ideas better than experienced people
  • Everyone should be confident to voice out their thought.
• Think about whether you are playing teacher, student or peer role.
• Understand how people came by their opinions
  • Ask the right question to the right people
  • Prevent myself and anyone randomly probe others without proper direction because its a waste of time
  • Watchout for phrases i think that, because it doesnt necessarily true.
  • Track believability people in systematic way. (Dot or baseball card system)
• Disagreeing must be done efficiently
  • Know when to stop debating, move on and agree on what should be done.
  • Use believability rating as a tool instead of substituting responsible parties.
  • Having 3 believable people is sufficient to make decision.
• Recognise that everyone has the right and responsibility to try to make sense of important things.

6. Recognize How To Get Beyond Disagreements

• Principles can't be ignored by mutual agreement
• Ensure people dont' confuse about the right to make decision between the right to complain, give advice or debate.
  • Always consider the larger context when challenging a decision.
• Never let important topics unresolved
  • Don’t be divided by little things when in actuality we already agreed on the big things that binds us together.
  • Make decision or vote when stuck in disagreements.
• Once the decision is made, everyone should put effort into it even though some may still disagree
  • Analyse things from the higher level
  • Don't slip into anarchy
• Meritocracy will suffer if it conflicts with the well being of the organisation
  • Only allow principle to be put into second place in extreme cases.
  • Get rid of people who argue, disobey and cant follow meritocracy idea (is a decision-making system where the best ideas win out)
• People with power need to operate by principles, not their preference

7. The Who Is More Important Than What

• Choose the right responsible parties.
• Responsible parties are the most accountable person.
• Company dont make the decision, people inside them are.

8. Hire Right, Because Hiring Wrong Resulted Huge Penalties

• Match the person to the role
  • Choose candidate by value > ability > skills
  • Bridgewater values
    • Meaningful work and
    • Meaningful relationships,
    • Radical truth and radical transparency
    • Open-minded willingness to explore harsh realities including one’s own weaknesses.
    • A sense of ownership
    • A drive for excellence
    • The willingness to do the good but difficult things
  • Find people through systemic and scientific approach.
  • Find the right fit between the role and person
  • Look for extraordinary person
    • Have outstanding performance within an outstanding peer group
  • Improving hiring result
    • Be crystal clear on what kind of people to join the company
    • Developing vocabulary to assess abilities at granular level
    • Candidate should hve 3 C’s; character, common sense and creativity
• Remember that each person have their own characters and ar built very differently.
  • Use personality assessment
  • Choose a or several interviewer that embody the type of people you want because they tend to choose people who are like them.
  • Find people who look at themselves objectively
  • Remember that people don't change much at all
• Not everyone is perfect in a team but yet every one of them must excel.
• Pay attention to people track records
  • Great experience and track record can be used to determine candidate’s abilities.
  • Result at school don’t mean much compare to values and abilities you are searching for.
  • Beware of impractical idealist
  • Never assume people that have been successful somewhere else will be successful in my organisation.
  • Choose people who have great character and great capabilities
• Hire people you want to share your life with
  • Look for people who have great question instead of great answers
  • Show candidate the organisation challenges to stress test them
  • Choose people that are compatible with you and will challenge you.
• Provide both stability and opportunity when considering compensation
  • Pay people enough so that they are not in financial stress, but not so much that makes them fat and happy.
  • Make them want to earn it through hard and creative work
    • Pay for the person, not the job
      • Find the correct person, add premium to it, build bonuses to motivate them
    • Have performance metrics tied to compensation
    • Pay north of fair
    • Make the pie birger so that so that everyone can have a bigger piece instead of thinking how to slice it
• Consideration and generosity are more important than money.
  • Be generous and expect generosity from others
• Think how to keep great person because they are hard to find

