Principles – Ray Dalio
Personal | | Nick Fellers
Ray Dalio built Bridgewater into one of the most successful hedge funds in the world. He correctly predicted the 2008 financial crash, and he attributes much of his success to the life lessons he later encoded in the form of Bridgewater Principles. His new book on this subject was just published.
I’ll come back to his book in a minute. But first, I want to talk about the impact these principles have had on The Suddes Group.
After Dalio first published his principles for the public in 2010, I was one of the 3 million people (!!!) who downloaded and devoured them. Inspired by Dalio, I starting writing up Suddes Group’s Principles and first shared them with our team in 2011. TSG Principles have proven to be an effective way to encode and transmit lessons to our team.
Here are a few Suddes Group Principles:
#3. The best knowledge is built (and then owned) by the clients.
We can develop the coolest strategy… or the greatest message… but if it’s not ‘owned’ and internalized by the client, it will not have the full effect. Often, it will not even have a shelf-life!
Facilitating the learning for clients often takes more effort, but it is essential in order for us to have the intended impact.
#10. Do what you need to do for YOU to be able to sell the impact. (I Am Sold Myself)
We’ve developed a lot of systems and frameworks over the years. As much as a team member can and should rely on those ‘encoded lessons,’ each person must take personal responsibility for doing whatever it takes to be SOLD on the program impact (or vision).
We’ve had team members:
- Sit in an ER for two days to observe the traffic.
- Travel to rural outposts to see how health evaluation happens in those communities.
- Dig through aisles of dusty archives to find the perfect ‘historical funding story.’
#19. Never assume a client ‘already knows what he/she is doing (with respect to the scope of work)’. NEVER. (Repeat, a 3rd time, NEVER.)
My greatest mistakes have been when I’ve tried to skip part of our process… when I’ve thought, “He or she knows that already. I’m going to skip over that.”
Don’t assume. Work the process like an airline pilot working a pre-flight checklist.
Back to Principles (the book)….
I’m only half-way into Dalio’s book, but like any book in this format, there are gems and nuggets for the taking; you can choose what resonates most for you. I find the real meat to be in the commentary Dalio provides behind each principle. For instance, he shares this explanation on the distinctions between first-order thinking and second-order thinking:
By recognizing the higher-level consequences nature optimizes for, I’ve come to see that people who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals. This is because first-order consequences often have opposite desirabilities from second-order consequences, resulting in big mistakes in decision-making. For example, the first-order consequences of exercise (pain and time spent) are commonly considered undesirable, while the second-order consequences (better health and more attractive appearance) are desirable. Similarly, food that tastes good is often bad for you and vice versa.
Quite often the first-order consequences are the temptations that cost us what we really want, and sometimes they are the barriers that stand in our way. It’s almost as though nature sorts us by throwing us trick choices that have both types of consequences and penalizing those who make their decisions on the basis of the first-order consequences alone.
By contrast, 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.
This makes me think of the fear that some people have around fundraising. They are stopped by the ‘first-order thinking,’ instead of continuing to consider the second-order consideration: the impact it will have… the lives saved or changed.