Principles

Principles is a 2017 nonfiction book by Ray Dalio, a hedge fund manager and founder of Bridgewater Associates. The book describes guiding principles that Dalio has developed over the course of his professional career. Some of the principles are intended to help individuals in their life in general, while others are focused on the workplace. Dalio claims that his principles will help individuals and organizations set goals and make decisions to increase their chances of success. This guide references the 2017 Simon & Schuster edition.

Summary

Principles is divided into three parts. In the first, Dalio shares his background and the story of his professional career. He narrates his childhood on Long Island, New York, his time in college, and the beginnings of his professional career in finance. Dalio founded his own hedge fund, Bridgewater Associates, after struggling to fit in at other companies. He describes the company’s successes and failures during the 1970s and 1980s.

Dalio gradually developed principles to guide Bridgewater more successfully, and the company became a top-ranked hedge fund. He then began to prepare for the next stage in his career, driven by a strong desire to share his knowledge with others. He transitioned out of his role as CEO of Bridgewater, turned his attention to philanthropic projects, and formalized his principles to share them in written form with other individuals and institutions.

In Part 2, Dalio outlines the life principles that he believes will help individuals learn to make the best decisions possible. Dalio encourages individuals to look at situations honestly and realistically. He recommends that they view mistakes positively, as opportunities to learn and grow. What Dalio calls radical open-mindedness involves suspending judgment to gather good information from authoritative sources. By putting the principles together, Dalio suggests, individuals will be poised to make decisions that are more likely to lead to success.

Part 3 focuses on the principles Dalio has developed to guide decision making at Bridgewater. He believes that these principles can be applied to other organizations. Above all, Dalio recommends that organizations pursue an idea meritocracy, in which decisions are made on the basis of the quality of ideas with respect to the experience and critical reasoning abilities of employees. An organization’s ability to make good decisions is vital, according to Dalio. He encourages organizations to be radically transparent and to share information as openly as possible within the organization. Open debates and healthy agreements should be fostered because they will help an organization make better decisions.

Dalio also advises organizations to get their culture right and ensure that employees are a good fit. He envisions successful organizations as continually evolving and believes individual employees should do the same. The section provides advice on how to manage change in organizations by instituting oversight systems and planning for employee transitions. Principles closes with a summary of Dalio’s principles and descriptions of decision-making tools that Dalio has utilized at Bridgewater.