9. Constantly Train, Test, Evaluate And Sort People

• Train, test, evaluate and sort people.
  • Leader must decide to get rid of people that are incapable to deliver in an acceptable time frame
• You and people you manage will go through a process of personal evolution
  • Career planned are not determined at the start but only after discovering strenght and weaknesses.
    • 6-12 month to get to know a new employee
    • 18 month for employee to internalise and adapt culture
  • Personal evolution comes from training. Trainees must be open minded, suspend their ego while understanding their strength and weaknesses.
  • Teach people to fish instead of giving them the fish and allow them to make acceptable mistake.
• Hands on and experience creates internalised learning instead of books alone.
• Provide constant feedback
• Evaluate accurately, not kindly
  • Accuracy and kindness is the same thing in the end.
  • Put compliments and critism in perspective. Make it clear to the people what i am complimenting and criticise
  • Think about accuracy, not implications. (Thinking as process rather than goals)
  • Exercise accurate assessments
  • Learn from success and also failure
  • Understand that people see what they are doing and did is much more important than it really is. (To assign correct weightage of work to understand who is responsible for what)
• Recognise tough love is the most hardest and the most important type of love because its rarely welcomed.
  • Compliments are easy to give but rarely stretched people whereas constructive feedback is less appreciated but more valuable in the long run.
    • Personal transformation happens when people experience the worst pain known as hitting bottom.
• Show your observations about people
  • Make assessment about people by connecting it to specific data.
  • Collect people strenght and weakness overtime and put it into perspective
  • Evaluate people based on averages instead of one specific events.
  • Use evaluation tool to documents people’s performance.
• Treat process of learning about someone is open, evolutionary and can be repeated.
  • Have clear set of rules and metrics to evaluate people
  • Encourage people to reflect objectively about their performance.
  • Assessment of peopl should be what they are like not what they should be; to see the pattern.
  • Look for patterns and get in sync with people and look to the evidence when doing performance review
  • Prevent from being overconfident in assessment and make sure people agree to the assessment
  • Ensure assessment is honest and transparent between both parties.
    • Ensure the managee believe that manager is not the enemy, but the sole goal is moving towards truth.
    • Ensure its an equal participant process
  • Learn each other through frank conversation about mistake and root cause
  • Do regular sampling to understand what people are like and what i can expect from them.
  • Change is difficult
  • Exploring people’s weaknesses is hard, hence guide them through the pain of it.
    • Knowing the truth will put them in much better place.
    • Pain of learning weaknesses comes with learning and personal evolution.
• Knowing what people are like is the best indicator how they will handle their responsibilities in the future.
• People weakness are true when you’re in sync
  • Perfect understanding is impossible when judging people.
  • It takes a year to know a person is right for the job
  • Continue assessing people over time
  • Evaluate employee similar to evaluateing job candidates
• Train, guardrail or remove people. Dont rehabilitate them.
  • Don’t keep the underperformer
  • Willing to fire people that you care about.
  • Consider whether to reassign people with jobs that they fit or fire them.
  • Be cautious when allowing people to step back after failing.
• The role they occupied after failing may well be suited for other person.
• The goal of transfering person should benefit the company as a whole.
  • Ensure people complete and be tested of their responsibilities before moving them out to prevent discontinuity and instability
• Never compromise the culture standards and ensure people adapt to the fundamental in an acceptable time frame.

