I finished this book in May 2021. I recommend this book 10/10.
Ray Dalio is the founder of investment firm Bridgewater. A billionaire, sharing the principles that took him from growing up in a middle-class family to sit at the table with kings and presidents. He shares how he managed his people to raise themselves and his company above the rest.
The first 100 pages of this book were interesting; the next 200 were a little hard to get through; however, the last 100 were magnificent! Get your copy here.
Imagine that in order to have a great life, you have to cross a dangerous jungle. You can stay safe where you are and have an ordinary life, or you can risk crossing the jungle to have a terrific life. How would you approach that choice? Take a moment to think about it because it is a sort of choice that, in one form or another, we all have to make.
When faced with the choice between two things you need that are seemingly at odds, go slowly to figure out how you can have as much of both as possible. There is almost always a good path that you just haven't figured out yet, so look for it until you find it rather than settle for the choice that is then apparent to you.
Heroes don't begin as heroes; they just become because of the way one thing leads to another. Check out pages 109, 110, and 111 for a detailed Hero journey.
When you account weakness, you have four choices:
You can deny then (Which is what most people do.)
You can accept them and work at them in order to try to convert them into strengths (Which might or might not work depending on your ability to change.)
You can accept your weaknesses and find ways around them.
Or, you can change what you are going after.
Use the 5-Step process to get what you want out of life:
Have clear goals.
Identify and don't tolerate the problems that stand in the way of your achieving those goals.
Accurately diagnose the problems to get at their root causes.
Design plans that will get you around them.
Do what's necessary to push these designs through to results.
Practice radical open-mindedness:
Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with "not knowing" is more important than whatever it is you do know.
Recognize that decision-making is a two-step process: First, take in all the relevant information, then decide.
Don't worry about looking good: worry about achieving your goal.
Realize that you can't put out without taking in. You need to prioritize learning and listening, over opinions and talking.
Recognize that to gain the perspective that comes from seeing things through another's eyes. You must suspend judgment for a time—only by empathizing can you properly evaluate another point of view.
Remember that you're looking for the best answer, not simply the best answer that you can come up with yourself.
Be clear on whether you are arguing or seeking to understand, and think about which is most appropriate based on your and other's believability.
Sometimes small things can be important—for example, that little rattle in your car's engine could be a loose piece of plastic, or it could be a sign your timing belt is about to snap. The key is having the higher-level perspective to make fast and accurate judgments on what the real risks are without getting bogged down in details.
One of the most important decisions you can make is who you ask questions of.
Don't believe everything you hear.
Everything looks bigger up close.
New is overvalued relative to great.
Don't over-squeeze the one small dot of data.
To get the best results out of yourself and others, you must understand that people are wired very differently. In a nutshell, learning how to make decisions in the best possible way and learning to have the courage to make them comes from a) going after what you want, b) failing and reflecting well through radical open-mindedness, and c) changing/evolving to become ever more capable and less fearful.
I learned that the more caring we gave each other, the tougher we could be on each other, and the tougher we were on each other, the better we performed and the more rewards there were for us to share.
In managing others who make mistakes, it's important to know the difference between 1) capable people who made mistakes and are self-reflective and open to learning from them, and 2) incapable people or capable people who aren't able to embrace their mistakes and learn from them. Over time I've found that hiring self-reflective people is one of the most important things I can do.
If you don't mind being wrong on the way to being right, you'll learn a lot—and increase your effectiveness. But if you can't tolerate being wrong, you won't grow, you'll make yourself, and everyone around you miserable, and your work environment will be marked by petty backbiting and malevolent barbs rather than by a healthy, honest search for truth.
"You have to have a willingness to repeatedly fail. If you don't have the willingness to fail, you're going to have to be very careful not to invent."~ Jeff Bezos.
In the end, what you need to do is simple:
Remember the goal.
Give the goal to people who can achieve it (which is best) or tell them what to do to achieve it (which is micromanaging and, therefore, less good).
Hold them accountable.
If they still can't do the job after you've trained them and given them time to learn, get rid of them.
Remember the force behind the thing. Who are the people in your organization behind the results and culture that make it special? Think about who they are and how they work together to make it what it is.
The world is littered with once-great organizations that deteriorated because the initial waves of excellence faded, and the leadership failed to adequately adapt by changing the people and the designs. There are also a few organizations that keep reinventing themselves to go on to new heights of greatness.
Great managers are not philosophers, entertainers, doers, or artists. They are engineers. They see their organizations as machines and work assiduously to maintain and improve them. They create process-flow diagrams to show how the machine works and to evaluate its design.
