3 Big Ideas From Ray Dalio’s “Principles”

Principles by Ray Dalio

Ray Dalio’s Principles is a 552 page tome which is his attempt to pass on the lessons he learned for living a fulfilling personal life and successful professional life. The book is broken into three parts: autobiography, life principles, and work principles. I personally found parts one and three to be the best parts of the book since much of his life principles were encapsulated in the format of a story through his autobiography section. 

The book is extremely well organized, and the latter two parts are actually formatted as a summary; he presents broader principles and then uses bullets to explain sub principles. 

All that to say, this book would be a difficult one to summarize since it is long and formatted as a summary. As such, I’m going to present 3 big ideas from the book:

  1. Pain + Reflection = Progress

Ray believes that we must treat pain as a signal that we need to find a solution. From his observations, those who waited until a painful situation passed missed out on the lessons that could have been provided whereas those who use it as a signal to reflect are consistently evolving. This reflection time is the best time to establish principles, which leads to the second big idea…

  1. Use Principles

Although Ray doesn’t discuss this much in the book, my biggest takeaway is the importance of building out my own principles document. Ray used the painful situations he faced to define a principle for handling it the next time he faced it by simplifying the problem. That way each new situation you face you can determine if it is “another one of those” where you can use your principles to reduce the amount of decisions you have to make, or modify your principles when you face a new situation which will make you prepared for the next one. 

To make your own principles:

  • Slow down your thinking so you can note the criteria you are using to make your decision.
  • Write down the criteria as a principle.
  • Think about the criteria when you have an outcome to assess, and refine them before the next “one of those” comes along.
  1. View problems as a mechanic looking down on a machine from a higher level.

As far as Ray’s specific advice went, the part of his work principles that discussed “building and evolving your machine” was most practical for my line of work as a manager. Most specifically Ray discusses steps for managers to follow when they face problems, which I will simplify below:

  • Fix the immediate problem.
  • Understand how to prevent the problem in the future.
  • Consider second or third order consequences to the solution you just used.

Everyone has too little time and too much on their plate, so often the second and third steps are skipped. This lesson was a gut-punch for me and became an immediate call to action. 

If you enjoyed one or more of the big ideas, I hope you will consider getting yourself a copy. 


Also by Ray and highly recommended: his famous 30 minute “how the economic machine works” video.

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