10. Manage Like A Person Operating A Machine To Achieve Goals

• Observe things top down
  • Frequently compare outcomes with goals
  • Understand that great managers are organisational engineers.
  • Create great target for people to achieve and refer
  • Focus on creating a great machine instead of handling individual task
  • Prevent unnecessary distraction
• Approach to every problem should serve 2 purpose ; 1-testing out the machine (people and design) 2-moving closer towards goals
  • Everything is a case study
  • Solving problems should involve discussion at two level
    • Machine level (why that outcome was produced)
    • Case at hand level (what to do about it)
  • Makes rule that come with principle behind it.
  • Policies should be align with principle
  • There are exception to every rule
• Recognise differences between managing, micro managing and not managing.
  • Managers are responsible to ensure their machine works well.
  • Managing people should feel like skiing together
  • Believability and track record is important to be a good manager.
  • Managers should be able to delegate task properly and accordingly
• Know what people are like and what makes them tick because they are the most important resources.
  • Develop a full profile of every people tou work with taht covers values, abilities and skills.
    • Probe key person and ask them if there is anything bothering them.
    • Learn how much confidence to have in your people, never assume.
    • Managers should manage based on their confidence
  • Manages should not delegate responsibilities to people that they dont know well.
• Varies the degrees of digging and instils confidence to people who are worth it
• Clearly assigned responsibilities
  • The most important person on the team is the ones that have the overall responsibility to accomplish the mission. He must have vision to see what supposed to be done and discipline to ensure it gets accomplished.
    • Remember who has what responsibiltiesb
    • Prevent job change due to circumstances without assigning it to the right people
• Probe deep and hard to your people to understand their problems and mistakes
  • Get rich understanding of people, process and problems to make a well informed decision.
  • Avoid staying too distant and follow up on problems.
  • Employ daily updates.
    • Ask people to write what they did that day, issues and their reflections
  • Probe people to anticipate problem before they occur.
  • Probe people 1 level below your direct reports/manager to understand how you repots/manager do.
  • Have subordinates under a manager report to you freely escalate their problems.
  • Don't assume people’s answer are correct. Have it double check.
  • Train my ear and identify words that can mislead or depersonalise problem such as ‘we’
  • Probe people openly than private to reinforce culture of truth and transparency.
  • Welcome probing because you and everybody can see themself objectively. This will nurture equanimity and character.
  • Recognise that people will have a hard time to understand other that think differently from them.
  • Identify and rectify all suspicious threats.
    • Small problems is breadcrumbs of symptomatic underlying bigger problems.
    • Rectify small problems before it gets too serious.
    • Create excellence culture
  • Understand that there is a lot of way to accomplished goals and it may not be your way.
• Think and behave like an owner and expect everybody do the same.
  • Going on vacation never means that you can neglect your responsibilities.
    • Set up a plan you can follow up work or people can follow up your work.
    • Force myself and people work for me do difficult things to grow and get strong.
• Have successor, back to back for key person in the company.
• Don’t treat everyone the same, treat them appropriately
  • Don’t let yourselve get squeeze and you giving in into it and do the right thing.
  • Care about the people that work for me.
• Great leadership is not what’s it made up to be.
  • The most effective leaders work to
    • open-mindedly seek out the best answers.
    • bring others along as part of that discovery process.
    • Be weak and strong at the same time
      • Always seek advice and let those who are better than me take the lead.
    • Don’t worry about people will like you or not as long youre making the right decision and have an appropriate open mind.
    • Don’t give orders and tried to be followed. Understand before being understood to get in sync.
• Hold myself and my people accountable and appreciate them for holding me accountable
  • Get frequent updates from people on their progress.
  • Create clear expectation and make people accountable for it. Common sense is not actually all common; be explicit.
  • Avoid getting sucked down by job slip. Delegate and ensure subordinate’s work are done by them.
  • Watch out for people who confuses between goals and task because if they can't differentiate them, you cannot trust them with responsibilities.
  • Watch out for unfocused and unproductive people who depersonalise action by saying we should. Instead tie it to responsible party by name.
• Create clear plans and metrics and ensure people are progressing according to it.
  • Put current situation into perspective before moving forward into a new plan.
• Escalate when I can’t handle well my responsibility.
  • Escalation is not a failure but as a responsibility.
  • Make sure my people are proactive and demand them to speak up when they cannot meet their deliverable or deadlines.

11. Be Concious And Don’t Tolerate Problems.

• Worried when you are not worry, and don't worry when you are worried.
• Design and oversee my people machine and assess it whether it's good enough or not good, or rather do it yourself.
  • Assign problems to people, let them investigate, and make them report to independent lines so they can convey their problems without any fear of accusation.
  • Watch out for people and managers to gradually accept unacceptable things that would eventually shock them if they look back on it.
  • Beware of group thinking, the fact that nobody cares doesn’t means there’s nothing wrong with it.
  • Compare outcomes from my problems to my expected visualisation.
  • People and managers are responsible to review delegates’s work before finalisng it.
  • Encourage people to bring problems to you and have as many eyes on it to prevent serious damages.
  • Explicitly ask people to speak up and ensure communication flow freely.
  • Recognise people who are close to their problems probably knows best to solve it.
• Prevent generalising problems and instead be specific with it.
  • Don’t avoid personal responsibilities by masking it with we and they.
• Be cauragous to fix difficult things.
  • Recognise that problems with proper planned solution is better than problems without solution and track the solution progress to the metrics.
  • Identify the problems, the responsibilities parties, discuss on it and follow through closely.

