Black and white portrait of Ray Dalio: Narrator and Creator of Life Principles

Principles are ways of successfully dealing with reality to get what you want out of life.

Ray Dalio, one of the world’s most successful investors and entrepreneurs, cites principles as his key to success.

Work Principle

When evaluating whether to outsource a function you currently do in house, make sure to weigh quality, economics, the loss of institutional knowledge, and security.

  1. Quality Control. When someone doing work for you is an employee, you are responsible for the quality of their work. But when the person working for you works for another company, you're operating by their standards, so it's important to know whether their standards are as high or higher than yours.
  2. Economics. If a full-time person is required, it is almost certainly more cost-effective to create a position. Consultants' daily rates add up to considerably more than the annualized cost of a full-time person.
  3. Institutionalization of Knowledge. Someone who is around your environment on an ongoing basis will gain knowledge and an appreciation of your culture that no outsider can.
  4. Security. Having outsiders do the job substantially increases your security risks, especially if you can't see them at work (and monitor whether they follow proper precautions, like not leaving sensitive documents on their desks).

You have to consider whether you should be outsourcing or developing capabilities in-house. Though temps and consultants are good for a quick fix, they won't augment your capacities in the long term.

Work Principle

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Life Principles

Work Principles

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