There always seems to be a guru offering advice on how to get what you want, be the best you can be, and achieve your goals.
But when the advice is coming from the founder of Bridgewater, one of the world’s biggest and most successful hedge funds – known for successfully challenging norms in both investment and management strategy – it’s probably worth taking the time to evaluate whether his recipe can work for you, your business, and your team.
Writing in his 2017 book “Principles: Life and Work” Dalio outlines the “five distinct steps” which if done well will ensure that anyone “will almost certainly be successful”.
He says you can “use the 5-step process to get what you want out of life”.
While you may not need to adhere to Bridgewater’s famous “radical transparency”, you will need to be honest with yourself and your team.
Have clear goals
Dalio says this is crucial because “your choice of goals will determine your direction”. And among a range of guidelines for setting them, Dalio warns against confusing goals, “something you really need to achieve”, with desires — which are simply “things you want that can prevent you from reaching your goals”.
Identify and don’t tolerate the problems that stand in the way of achieving your goals
Active decision making seems to be at the heart of Dalio’s process: active decisions to determine goals and active decisions to identify and “confront” problems. That’s important because goal attainment will naturally encounter problems.
Some problems will bring people and teams up against their weaknesses. Dalio recognises that “thinking about problems that are difficult to solve may make you anxious, but he says “not thinking about them (and hence not dealing with them) should make you more anxious still”.
Accurately diagnose the problems to get at their root causes
When you run into problems, Dalio has a simple tip to avoid a trap many people and teams fall into.
He says you need to “focus on the ‘what is’ before deciding ‘what to do about it’”.
“Strategic thinking requires both diagnosis and design”, Dalio says, so people and teams should avoid the “common mistake to move in a nanosecond from identifying a tough problem to proposing a solution for it”.
And make sure it’s the root cause that you are diagnosing. “Distinguish the symptoms from the disease,” Dalio says.
Design plans that will get you around problems
Sometimes the achievement of goals can feel like a roller coaster ride. Indeed Dalio’s process recognises exactly this point – sometimes steps need to be retraced, progress consolidated. You may need to “go back before you go forward”.
He says there is more than one path to get to your goal, and you simply need to find the one that works. That can be done by replaying the story of how to came upon the roadblock and then “visualise what you and others must do in the future so you will reach your goals”.
Start high level, and then narrow the focus, he says. That means writing down a plan with buy-in from the team, which is clear and which has enough granularity of detail to allow progress to be measured.
Crucially, this aids accountability.
Do what’s necessary to push these designs through to results
There’s no point in taking the first four steps if you can’t execute the plan. Dalio says you have to follow the “script” you have settled on – your plan. You and your team then need to show the discipline to follow the plan and while doing Dalio says to also “remember the connections between your tasks and the goals you are meant to achieve”.
It’s a simple and as difficult as all that.
One thing Dalio does say you must do to succeed is to follow the steps sequentially but also recognise this is an iterative plan. That means as each step is completed others may be modified.
But the secret is to stay on target — just as Dalio has, building one of the world’s biggest and most successful hedge funds in history.
For more on Ray Dalio and his Principles you can read his interview with Henry Blodget, Business Insider’s founder, soon after the book was published in 2017.
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