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Principles and Radical Transparency - Lessons Learned from Ray Dalio

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Main lesson learned reading the book Principles from Ray Dalio.

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Principles and Radical Transparency - Lessons Learned from Ray Dalio

  1. 1. André Faria @andrefaria principles & radical transparency
  2. 2. I believe that the best way to learn and internalize something new is to teach others about it, that's why I have prepared this presentation about the book. This book has been very helpful to me and I hope that this presentation inspire you to read it, I'm sure it is going to be useful for you too. Get the book now at https://amzn.to/2MinMYq Beware
  3. 3. Raymond Dalio is an American billionaire investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds. [Wikipedia] Ray Dalio Founder of Bridget Water
  4. 4. When two people believe opposite things, chances are that one of them is wrong. Success has more to do with how you deal with what you don't know that about what you do know Idea Meritocracy and Independent Thinking Avoid our natural fight or flight tendency Thoughtful disagreement and the Two Yous Principles can be applied over and over again to similar situations. Write your Principles When you solve a problem and learn new principles from them you get better and better Problems are opportunities for us to evolve A B C D Big Ideas Please write your great title is here
  5. 5. 3 stages in life 1. We are are dependent on other 2. We are working, trying to be successful and others are dependent on us 3. Others no longer depend on us and we no longer have to work, and we have to pass along onto others how to be successful and we are free to live and free to die.
  6. 6. Principles Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals.
  7. 7. Am I Right? My success has more to do with knowing how to deal with not knowing. Embrace the fact that you don’t know everything you need to know.
  8. 8. Confirmation Bias People to confuse what they want to be true with what actually is true.
  9. 9. Believability I define believable people as those who have repeatedly and successfully accomplished the thing in question—who have a strong track record with at least three successes—and have great explanations of their approach when probed.
  10. 10. Believability Believable parties are those who have repeatedly and successfully accomplished something - and have great explanations for how they did it.
  11. 11. Pain It is a fundamental law of nature that in order to gain strength one has to push one’s limits, which is painful. Develop a reflexive reaction to psychic pain that causes you to reflect on it rather than avoid it. View painful problems as potential improvements that are screaming at you. Once you identify a problem, don’t tolerate it.
  12. 12. You are Not Perfect You shouldn’t be upset if you find out that you’re bad at something - you should be happy that you found out, because knowing that and dealing with it will improve your chances of getting what you want.
  13. 13. You can deny them (which is what most people do). You can accept them and work at them in order to try to convert them into strengths (might or might not work depending on your ability to change). You can accept your weaknesses and find ways around them. You can change what you are going after. A B C D Dealing with your weaknesses Which solution you choose will be critically important to the direction of your life.
  14. 14. Process You will need to do all five steps well to be successful and you must do them one at a time and in order. For example, when setting goals, just set goals... Don’t think about how you will achieve them or what you will do if something goes wrong. When you are diagnosing problems, don’t think about how you will solve them - just diagnose them. 1. Have clear goals. 2. Identify and don’t tolerate the problems that stand in the way of your achieving those goals. 3. Accurately diagnose the problems to get at their root causes. 4. Design plans that will get you around them. 5. Do what’s necessary to push these designs through to results.
  15. 15. Prioritize While you can have virtually anything you want, you can’t have everything you want. Don’t let yourself be paralyzed by all the choices. You can have much more than what you need to be happy. Make your choice and get on with it.
  16. 16. What's Your Weakness?Everyone has at least one big thing that stands in the way of their success; find yours and deal with it. Ego and blind spots are the fatal flaws that keep intelligent, hardworking people from living up to their potential.
  17. 17. Open your Mind Closed-minded people don’t want their ideas challenged. They are typically frustrated that they can’t get the other person to agree with them instead of curious as to why the other person disagrees. Open-minded people are more curious about why there is disagreement. Closed-minded people are more likely to make statements than ask questions. Open-minded people genuinely believe they could be wrong. Open-minded people are always more interested in listening than in speaking. Close-minded people block others from speaking.
  18. 18. Why is so Hard to Disagree? Even about the most simple things like - "I really liked this restaurant..." There is Two Barriers The Ego Barrier and The Blind Spots Barrier
  19. 19. The 2 Yous The Ego Barrier There are no greater battles than those between feeling and thinking. Neuroscientists tell me that there's a part of our brain, which we call the prefrontal cortex, the thoughtful part of our brain, in which we sort of want to be radically straightforward. We'd like to know what our weaknesses is 'cause it's logical. And then there's an emotional part of the brain. We understand the amygdala that is the fight or flight. And it takes disagreement and it converts that into a battle, and it's not easy.
  20. 20. Change! Use feelings of anger/frustration as cues to calm down, slow down, and approach the subject at hand thoughtfully. Record the circumstances in which you’ve consistently made bad decisions because you failed to see what others saw. Write a list, tack it up on the wall, and stare at it. If ever you find yourself about to make a big decision in one of these areas, consult others.
  21. 21. You have Blind Spots! Areas where your way of thinking prevents you from seeing things accurately. Some people naturally see big pictures and miss small details while others naturally see details and miss big pictures; some people are linear thinkers while others think laterally, and so on. Naturally, people can’t appreciate what they can’t see. To make it even harder, we don’t like to see ourselves or others as having blind spots, even though we all have them.
