Book Notes – Principles
- Part 1: The purpose and importance of having principles in general
- Part 2: Ray’s fundamental life principles
- Part 3: Ray’s management principles
If you are looking to get the most bang for your buck… I suggest that you read Parts 1 and 2, and the beginning of Part 3… which will give you nearly the whole picture.
The core theme of the book:
- Decide what you want
- Establish what is currently true
- Decide what to do about it
Principles are concepts that can be applied over and over again in similar circumstances as distinct from narrow answers to specific questions.
Principles are ways of successfully dealing with the laws of nature or the laws of life. Laws of nature is an interesting point; understand them as they can’t be changed, so you must work with them.
Part 1: The Importance of Principles
What are principles?
- Your values are what you consider important, literally what you “value.”
- Principles are what allow you to live a life consistent with those values.
- So, principles are like formulae that say “Given scenario X, I should do Y, because that aligns with my value of Z”.
Why are principles important?
- Without principles, you would be forced to react to circumstances that come at you without considering what you value most and how to make choices to get what you want.
- They help to react with a long-term view of what you are trying to achieve.
Where do principles come from?
- Sometimes we forge our own principles and sometimes we accept others’ principles, or holistic packages of principles, such as religion and legal systems.
- Holding incompatible principles can lead to conflict between values and actions
- Your principles need to reflect values you really believe in.
Do you have principles that you live your life by? What are they?
- Individuals’ principles determine how they interact
- People with shared values and principles generally get along
- People who don’t will experience misunderstandings and conflicts
How well do you think they will work, and why?
- Every time we face hard choices, we refine our principles by asking ourselves difficult questions
- To be most effective, each principle must be consistent with your values, and this consistency demands that you ask: Why?
- E.g. “I won’t steal”. Why? Because you feel empathy for your potential victim? Because you fear getting caught?
Part 2: My Most Fundamental Life Principles
Time is like a river that will take you forward into encounters with reality that will require you to make decisions. You can’t stop the movement down this river, and you can’t avoid the encounters. You can only approach these encounters in the best way possible.
TL;DR: You can’t avoid making decisions; make the right ones.
How to think for yourself:
- Work for yourself (or, set your own goals)
- Come up with independent opinions
- Stress-test them
- Be wary about being overconfident
- Reflect on the consequences of your decisions and constantly improve
Failure is mostly due to not accepting and successfully dealing with the realities of life.
Figuring out what is true – including “bad stuff” like mistakes and personal weakness – allows you to deal with these things so that they don’t geet in the way.
You should always establish what is true so that you don’t act on misguided information.
In short, I learned that being totally truthful, especially about mistakes and weaknesses, led to a rapid rate of improvement and movement toward what I wanted.
Having questions is better than having answers because it leads to more learning.
Most learning comes via making mistakes and reflecting on them.
If you accept realities you can learn to work with them rather than fight against them.
Success is achieved by those who see what’s possible (deeply understand reality) and figure out how to make their goal happen.
an accurate understanding of reality is the essential foundation for producing good outcomes
It is pursuit of self-interest that motivates people to push themselves to do the difficult things that benefit them and that contribute to society. In return, society rewards those who give it what it wants.
There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes.
As Darwin described, adaptation—i.e., adjusting appropriately to changes in one’s circumstances—is a big part of the evolutionary process, and it is rewarded. That is why some of the most successful people are typically those who see the changing landscape and identify how to best adapt to it.
All things in nature have innate attributes that are both good and bad, with their goodness and their badness depending on what they are used for.
Most people dislike others exploring their weaknesses because it makes them feel attacked, which produces fight or flight reactions; having others help one find one’s weaknesses is essential because it’s very difficult to identify one’s own.
The Personal Evolutionary Process
the quality of our lives depends on the quality of the decisions we make
Reality + Dreams + Determination = A Successful Life
It is a fundamental law of nature that to evolve one has to push one’s limits, which is painful, in order to gain strength.
When we encounter pain, we are at an important juncture in our decision-making process.
If you can develop a knee-jerk reaction to pain that is to reflect rather than to fight or flee, it will lead to your rapid learning/evolving.
Pain + Reflection = Progress
People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices.
Ask yourself, “Is it true?”
People who are interested in making the best possible decisions rarely are confident that they have the best possible answers
How much do you worry about looking good relative to actually being good?
People who overweigh the first-order consequences of their decisions and ignore the effects that the second- and subsequent-order consequences will have on their goals rarely reach their goals.
Quite often the first-order consequences are the temptations that cost us what we really want.
Think beyond the immediate consequenses of a decision
Blaming bad outcomes on anyone or anything other than one’s self is essentially wishing that reality is different than it is.
Successful people understand that bad things come at everyone and that it is their responsibility to make their lives what they want them to be by successfully dealing with whatever challenges they face.
The more you operate in your “stretch zone,” the more you adapt and the less character it takes to operate at the higher level of performance.
Hold yourself accountable
Your Two Yous and Your Machine
Those who are the most successful are capable of “higher level thinking”—i.e., they are able to step back and design a “machine” consisting of the right people doing the right things to get what they want.
