5 steps to success

• They are iterative
• Do them ONE at a time!

Step 1: Have clear goals

• You shoulder (almost) never drop a goal because you think it’s unattainable!

Step 2: Identify problems/obstacles

• Bring problems to the surface, so you can learn from them
• Don’t mistake causes with problems!
  • Problem = Poor performance
  • Cause = Not getting enough sleep
• While the logical part of your brain knows it’s good to address your problems, your emotional part hates it

Step 3: Diagnose the root cause

• Diagnose before proposing solutions
• Find the disease rather than the symptoms (look at ROOT causes, rather than proximate causes)
  • Symptoms = I missed the train because I didn’t buy train tickets
  • Disease = I missed the train because I’m forgetful

Step 4: Design principles for avoiding the problems/obstacles in the future

Step 5: Follow the principles

What are principles?

• Principles = Decision making criteria

How to find principles?

• Categorize situations and find principles for dealing with them:
  • Pain + Reflection (find the root cause) = Principles

• Use other peoples principles
• What do do when experiencing a new type of situation you don’t have principles for?
  • Find someone who has!

How to improve your principles?

• Analyze previous decisions to see if they would have worked
• Write them down as algorithms a computer can run!
  • Computers can process more information and are unemotional!
  • Compare your intuitions with the decisions made by the computer:
    • If the computer were right and your intuition were wrong, examine why
    • If your intuition was right and the computer were wrong, consider updating the principles the computer uses

Life principles

Understand your 2 biggest barriers

1. Ego barrier
   • It’s hard to see your own weaknesses & mistakes!
2. Blind spot barrier
   • We all see the world differently (Linear vs. lateral thinking, big picture vs. details, etc.)

Solve your 2 biggest barriers with open-mindedness

• Realize that others might see something more accurately than you
  • The probability that you have the best answer is really low!
• How to be more open minded?
  • Explore different points of view while being in the state of “not knowing”.
  • Understand the arguments of the smartest people who disagree with you
  • When someone is more believable than yourself, place them as teacher and yourself as student
  • If everybody disagrees with you, try to figure out the reason for it!

Humility

• Humility is important, because it’s required for seeking help from others
• Knowing a lot + humility is better than either alone!

Radical transparency

Seeing yourself as a machine within a bigger machine

• It’s more important to be a designer of your machine, than a worker of your machine (even though both are important)
• How to improve your machine?
  • Identify recurring problems!
  • Compare your outcomes with your goals!

Consider whether to find big picture or in details

• Only go into details when necessary

Understand that we are all wired differently

• Just like we are born with physical constraints, we are also born with mental constraints
  • Some can be changed through training while others can’t.
  • Brain plasticity is real, but the brain isn’t 100% mallable
• Find ways of dealing with your weaknesses
  • Deny them (what most people do)
  • Turn them into strengths
  • Find workarounds
  • Pursue different goals
  • Get help
• We are preprogrammed with learning
  • We are instinctively afraid of snakes, but not of flowers
• You have to see yourself and others objectively
  • Looking at yourself objectively is hard, so get help from others input!

Work principles

• Understand that most people will operate according to their own interests

Make believability-weighted decisions

• Believable people are those who have repeated successes and can explain the cause-effect relationships behind them
• Bridgewater’s dot collector lets them see the believability-weighted conclusion and the equal-weighted conclusion, to see if there are any disagreements
  • The dot collector uses ratings on different attributes (creativity, expertise in subject, etc. ) from peers & tests.

How Ray Dalio operates Bridgewater

Personality tests they use

• MBTI
• The workplace personality inventory
• The team dimensions profile
• Stratified systems theory

Coach

• Library of common scenarios and the principles to apply

Dot collector

• See each others thought in real time
• Give each other positive or negative dots for specific attributes, which is dynamically inserted into a grid for everyone to see

Baseball cards

• Information from reviews, tests, choices they make, etc.
  • This information is analyzed by computers to generate people’s strengths & weaknesses on the baseball cards

People profile

• A text summary of the baseball cards

Combinator

• Name some people you would like to solve a problem, and then it synthesizes their strengths and find similar people

Issue log

• Who made which mistake?
• How severe?

Pain button

• Lets people record their pain as they experience it
• Later they are prompted to reflect on it to make progress (because of his principle “pain + reflection = progress”)

Dispute resolver

• A series of guided questions to resolve disputes

Daily update tool

• For employees to report what they did, issues & reflections on those issues

Contract tool

• For everything people agree to do at meetings

Process flow diagrams

• Who has which responsibilities?

Policy & procedural manual

• Instructions for how to behave

Metrics

• Find them by:
  • Knowing your goals
  • Knowing the processes that lead to those goals
  • Finding the best places in the processes to measure
  • Find levers that affect those metrics

Making decisions

• Based on your knowledge your decide which actions to take to pursue your goals, which are based on your values
• Have the best possible life by:
  • Knowing what the best decisions are
  • Having the courage to make them

Techniques for good decision making

• Use logic, reason and common sense!
  • Make expected value calculations
    • Value of decision = (Benfits * likelihood of benefits) – (cost * likelihood of cost)
  • Compare the benefit of gathering more information with the cost of waiting to decide.
• Perhaps get someone else to make your decision?

Getting perspective

• Be wary of emotional decision making
  • What feels good in the moment might be bad long-term
• When facing two seemingly opposed decisions, get the best of both worlds?
• A group can make better decisions than an individual!
• Remember that everything seems much bigger in the moment than in retrospect
• Get rid of irrelevant details, so you can see what’s important!
  • Also, usually don’t seek more than the 20% of information that gives you 80% of the results!

Other

How much better is it to be REALLY successful?

• He experienced everything from being down to being on top
  • Talked to those he wanted to talk to!
  • Gone where he wanted to go!
  • Gotten everything he wanted to own!
  • Done everything he wanted to do!
• But he says it wasn’t much better than having basic needs meet: Good bed, relationships, food & sex!
  • He is still struggling
  • The people at the top weren’t that much more special
  • Having a lot comes with heavy burdens
  • Being well known is probably worse than being anonymous
  • Even his impact was small, when putting things in perspective

We are insignificant

• You are 1 out of 7 billion people, which is 1 out of 10 million species on the planet, which is 1 out of 100 billion planets in our galaxy, which is 1 out of about 2 trillion galaxies
• Your life is 1/3000 of humanity’s existence, which is 1/20.000 of the earths existence

Investing advice

• Make many uncorrelated bets