Although 2022 might not have been the best year yet, January brings a clean slate and the ability for each of us to make a fresh start. If you are striving to do better in business, then you need some guiding principles to follow. The ideas in Ray Dalio’s book Principles: Life and Work have been tested in the furnace of life, and are a good place to start.
Life Lessons for Better Business
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, 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.
People are the Heart
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
Honesty is the Best Policy
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.”
Surround Yourself With a Great Team
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.
Make a resolution to create some guiding principles for 2023. Whether you borrow Dalio’s tried and true principles, or focus on your own ideas, with some ingenuity and passion you can make it great!