12. Diagnose Problems To Get To The Root Cause.

• Performing good problem diagnostic should involve 3 questions to diagnose. Ask the following questions:
  • Is the outcome good or bad?
  • Who is responsible for the outcome?
  • If the outcome is bad, is the responsible party incapable and/or is the design bad?
    • Always ask myself who should do what differently instead of complaining about it.
    • Identify at which 5 steps process failure occurs.
    • Identify which principle are violated.
    • Evaluate past decision not based on what I know now but instead what I have reasonably known at the time of the decision was made.
    • Messy circumstance are essential to evolutionary process of innovation.
      • Bridgewater is considered as terrible and terrific at the same time. They produce extraordinary result while struggling with lots of problems.
    • Recognise that some people doesn’t know what to do doesn’t mean you know what to do.
      • Good problem solver able to logically describe how to handle the problem and has solved the problem before.
    • Root cause is not an action but a reason.
    • Distinguish capability (person ability) and capacity (volume) issues.
    • Managers fall short on their goals because
      • Too distant
      • Have bad quality problems (do not have solution)
      • Used to unacceptable things and problems.
      • Have high ego/pride in their work that they can’t admit they are unable to solve the problems.
      • They fear adverse consequences from admitting failure.
• Continuously diagnosing problems.
• Recognise that diagnosing problems should produce an outcome.
  • Expect that same people doing the same thing will produce the same result. Instead try to variety people to solve problems.

13. Make Improvement To My Machine To Effectively Solve Problems.

• Build an effective machine
  • Building the right team and machine will take 2 times longer than solving the problems itself but it is worth while as it will compound in the future.
• Have a systematic principle and ensure it regularly applied.
  • Create a machine by thinking through criteria on how would you solve them. Turn it into principle and then algorithm that will improve quality of management.
• Create a plan that i can vividly visualise the outcome because the result will usually the clear plan
  • Put myself in the shoe’s of a person that is enduring pain/difficulties solving his problem to get a richer understanding of what i’m trying to design.
  • Visualise alternative machine and it outcome’s andthe decide on it whether to implement or not.
  • Consider 2nd and 3rd order of consequences
    • Ex; going to the gym
    • 1st order: muscle ache
    • 2nd order: easy to sleep
    • 3rd order: gain fitness
  • Regularly schedule standardise to do’s meeting with the same question.
  • Good machine takes into account imperfect person and should be design to produce good result even when people make mistakes.
• It will take some time, mistake and learning to move forward to the ideal systematic design.
  • They will be time when cleansing storm’s happen
    • Bad times will force cutbacks and only the most strongest and essential employees survive. Its inevitable, seem terrible at the time but can be great in the long run.
• Build organisation to achieve goals rather than task
  • Build organisation from top to bottom
  • Everyone must be supervise by believable person who have high standards. Without strong oversight there is potential of
    • Inadequate quality control
    • Inadequate training
    • Inadequate of appreciating excellent work
  • People at the top should have the skills and focus to manage direct reports and have deep understanding of their jobs
  • In organisation, different people suits different roles. Usually people are good in 2-3 quality but never all.
    • Big picture visionary (goal setting)
    • Taste tester (identifying and not tolerating problems)
    • Diagnoser (logical detective)
    • Imaginative designer (craft improvement plan)
    • Reliable taskmaster (ensure task is executed)
  • Dont create organisation to fit people. Ensure the right people are choosen for it.
  • Keep organisation scale in mind. Personnel in small company usually have to know and do it all. Keep thing simple as possible. Ensure information technology management is relevant, reliable and sustainable.
  • Organise department and section into heir grabitational pull to improve efficiency.
  • Make department self sufficient as possible so they can control their resources to achieve their goals.
  • Ensure manager to subordinate ratio close to 1:5 (the best). Max is at 1:10
  • Consider succession and training in an organisation
  • Pay attention to how the job will be done when you are not around
  • Employ double do techniques instead of double check in critical areas such as finances.
    • Ensure better answers
    • Check difference in personnel performance and abilities.
  • Use consultant wisely.
• Create organisation chart that reports directly, never with crosses and dotted line
  • Personnel at the point of pyramid should be involve in cross departmental issues.
  • Don't do work for other department unless you already spoken to the manager overseeing them.
  • Watch out for department slip
• Create guadrail when needed but it's better not to guardrail at all.
  • Help good person perform better.
  • Don’t expect people to recognise and compensate their own blindspot
  • Identify several person to become responsible party for a very hard issue although it's not recommended as 1 person is the best.
• Maintain strategic vision while only altering appropriately to changes in circumstances.
  • Bridgewater values and strategic goals is to produce excellent results, meaningful work, and meaningful relationships through radical truth and transparency.a)
  • Focus on long term strategy instead of short term convenience.
  • Think about the big and small details/strategy and recognise the connections between them.
• Have good controls to limit exposed dishonesty from other people.
  • Investigate and inform people early they will be investigated.
  • Having laws makes sence when they are enforcer (“policemen”/auditor)
  • Make sure you can audit the auditor
  • Recognised that people who make purchases on my behalf spend my money wisely because its not their money.
  • Publicly expose people if you catch them being dishonest or violate rules and controls and ensure everyone sees its consequences.
• Have the clearest reporting lines and delineation of responsibilities.
  • Assign responsibilities based on workflow design and their capabilities, not their job title ex; even though HR is reponsibile for hiring/firing/bonus, doesn't mean they can determine who should be hired, fired and etc.
  • Constantly think about producing leverages.
    • Imply 50:1 ratio when working. Every 1 hour I spend with each person who works for me, they spend 50 hours to move the project along.
    • Technology is a leverage.
    • Principle is a form of leverage when it is in place as a guide to compound my understanding and I do not have to exert the same force each time I encounter the same situation.
  • Having the best people and technology is far better than having a large number of ordinary people that are less equipped.
  • Use leverages.
• Recognise that almost everything will take more time and cost more money than expected.