  22. 22. Recognize your Blind Spots if you can recognize that you have blind spots and open-mindedly consider the possibility that others might see something better than you—and that the threats and opportunities they are trying to point out really exist—you are more likely to make good decisions.
  23. 23. Look for the best Answer Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.
  24. 24. Thoughtful Disagreements In thoughtful disagreement, your goal is not to convince the other party that you are right—it is to find out which view is true and decide what to do about it.
  25. 25. Why you made that decision? Most people do not look thoughtfully at the facts and draw their conclusions by objectively weighing the evidence. Instead, they make their decisions based on what their deep-seated subconscious mind wants and then they filter the evidence to make it consistent with those desires. Can you point to clear facts (i.e., facts believable people wouldn’t dispute) leading to your view? If not, chances are you’re not being evidence-based.
  26. 26. Not all opinions matter One of the most important decisions you can make is who you ask questions of. Listening to uninformed people is worse than having no answers at all. The best choices are the ones that have more pros than cons, not those that don’t have any cons at all. Watch out for people who argue against something whenever they can find something - anything - wrong with it, without properly weighing all the pluses and minuses. Such people tend to be poor decision makers.
  27. 27. Write down your principles 1. Slow down your thinking so you can note the criteria you are using to make your decision. 2. Write the criteria down as a principle. 3. Think about those criteria when you have an outcome to assess, and refine them before the next “one of those” comes along. Have principles and use them consistently. Never stop refining and improving them!
  28. 28. Weigh second and third order consequences For example, the first-order 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.
  29. 29. Have Integrity and Demand it from Others Integrity comes from the Latin word integritas, meaning “one” or “whole.” Aligning what you say with what you think and what you think with what you feel will make you much happier and much more successful. Never say anything about someone that you wouldn’t say to them directly and don’t try people without accusing them to their faces.
  30. 30. But Criticism is Good Never say anything about someone that you wouldn’t say to them directly and don’t try people without accusing them to their faces. Criticism should be welcomed and encouraged, but there is never a good reason to bad-mouth people behind their backs.
  31. 31. Dot Collector It is an app used in meetings that allows people to express their thoughts and see others’ thoughts in real time, and then helps them collectively reach an idea-meritocratic decision.
  32. 32. Coach App Coach’s platform is populated with a library of common situations, or “ones of those” (e.g., disagreeing with an assessment someone made, someone lied or did something unethical, etc.), which are linked to the relevant principles to help people handle them.
  33. 33. Baseball Cards A simple way of presenting a person’s strengths and weaknesses and the evidence behind them, based on collected data in numerous ways (meetings, reviews, tests, the choices people make, etc.), all these dots are analyzed via computerized algorithms based on stress-tested logic in order to create pointillist pictures of what people are like. Issue Log: primary tool for recording our mistakes and learning from them. We use it to bring all problems to the surface, so we can put them in the hands of problem solvers to make systematic improvements.
  34. 34. Issue Log Primary tool for recording our mistakes and learning from them. We use it to bring all problems to the surface, so we can put them in the hands of problem solvers to make systematic improvements.
  35. 35. Pain Button I believe Pain+Reflection=Progress. In other words, pain is an important signal that there is something to be learned. The moment someone experiences pain is the best time for them to record what the pain is like, but it’s a bad time to reflect because it’s hard to keep a clear head. So the app is designed to let people record the emotions they are feeling (anger, disappointment, frustration, etc.) as they feel them and then come back at a later time to reflect on them using guided reflection questions.
  36. 36. Dispute Resolver Provides paths for resolving disagreements in an idea-meritocratic way. It asks a series of questions used to guide the people through the resolution process. One of its features is that it locates believable people who can help determine whether a disagreement is worth taking up at a higher management level.
  37. 37. Daily Update For years, I have asked each person who reports to me to take about ten to fifteen minutes to write a brief email of what they did that day, the issues pertaining to them, and their reflections. Over the last few years, I’ve developed this into a software application that pulls these updates into a dashboard, which makes them much easier to track, record metrics, and respond to than dealing with dozens of separate email threads. It also allows people to easily provide helpful data—like their morale, how heavy their workload is, issues they want to escalate—on a daily basis.
  38. 38. Contract How often have you ended a meeting with everybody saying we should do this or that, but then everybody walks off and nothing actually happens because people lose track of what was agreed upon? The Contract Tool is a simple app that lets people make and monitor their commitments to each other.
  39. 39. Process Flow Diagram Just as an engineer uses flow charts to understand the workflow of what they’re designing, a manager needs a Process Flow Diagram to help visualize the organization as a machine. Create process maps for every department in the company that show clearly all the roles and the responsibilities for each role and how the work flows among them to reach intended outcomes.
  40. 40. Metrics We aim to have metrics that cascade from the most important matters the CEOs are responsible for at the company level, down through the departments, to the teams within them and the people responsible in each role. We talk about four helpful steps to creating good 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 that goal 4) explore how to create levers, tied to those key metrics, that allow you to adjust your process and change your outcomes.
  41. 41. Metrics The test of the effectiveness of metrics lies in whether they can tell you what and who is doing well and poorly, all the way down to specific people.
  42. 42. http://uk.businessinsider.com/bridgewater-employees-rate-performance-dots-2017-2 http://uk.businessinsider.com/bridgewater-associates-job-application-process-2016-8

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