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Principles

The 5-Step Process to Get What You Want Out of Life

Recently, I finished reading Ray Dalio’s “Principles” — one of the most recommended business books of 2017. One of the world’s most successful investors and entrepreneurs, Ray shares the unconventional principles that he’s developed, refined, and used over the past 40 years to create unique results in both life and business — and which any person or organization can adopt to help achieve their goals.

In 1975, Ray Dalio founded an investment firm, Bridgewater Associates, out of his two-bedroom apartment in New York City. 40 years later, Bridgewater has made more money for its clients than any other hedge fund in history and grown into the fifth most important private company in the United States, according to Fortune magazine. Ray himself has been named to Time magazine’s list of the 100 most influential people in the world. Along the way, he discovered a set of unique principles that have led to Bridgewater’s exceptionally effective culture, which he describes as “an idea meritocracy that strives to achieve meaningful work and meaningful relationships through radical transparency.” It is these principles, and not anything special about him — who grew up an ordinary kid in a middle-class Long Island neighborhood — that he believes are the reason behind his success.

In Principles, he shares what he’s learned over the course of his remarkable career. He argues that life, management, economics, and investing can all be systemized into rules and understood like machines. In particular, there is one life principle that really caught my attention. Ray believes that the personal evolutionary process takes place in 5 distinct steps. If you can do those 5 things well, you will almost certainly be successful. I want to share them here as I believe anyone of us can benefit from this systematic process.

The 5-Step Process

First you have to pick what you are going after — your goals. Your choice of goals will determine your direction. As you move toward them, you will encounter problems. Some of those problems will bring you up against your own weaknesses. How you react to the pain that causes is up to you. If you want to reach your goals, you must be calm and analytical so that you can accurately diagnose your problems, design a plan that will get you around them, and do what’s necessary to push through to results. Then you will look at the new results you achieve and go through the process again. To evolve quickly, you will have to do this fast and continuously, setting your goals successively higher.

You will need to do all 5 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. Blurring the steps leads to suboptimal outcomes because it interferes with uncovering the true problems. The process is iterative: Doing each step thoroughly will provide you with the information you need to move on to the next step and do it well.

It is essential that you approach this process in a clearheaded, rational way, looking down on yourself from a higher level and being ruthlessly honest. If your emotions are getting the better of you, step back and take time out until you can reflect clearly. If necessary, seek guidance from calm, thoughtful people.

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1 — Have clear goals

  • Prioritize: While you can have virtually anything you want, you can’t have everything you want. Life is like a giant smorgasbord with more delicious alternatives than you can ever hope to taste. Choosing a goal often means rejecting some things you want in order to get other things that you want or need even more. Some people fail at this point, before they’ve even started. Afraid to reject a good alternative for a better one, they try to pursue too many goals at once, achieving few or none of them. Don’t get discouraged and 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.

2 — Identify and don’t tolerate problems

  • View painful problems as potential improvements that are screaming at you. Though it won’t feel that way at first, each and every problem you encounter is an opportunity; for that reason, it is essential that you bring them to the surface. Most people don’t like to do this, especially if it exposes their own weaknesses or the weaknesses of someone they care about, but successful people know they have to.

3 — Diagnose problems to get at their root causes

  • Focus on the “what is” before deciding “what to do about it.” It is a common mistake to move in a nanosecond from identifying a tough problem to proposing a solution for it. Strategic thinking requires both diagnosis and design. A good diagnosis typically takes between 15 minutes and an hour, depending on how well it’s done and how complex the issue is. It involves speaking with the relevant people and looking at the evidence together to determine the root causes. Like principles, root causes manifest themselves over and over again in seemingly different situations. Finding them an dealing with them pays dividends again and again.
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Ray Dalio himself

4 — Design a plan

  • Go back before you go forward. Replay the story of where you have been (or what you have done) that led up to where you are now, and then visualize what you and others must do in the future so you will reach your goals.

5 — Push through to completion

  • Great planners who don’t execute their plans go nowhere. You need to push through and that requires self-discipline to follow your script. It’s important to remember the connections between your tasks and the goals that they are meant to achieve. When you feel yourself losing sight of that, stop and ask yourself “why?” Lose sight of the why and you will surely lose sight of your goals.

You almost certainly can’t do all these steps well, because each requires different types of thinking and virtually nobody can think well in all these ways. For example, goal setting (such as determining what you want your life to be) requires you to be good at higher-level thinking like visualization and prioritization. Identifying and not tolerating problems requires you to be perceptive and good at synthesis and maintaining high standards; diagnosis requires you to be logical, able to see multiple possibilities, and willing to have hard conversations with others; designing requires visualization and practicality; doing what you set out to do requires self-discipline, good work habits, and a results orientation. Who do you know who has all those qualities? Probably no one. Yet doing all 5 Steps well is required for being really successful;. So what do you do?

Everyone has weaknesses. They are generally revealed in the patterns of mistakes they make. Knowing what your weaknesses are and staring hard at them is the first step on the path to success. You can either fix them or you can get the help of others to deal with them well. The second option requires you to have humility. Humility is as important, or even more important, as having the strengths yourself. Having both is best.

All 5 steps proceed from your values. Your values determine what you want, i.e., your goals. Also keep in mind that the 5 Steps are iterative. When you complete one step, you will have acquired information that will most likely lead you to modify the other steps. When you’ve completed all 5, you’ll start again with a new goal. If the process is working, your goals will change more slowly than your designs, which will change more slowly than your tasks.

Last Takeaway

I would highly recommend you checking this book out. Its hundreds of practical lessons, which are built around his cornerstones of “radical truth” and “radical transparency,” include Ray laying out the most effective ways for individuals and organizations to make decisions, approach challenges, and build strong teams. He also describes the innovative tools the firm uses to bring an idea meritocracy to life, such as creating “baseball cards” for all employees that distill their strengths and weaknesses, and employing computerized decision-making systems to make believability-weighted decisions. While the book brims with novel ideas for organizations and institutions, Principles also offers a clear, straightforward approach to decision-making that Ray believes anyone can apply, no matter what they’re seeking to achieve.

Written by

Blue Ocean Thinker | https://jameskle.com/ | @le_james94

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