If your machine is not achieving the goals you set, you can either modify the design or the people.
I call it “higher level thinking” because your perspective is that of one who is looking down at your machine and yourself objectively
You need to take a step back to design, operate and improve your machine.
You also need to assess yourself objectively. Are you the best person for the part in the machine?
- Have clear goals.
- Identify and don’t tolerate the problems that stand in the way of achieving your goals.
- Accurately diagnose these problems.
- Design plans that explicitly lay out tasks that will get you around your problems and on to your goals.
- Implement these plans—i.e., do these tasks.
Approach as distinct steps; the process is iterative.
Each step requires different skills.
You can have virtually anything you want, but you can’t have everything you want.
Easy to pursue too many goals at the same time, achieving few or none.
- Goals are things you want to achieve
- Desires are things you want
Avoid setting goals based on what you think you can achieve.
Once you commit to a goal, it might take lots of thinking and many revisions to your plan over a considerable time period in order to finalize the design and do the tasks to achieve it.
Achieving your goals isn’t just about moving forward – goals aren’t just those things that you want and don’t have. They might also be keeping what you do have, minimizing your rate of loss, or dealing with irrevocable loss.
Identifying and Not Tolerating Problems
Most problems are potential improvements screaming at you.
If you are unable to distinguish the big problems from the little ones, you can’t “successfully” (i.e., in a practical way) identify problems.
It is essential to identify your problems with precision, for different problems have different solutions.
- Willpower? Start small and build confidence
- Skill? Training, or get someone else
Difficult to identify weaknesses because:
- Most people don’t go looking for their weaknesses
- Its hard to perceive weaknesses when you don’t know you’re bad at something
Having people show you what you’re missing – while painful – is essential.
Once you identify your problems, you must not tolerate them.
Diagnosing the Problems
You will be much more effective if you focus on diagnosis and design rather than jumping to solutions. Diagnosing and designing are what spark strategic thinking.
- Proximate causes are typically described via verbs
- Root causes are typically described with adjectives
Designing the Plan
Most of the movement toward your goals comes from designing how to remove the root causes of your problems.
It’s essential to visualize the story of where you have been (or what you have done) that has led you to where you are now and what will happen sequentially in the future to lead you to your goals.
Then write down the plan so you don’t lose sight of it, and include who needs to do what and when.
You must not lose sight of the goals or the story while focusing on the tasks.
Doing the Tasks
It is critical to know each day what you need to do and have the discipline to do it.
You need to know whether you (and others) are following the plan, so you should establish clear benchmarks. If not, you need to diagnose why and resolve the problem.
Goals are the sole purpose of designs and tasks
Weaknesses Don’t Matter if You Find Solutions
- Life is like a game where you seek to overcome the obstacles that stand in the way of achieving your goals.
- You get better at this game through practice.
- The game consists of a series of choices that have consequences.
- You can’t stop the problems and choices from coming at you, so it’s better to learn how to deal with them.
- You have the freedom to make whatever choices you want, though it’s best to be mindful of their consequences.
- The pain of problems is a call to find solutions rather than a reason for unhappiness and inaction, so it’s silly, pointless, and harmful to be upset at the problems and choices that come at you (though it’s understandable).
- We all evolve at different paces, and it’s up to you to decide the pace at which you want to evolve.
- The process goes better if you are as accurate as possible in all respects, including assessing your strengths and weaknesses and adapting to them.
Part 3: Management Principles
If a group is not clear about its principles, confusion and eventually gravitation toward the population’s averages will result.
An organisation is just a machine for achieving goals.
Lots of quality feedback loops produces a steep upward trajectory.
Short summary of management principles:
- To Get the Culture Right
- Trust in Truth
- Create a Culture in Which It Is OK to Make Mistakes but Unacceptable Not to Identify, Analyze, and Learn From Them
- Constantly Get in Sync
- To Get the People Right
- Recognize the Most Important Decisions You Make Are Who You Choose to Be Your Responsible Party
- Recognize that People Are Built Very Differently
- Hire Right, Because the Penalties of Hiring Wrong Are Huge
- Manage as Someone Who Is Designing and Operating a Machine to Achieve the Goal
- Probe Deep and Hard to Learn What to Expect from Your “Machine”
- Evaluate People Accurately, Not “Kindly”
- Train and Test People Through Experiences
- Sort People into Other Jobs at Bridgewater, or Remove Them from Bridgewater
- To Perceive, Diagnose, and Solve Problems
- Know How to Perceive Problems Effectively
- Diagnose to Understand What the Problems Are Symptomatic Of
- Put Things in Perspective
- Design Your Machine to Achieve Your Goals
- Do What You Set Out to Do
- To Make Decisions Effectively
- Recognize the Power of Knowing How to Deal with Not Knowing
- Make All Decisions Logically, as Expected Value Calculations
- Remember the 80/20 Rule, and Know What the Key 20% Is
Each bullet point here has 10-20 child points that expand on the point in detail.