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

Foster an environment of confidence and fairness by having clearly-stated principles that are implemented in tools and protocols so that the conclusions reached can be assessed by tracking the logic and data behind them.

In all organizations, it's always the case that some of the people judged to be ineffective will argue that those judgments are wrong. When that happens, a data- and rules-based system with clearly laid-out criteria allows less room for such arguments and greater belief that the system is fair. Though the system won't be perfect, it is much less arbitrary--and can much more easily be examined for bias--than the much less specified and much less open decision making of individuals with authority. My ideal is to have a process in which everyone contributes criteria for good decision making and those criteria are assessed and selected by appropriately assigned (believable) people. If people maintain the right balance of open-mindedness and assertiveness so they understand where they are and aren't believable to make decisions, having these open discussions on the criteria for assessing and managing people can be very powerful in building and reinforcing the idea meritocracy.

We have early-stage tools that achieve these things and we are striving to refine them so that our people management system operates as effectively as our investment management system.

Even with its imperfections, our evidence-based approach to learning about people, guiding them, and sorting them is much fairer and more effective than the arbitrary and subjective management systems that most organizations still rely on. I believe that the forces of evolution will push most organizations toward systems that combine human and computer intelligence to program principles into algorithms that substantially improve decision making.

In the Appendix, I've provided detailed descriptions of a number of the tools and protocols that support this idea-meritocratic approach and reinforce the behaviors that people need to operate consistently with it. They are designed to help us achieve our goals of 1) learning what people are like, 2) sharing what people are like, 3) providing personalized training and development, 4) offering guidance and oversight in specific situations, and 5) helping managers sort people into the right roles or out of the company based on what they are like and what is required.

You don't need to use these same tools and protocols for your own idea meritocracy, but you should have ways of producing the internalized learning that it will require. While ours have evolved a lot, yours don't have to be as fancy or automated. For example, providing a form or a template to help guide people through the steps required for them to manage their work or carry out a process will yield better results than expecting them to just remember--or figure it out--on their own.

How you decide to use tools and protocols is up to you. The main point I want to make here is that they're important.

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