Book Review: "Principles" by Ray Dalio

 Dalio, Ray. Principles. Simon and Schuster, 2017.

Review

When I downloaded this 16-hour audiobook, I am pretty sure that it made a “thunk” as if Ray Dalio had thrown the book down on my desk himself. For nearly half of this audiobook, Ray himself is narrating and the other half is narrated by Jeremy Bobb who sounds very similar. Ray’s thick Long Island accent with his raspy voice demand your attention and respect as you listen in on his work and life principles. This is not a book I would recommend for everyone because it is not necessarily the most exciting to listen to. However, I think there are some really good nuggets throughout this book that anyone could apply in their daily work and life. I appreciate Ray’s straight forward approach and his need to tell it as he sees it without holding back. This is not an audiobook about feelings, it’s an audiobook about how to do work right and how to do it well. I was originally attracted to this book through a couple sources:

•  Work Life with Adam Grant
•  Ray Dalio - TED: How to build a company where the best idea wins
• YouTube Channel: Principles by Ray Dalio

Key Takeaways

Radical Open-Mindedness

Dalio makes a point to be open-minded so that you do not miss out on the right answer. If we start by recognizing that one individual can not know everything and that often we are wrong, then keeping open-minded is one of the most important things that we can do for ourselves.

“To be effective you must not let your need to be right be more important than your need to find out what’s true. If you are too proud of what you know or of how good you are at something you will learn less, make inferior decisions, and fall short of your potential.”

This is a concept that I myself have been working to improve. In a lot of works on leadership, I think people refer to this as being a “good listener”. As I have matured over the last few years I have tried to be a better listener and keep an open mind. I think this starts with improved self-awareness. If you can recognize that you are not keeping an open mind in the moment, then you will be able to correct it immediately. I also think that this is a behavior which takes time to establish and become a habit.

Idea Meritocracy

This was my first encounter with this concept of Idea Meritocracy and it is probably the biggest concept in this audiobook. In Principles, it is conveyed as an environment in which individuals can share all their ideas openly and work together to methodically sort through these ideas to determine which idea is the best idea. Dalio emphasizes that for an Idea Meritocracy to be successful, two things are required: radical transparency and radical truthfulness. This is where everything gets interesting. The concept of transparency is nothing new in leadership. I have experienced firsthand that transparency can lead to increased trust with your employees and ultimately lead to a stronger work relationship. What is new, is radical transparency. With radical transparency, you put feelings and emotions aside to get to the point. This is not saying to disregard respect, but instead suggesting that you should foster an environment in which individuals can respectfully say their opinion so long as it is backed up by facts. For example, if you feel that an individual is unprepared for a design review, then you would tell that individual directly (not necessarily in front of everybody) that you felt that they were not well prepared and here are the reasons why. Dalio believes that not telling that individual your observation would be a disservice to that individual as well as the entire company. When you think about it, the idea seems so simple, but I think that in some company cultures, this idea does not sit well with a lot of people. 

Meaningful Work

It is important that you and the people around you are doing meaningful work. This ensures that everyone is well motivated and that they are working for the overall good of the company. You should be doing work that everyone is excited about. Riot Games actually provides a really good example of people doing amazing work when they are excited in one of their recent videos (here; yes, it is a cartoon). You can also see excitement leading to amazing work in the “New Space” movement. 

Also, you should seek to align people’s work with their strengths so that they are working as efficiently and effectively as possible. If a person does not get motivated by the work or doesn’t have the skills to accomplish any work which is available, you should remove them as soon as you recognize this gap. Continuing to foster an individual who is not contributing does a disservice to that individual as well as the entire company.

Dalio also recognizes that work may not align with your life’s passion. While you should definitely try to align these two, it is not always possible and therefore you must work to be able to fund these passions. However, this is not an excuse for poorly executing your job. You should find work that gives you meaning and that you can apply your strengths and skills to their fullest potential.

Thoughtful Disagreements

This is a topic that I find very interesting. All my life I have rode the line between being inquisitive and being perceived as a smart ass. What I have learned over the last couple years is that delivery, communication, and perception make all the difference. This sounds simple and easy to implement, but if it is not your natural tendency, it takes discipline and awareness to keep yourself on the right side of the line. Allow me explain using some bullet examples.

•  Devil’s Advocate – Even if you believe the other person is right, you choose to play out the opposing side of the argument to see what other possibilities exist. Bad Approach: Smile and start playing the role of the Devil. Good Approach: Lead by voicing your intentions, then follow up by playing the role of the Devil.
• Socratic – Using questions to get the other person to arrive at the answer you would like them to have. Bad Approach: Typically, when you ask the question that starts with “Why” people go on the defensive and assume that you are questioning their intelligence. Good Approach: Use well-thought questions and have a plan to deviate from the Socratic method to a directive method if you recognize Socratic is not productive.

I will add though (and I think Ray agrees) that it is important that you surround yourself with people who mesh well with you in your natural state so that you do not have to worry about adapting and you can focus on delivering the highest level of excellent work in your natural state.

“The happiest people discover their own nature and match their life to it.”

In addition, Dalio discusses a formal process for having disagreements. Within his process he has a couple ideas that stuck out and I have heard in other places. One idea is the 2 Minute Rule. This is a rule that you must allow 2 minutes for everyone to state their ideas without interruption so that they have adequate time to get their point across. Another idea is to clearly define or understand who is the ruling party (RP). This is the person (or group) outside of the disagreement would be the authority on the subject and could be utilized to resolve the matter if the need arose.

“Thoughtful disagreement is not a battle; its goal is not to convince the other party that he or she is wrong and you are right, but to find out what is true and what to do about it.”

Other Takeaways of Interest

• Baseball Cards – Great article here that talks about the idea and implementation.
• Hiring and Firing – Aside from my limited experience and the experiences of my friends, I don’t know what options and opinions exists around hiring and firing. In this book Dalio puts his principles in this regard clearly for everyone to hear and understand.

“My approach was to hire, train, test, and then fire or promote quickly, so that we could rapidly identify the excellent hires and get rid of the ordinary ones, repeating the process again and again until the percentage of those who were truly great was high enough to meet our needs.”

• Everything is a Machine – Dalio believe wholeheartedly in power of simulations. He even looks at the world through the lens that everything, including people, can and should be perceived as machines. He feels strongly that there is a future in which AI will work in collaboration with humans.

Final Thoughts

If you are looking for a new perspective that might go against the grain of the corporate culture you are working in, then you may want to give Principles a look. As he makes clear in the audiobook, it is important to question these principles and formulate principles of you own. I plan to take this advice seriously and formulate my own principles as well as think about how I might integrate some of these principles into my life. We must question ourselves and our environment regularly to make sure that we are following our own principles and staying true to ourselves. Thanks Ray for taking the time to write down your principles and for sharing the with the rest of the world.