14. Do What You Set Out To Do

• Work for goals that me and my organisation are excited about and connect it to how my task to these goals.
  • I'm excited visualising these ideas and I desire to build is what pulling me through to ensure my dreams happen.
    • Be coordinated and consistent motivating others.
    • Take time thinking before acting.
    • Find better ways when I have too much to do instead of working harder.
• Recognise that everyone has too much to do.
  • People that can do a lot have creativity, character and wisdom.
    • Creativity: find or invent ways to do thing effectively.
    • Character: Able to wrestle with challenges and demands
    • Wisdom: calm and compose, priotise work, realisticly design, make sensible choice.
  • Don't get frustrated because everyone will face failure.
• Dont confuse checklist with personal responsibilities.
  • People are expected to fill and do their whole job well, not only on the task in the checklist.
• Allow time for rest and innovation.
• Celebrate when you accomplish things.

15. Utilise Tools And Protocols To Control How Work Is Done.

• Having systemised principle embedded in tool is valuable in idea meritocracy.
  • Behavioural changes requires habituated/internalised learning.
  • Use tools to collect data and process it to form action or conclusion.
  • Foster a confidence and fairness environment by having principle implemented in tools and protocols and results can be assessed by tracking data and logic behind it.
    • Ineffective people will argue that labelling them ineffective are wrong.

16. Don’t Overlook Governance.

• Successful organisation should have check and balance process.
  • Have people check other people’s performance.
  • Balance meaning balance of power.
    • In some rare case, merit cannot be the only determining factor in assigning responsibility and authority.
    • Ensure nobody is above the system and can be replaceable.
    • Ensure loyalty to the boss or department does not conflict with loyalty to the organisation/company.
    • Make sure check and balances system functions well.
    • Ensure reporting lines are clear.
    • Ensure decision rights and its weightage are clear.
    • People who are evaluating people’s performance should;
      • Fully inform on how the peoples are doing.
      • Have the ability to make the assessment.
      • No conflict of interest.
  • Decision makers must have access to necessary information to make decision and must be trustworthy enough to handle the sensitive information.
• Single CEO is as not as effective and good compare to a group of leaders.
  • Bridgewater employ co CEO to establish check and balances.
• Great partnership triumph principles, rules, check and balances.
  • A leader must have competence wisdom, have close, cooperative and effective working relationship characterised by thoughtful disagreement and following through idea meritocratic process.
  • We work with others to get;
    • Leverage to accomplish missions in bigger and better ays than doing it alone.
    • Quality relationship forge great community.
    • Money that allows us to buy what we need for ourselves and others.

Conclusion

• Goals of idea meritocracy
  • Meaningful work.
  • Meaningful relationship.
• Idea meritocarcy requires people.
  • Put their honest thought and tables for everybody to observe.
  • Have thoughtful disagreements.
  • Abide by idea meritocratic ways to get last the remaining disagreements.