I have always struggled to get through self-help books. Probably this can be ascribed to me having issues with other people telling me what to do. According to Ray Dalio’s Principle 3 about radical openness this is something I need to work on. I suppose, he has got a point…
Ray Dalio is the founder of Bridgewater Associates, one of the largest hedge funds in the world. Having previously read some of Bridgewater’s rather original research, I thought it might be interesting to know how it all started. This is primarily why I downloaded Principles, although Ray Dalio’s life and work principles are really what this book is about.
Part I: Autobiography
The book is divided into three parts. Part I covers the backstory from the early foundation of Bridgewater out of Ray Dalio’s spare bedroom up till today. Part I is not meant to be the focus of the book, but I quite enjoyed it. In particular it is interesting to learn there has been crashes on the way to success and the lessons learned from these. We are also fed titbits of Ray Dalio’s private life, for instance how he sent his 11 year old son alone to China to attend a local non-English speaking school with limited heating and comfort.
Part II: Life Principles
Unfortunately I got off on the wrong foot to this part of the book. To explain his life principles Ray Dalio uses analogies from evolution and nature, which I found distracting. They do not really work. Evolution is slow change taking place over generations through genetic changes and genetic transmission. It is certainly beyond the control of the individual. An individual can develop and improve through his/her lifespan, but won’t pass that improvement on to the next generation through genes. So self development is not evolution. Furthermore, evolution is not necessarily progressive, just an adaption to external circumstances. The availability of Google makes it less important to remember a lot of things, so future generations may have less capacity for memorisation. That is evolution, but certainly not (self)improvement.
Another analogy used is ‘Nature optimises for the whole not the individual’. I am not even sure what that means or how such an objective function could be formulated. But looking at the state of nature today, you could argue something has gone wrong. Homo Sapiens is admittedly the most sophisticated species we are aware of on our planet, but in the big picture the species does not seem to be particularly beneficial for nature as a whole. So I doubt nature optimises for the whole. If I understood Richard Dawkins’ The Selfish Gene correctly, the individual gene – sort of – optimises to increase its chances of being passed on through generations, but that is as far as optimisation goes.
Anyway. After mulling over these analogies for a while, I finally managed to apply principle 5.3.c. ‘Remember the 80/20 Rule and know what the key 20 percent is‘ and started to pay full attention to the principles themselves.
There are a lot of principles and sub principles and different people will probably find different subsets useful. I suspect the points relating to how we deal with our own weaknesses and the inherent barriers we have to radical open-mindedness could be beneficial to many. There are some uncomfortable truths in there, which we may not wish to hear, but this is exactly why they are valuable. In particular if we remember to act upon them…
Part III: Work Principles
Part III is about management principles. I suspect these are the reason why many people picked up this book. Certainly it is the most radical part. Half of the time, whilst listening, I was thinking: this is completely unrealistic! Then I had to remind myself, these principles are actually implemented in the Bridgewater organisation. It would be interesting to be a fly on the wall in Bridgewater’s offices to see how it pans out in real life.
The principles are based on the concept of idea meritocracy i.e. probability weighted decision making, with the highest weight given to people most capable in the matter. Radical open-mindedness and radical transparency are applied throughout. In an organisation built on these principles decision making needs to be transparent and out in the open. Thoughtful disagreement is highly encouraged as a means to get to the truth. A case study is mentioned where the disagreement between two people is sent out to the full organisation to be commented on. Every person carries a baseball card with their characteristics drawn from observations, Myers-Briggs indicators and other personality tests. This should help to get right kind of people do the right kind of tasks. Every human error is logged in an issues file to help track and address mistakes. Bridgewater’s employees should be prepared to have their mistakes debated in broad forums. Meetings are taped with summaries sent out to the organisation and used for training material.
Although radical, most of the principles sound sensible to me. I would think they are miles away from how most organisations are run though. Ray Dalio states that 2/3 of all employees manage to adapt with an adaptation period of around 18 months.
I do wonder how radical openness would work here in the UK. Many British people still prefer to formulate criticism in such a polite and roundabout fashion, so afterwards you are not entirely sure, if they were criticising or just engaging in general small talk. The brutal honesty and tough love connected with radical open-mindedness and transparency might be too much of a culture shock.
The idea meritocracy and culture around it presumably requires a rather extreme extent of listening to ones higher-level self as opposed to its lower-level alter ego. This is not a bad thing, but it is a further challenge for employees regularly to have to act against their natural instincts and inclinations.
Towards the end of the book my attention started to wander. It is a very long book and as others have pointed out, there is a lot of repetition. Buying a book which is mainly in bullet point format as audiobook, may not have been my brightest decision ever. It is rather dry to listen to hundreds of bullet points being read out and the audio-format makes it difficult to get an overview. The accompanying pdf-file serves as a handy summary though.
The points I would like to remember (or rather, the points I actually did remember after finishing the 16 hours audiobook) are: radical open-mindedness and transparency, manage your weaknesses, learn from your pain, seek multiple opinions and pay more attention to people who actually know what they are talking about.
I found Principles very interesting, but not flawless. Ray Dalio does not distinguish properly between principles which tend to be general (idea meritocracy, radical open-mindedness) and implementation and interpretations of these principles (dealing with job interviews or disagreements in the organisation) which tend to be detailed. This makes the actual principles stand out less clearly and makes the book long and repetitive. However, if I find something in a book I would like to take with me, it has been worth the read. And that was the case for Principles.
A Modern Self-help Book
The life principles conclude with a couple of points to support the implementation of ones principles. An old-school self-help book might have suggested: ‘Convert your principles into a short bullet point list and put them on the fridge as a reminder, but be cautious about trusting yourself automatically to avoid old patterns in decision making‘. Ray Dalio’s modern version reads: ‘Convert your principles into algorithms and have the computer make decisions alongside you‘, but ‘Be cautious about trusting AI without having deep understanding’. Welcome to the 21st century….
Title: Principles
Author: Ray Dalio
Format: Audiobook
Genre: Business, Self-help, Autobiography