Like great musicians, all great managers have both creativity and technical skills. And no manager at any level can expect to succeed without the skill set of an organizational engineer.
In constructing your metrics, imagine the most important questions you need answering in order to know how things are going and imagine what numbers will give you the answer to them. Don't look at the numbers that you have and try to adapt them to your purpose because you won't get what you need. Instead, start with the most important questions and imagine the metrics that will answer them.
Beware of paying too much attention to what is coming at you and not enough attention to your machine.
Don't get distracted by shiny objects.
Remember that for every case you deal with, your approach should have two purposes 1) to move you close to your goal and 2) to train and test your machine (Your people and your design.)
Everything is a case study.
When a problem occurs, conduct the discussion at two levels: 1) the machine level (why the outcome was produced) and 2) the case-at-hand level (what to do about it.)
If you don't know your people well, you don't know what you can expect from them. You're flying blind, and you have no one to blame but yourself if you don't get the outcome you're expecting.
If you aren't working with people, you care about and respect, your job probably isn't the one for you.
The most effective leaders work to 1) open-mindedly seek out the best answers and 2) bring others along as part of that discovery process. That is how learning and getting in sync occurs. A truly great leader is appropriately uncertain but well equipped to deal with that uncertainty through open-minded exploration. All else being equal, I think the kind of leader who looks and acts like a skilled ninja will beat the kind of leader who looks and acts like a muscular action hero every time.
If you're leading well, you shouldn't be surprised if people disagree with you. The important thing is for you to be logical and objective in assessing your probabilities of being right.
It's not logical to believe that what the average person thinks is better than what you and the most insightful people around you think because you have earned your way into your higher-than-average position, and you and those insightful people are more informed than the average person. If the opposite were true, then you and the average man shouldn't have your respective jobs. In other words, if you don't have better insights than them, you shouldn't be a leader—and if you do have better insights than them. Don't worry if you are doing unpopular things.
The sucked-down phenomenon is what happens when a manager chronically fails to properly redesign an area of responsibility to keep him or herself from having to do the job that others should be capable of doing well. You can tell this problem exists when the manager focuses more on getting tasks done than on the operations of his or her machine.
Put things in perspective by going back before going forward. Before moving forward with a new plan, take the time to reflect on how the machine has been working up until now. Sometimes people have problems putting current conditions into perspective or projecting into the future. Sometimes they forget who or what caused things to go well or poorly.
On your way to your goals, you will inevitably encounter problems. To be successful, you must perceive and not tolerate them. Problems are like coal thrown into a locomotive engine because burning them up—inventing and implementing solutions for them—propels us forward. Every problem you find is an opportunity to improve your machine. Identifying and not tolerating problems is one of the most important and disliked things people can do.
To diagnose problems, ask the following questions:
Is the outcome good or bad?
Who is responsible for the outcome?
If the outcome is bad, is the responsible party incapable and/or is the design bad
Managers usually fail or fall short of their goals for one or more of five reasons.
They are too distant.
They have problems perceiving bad quality.
They have lost sight of how bad things have become because they have gotten used to it.
They have such high pride in their work 9or such large egos) that they can't bear to admit they are unable to solve their own problems.
They fear adverse consequences from admitting failure.
Focusing solely on first-order consequences, which people tend to do, can lead to bad decision-making. For example, if you asked me if I'd like to not have rainy days, I probably would say yes if I didn't consider the second and third- order Consequences.
An organization is the opposite of a building: Its foundation is at the top, so make sure you hire managers before you hire their reports.
Recognize that everyone has too much to do. Besides working longer hours, there are 3 things you can do. 1) having fewer things to do by prioritizing and saying no, 2)finding the right people to delegate to, and 3) Improving your productivity.
It makes no sense to get frustrated when there's so much you can do and when life offers so many things to savor. Your path through any problem is outlined in these principles—and in others, you'll discover yourself. There's nothing you can't accomplish if you think creatively and have the character to do the difficult things.
An idea meritocracy requires people to do three things: 1) Put their honest thoughts on the table for everyone to see, 2) Have thoughtful disagreements where there are quality back-and-forths in which people evolve their thinking to come up with the best collective answers possible, and 3) Abide by idea-meritocratic ways of getting past the remaining disagreements (such as believability-weighted decision making.
Four helpful ways to create metrics: 1) know what goal your business is achieving, 2) understand the process for getting to the goal (your machine with its people and design), 3) identify the key parts in the process that are the best places to measure, so you know how your machine is working to achieve the goals, and 4) explore how to create levers, tied to those key metrics, that allow you to adjust your process and change your outcomes.