If you are like most people, when the clock struck midnight on the first of the year, you vowed to change your life in some positive way. The year 2022 is in the books, and though for most people it was not the best year on record, there is just something about humanity that makes us hungry for the next year and the positive changes it can bring us. The turning of the page to 2023 is no different. Although the economy is rocky and the pandemic still lingers, there is just something special about a fresh start. If you are looking for a guidebook to help you do better in business in the coming year, and be a more rational thinker, then Ray Dalio’s book Principles: Life and Work is the book for you.
Although the name Ray Dalio may not be as well-known in the business world as Jeff Bezos or Elon Musk, he is an entrepreneur that has made a big impact. As the founder, co-chairman, and co-chief investment officer of Bridgewater Associates, he has risen from his middle-class Long Island neighborhood where he played the stock market at age 12, to an extremely successful businessman running the largest hedge fund in the world. After starting Bridgewater in his apartment in the 1970’s, he learned a big lesson when he lost everything after some questionable market predictions in 1982. This changed his mindset and taught him not to be too confident.
From his failure and his ultimate ability to bounce back, he created his set of principles which were later detailed in his book Principles: Life and Work. This book is geared toward the role that truth has on decision making, and how a person’s emotions, ego, and other personality traits can get in the way of being successful. One of Dalio’s mantrashas always been “Strive for a lot, and fail well.” By taking a more rational approach to the world of business like Dalio, people will ultimately be more successful in their pursuits.
In his famous book, Dalio uses the first three chapters to help the reader understand where he is coming from. Everyone has a story, and he spins his tale to help others to become the best versions of themselves. In order to set other entrepreneurs up for success, the first chapter “Independent Thinking” expounds on how people need to think clearly, and he even uses some examples from his own life to show how things can work well or go poorly. Next, in “Working With Great People,” he champions the idea that people should surround themselves with great people who will bolster them in times of trouble, but also will work together to move ideas forward.
Lastly, Dalio expounds on the idea of “Operating by Clear Principles,” creating principles, or guiding ideas, that will showcase exactly what he is after. With all of his life’s failures and successes, some people thought that Dalio was too abrasive in his dealings with people. This prompted him to want to put his ideals in writing. And Dalio understands that the principles need to grow and change with the culture and the times
“Dalio is an advocate of automation and emotionless candor, and many companies have followed suit. But the Covid-19 pandemic has seen the rise of new trends in people management, highlighting the need for empathetic managers and for relationships with employees to become more emotional.”
Some of the most important principles are in Part Two of the book, which starts off with what Dalio calls “Relentless Truth Seeking.” Many people do not like to face reality, but in doing so, Dalio would argue that you will better understand your situation and therefore be better equipped to handle it. The next principle, “Total Receptivity,” goes hand in hand with that. Seek answers that come from trusted sources, and be open to all new information. When you close yourself off, you risk missing out on some of the best ideas. When you are radically receptive, however, great things happen.
The next principle is “Extreme Honesty and Transparency,” which Dalio would argue is living life without a filter, and sets you up for a life of freedom from expectations. The next principle, “Productive Conflict and Letting the Best Ideas Win,” shows that instead of being a negative, conflict can be productive and get you closer to your goals. Lastly in this section, “Visualizing Complex Systems as Machines” will help you understand the world you are actually living in so that you can move forward.
Dalio says, “To gain strength, one’s limits must be tested, which is a painful process. Yet, most people instinctively avoid pain and, therefore, avoid growth. However, to truly evolve as an individual, you need to experience pain but then reflect on it. Instead of avoiding it, you must move towards it as it contains some of your most important lessons.”
Dalio spends a lot of time towards the end of his book talking about people, and if you are honest with yourself, these are the principles that are not only the most critical, but often the most difficult. “People Management: Understanding People” is the key to success in any company. Knowing how to motivate those around you and what makes them tick is extremely important. With all of the transparency in the earlier section “People Management: Hiring the Right People,” becomes extremely important. This involves an honest look at people, and your role in creating the right mix for your job. “People Management: How to Train, Evaluate, and Sort People” is another key. Again, people have to be trained and “sorted” with the company’s expectations in mind. Once all of the people and their gifts and talents are taken into consideration, you can use the people as building blocks to “Building Strong, Efficient Teams.” Finally, with all of the key players in place, “Effective Decision-Making” is possible in order to ensure your company runs smoothly. This is possible only if you have gone through the other principles so you know exactly how to make decisions.
As the new year rolls out a clean slate for each person in their business and interpersonal relationships, Dalio’s guiding principles can help to shape successful interactions for the coming year.
I like to spend my time giving back with organizations that focus on mentoring aspiring entrepreneurs. I have supported after school programs that focus on entrepreneurial and global initiatives in local primary schools. I recently extended my mentoring to include students at Case Western Reserve University.