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

Build great metrics.

Metrics show how the machine is working by providing numbers and setting off alert lights in a dashboard. Metrics are an objective means of assessment and they tend to have a favorable impact on productivity. If your metrics are good enough, you can gain such a complete and accurate view of what your people are doing and how well they are doing it that you can almost manage via the metrics alone.

In constructing your metrics, imagine the most important questions you need answered in order to know how things are going and imagine what numbers will give you the answers to them. Don't look at the numbers that you have and try to adapt them to your purposes, because you won't get what you need. Instead start with the most important questions and imagine the metrics that will answer them.

Remember that any single metric can mislead; you need enough evidence to establish patterns. And of course the information that goes into the metrics must be assessed for accuracy. A reluctance to be critical can be detected by looking at the average grade each grader gives; those giving higher average grades might be easy graders and vice versa. Similarly helpful are "forced rankings," in which people must rank co-worker performance from best to worst. Forced rankings are essentially the same thing as "grading on a curve." Metrics that allow for independent grading across departments and groups are especially valuable.

Work Principle

Find a Meaningful Principle for You

Learn to get more of what you want out of life.

Life Principles

Work Principles

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