Principles

That’s from the Introduction where Dalio sets the stage for the rest of the book. That model of setting audacious goals, failing, learning, improving and then setting more audacious goals sets the tone for the whole book. It’s also captured in an elegantly simple image. (Check it out here.)

Those loops from goal to failure to learning to improving (Optimizing!) to even more audacious goals represents a dynamic evolution that Dalio says is the whole point of life.

We’re going to revisit this looping model in a moment in the context of his 5-Step Process to Get What You Want in Life. But first, let’s take a quick look at why failure (and failing well) is so important and then we’ll get clear on what Dalio thinks is most important in life.

Regarding the importance of failure, Dalio shares his own failures and tells us: “Over the years that followed, I found that most of the extraordinarily successful people I’ve met had similar big painful failures that taught them the lessons that ultimately helped them succeed. Looking back on getting fired from Apple in 1985, Steve Jobs said, ‘It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don’t lose faith. I’m convinced that the only thing that kept me going was that I loved what I did.’

I saw that to do exceptionally well you have to push your limits and that, if you push your limits, you will crash and it will hurt a lot. You will think you have failed—but that won’t be true unless you give up. Believe it or not, your pain will fade and you will have many other opportunities ahead of you, though you might not see them at the time. The most important thing you can do is to gather the lessons these failures provide and gain humility and radical open-mindedness in order to increase your chances of success. Then you press on.”

Recall that Ray Dalio is one of the 100 wealthiest people on the planet.

Was making money his primary goal? No. It was not. It was an “incidental consequence” to his “real goals” of creating meaningful work and meaningful relationships.

In Abundance 101, we talk about the fact that, as we think about creating material wealth in our lives, we want to make sure we do so with an eye on the ultimate currency—the reason we do anything. You know what that is?

HAPPINESS! The only reason we do *anything* is because we think it will make us happy. Of course, it’s wise to step back and make sure we define what happiness means to us and then choose the most efficient means to attain it, eh?

I suggest we pursue a deep, eudaimonic sense of happiness that comes from a sense of flourishing. As Martin Seligman tells us in Flourish via his PERMA model, that includes Positive emotion (aka, we’re enjoying ourselves!), Engagement (in what? meaningful work!), Relationships (!), Meaning, and Achievement.

Guess what? You can boil all that down into two simple things: Meaningful work and meaningful relationships. So… Let’s make those our REAL goals as we remember our ultimate currency and pursue our happiness wisely.

P.S. In Abundance 101 I share Dalio’s story and Stephen King’s. King has the same attitude. In On Writing, he tells us that he “never set a single word down on paper with the thought of being paid for it… I have written because it fulfilled me. Maybe it paid off the mortgage on the house and got the kids through college, but those things were on the side—I did it for the buzz. I did it for the pure joy of the thing. And if you can do it for the joy, you can do it forever.”

Dalio is a big fan of personality assessments and spends some time unpacking them in Principle 4: Understand that People are Wired Very Differently.

In this context, he had some of his friends spend an hour of their time on personality assessments to “discover their values, abilities, and approaches.” The passage above captures what he discovered. A sort of optimal archetype he calls “Shapers.”

Which reminds me of Abraham Maslow’s “Self-Actualizer” and Joseph Campbell’s “Hero.” In Motivation and Personality, Maslow describes the 19 characteristics of his Self-Actualizer. If you haven’t checked them out lately, I highly recommend the Note. You’ll enjoy the parallels.

And, although Dalio humbly resists calling himself or his friends “heroes,” the chapters in his story are mapped out according to Campbell’s model: “My Call to Adventure,” “Crossing the Threshold,” “My Abyss,” “My Road of Trials,” “The Ultimate Boon,” and “Returning the Boon.”

I’m also reminded of Mihaly Csikszentmihalyi’s book Creativity. He did his own research on eminent creators and his #1 finding was the fact that they were, like Dalio’s Shapers, COMPLEX. For our purposes, what Shaper qualities do you see in yourself? What can use some work?

That’s Life Principle #1: “Embrace Reality and Deal with It.”

Our goal? Fall so in love with the process of learning and the mistakes that are an ESSENTIAL (!) part of that process that we experience “mistake learner’s high.”

How? Well, each Principle has sub-principles. Sub-principle 1.1: “Be a hyperrealist.”

Dalio says: “I have become so much of a hyperrealist that I’ve learned to appreciate the beauty of all realities, even harsh ones, and have come to despise impractical idealism.” And… “My point is that people who create great things aren’t idle dreamers: They are totally grounded in reality. Being hyperrealistic will help you choose your dreams wisely and then achieve them.”

Which then leads to a formula in 1.1.a “Dreams + Reality + Determination = A Successful Life.” ← Sounds a lot like WOOP, eh? Indeed it does. Start with a dream. Rub it up against reality. Add some gritty determination and voila! Successful life.

btw: Our last Note was on The Telomere Effect by Nobel Prize winner Elizabeth Blackburn. Her #1 recommendation to Optimize our telomeres? When we face problems, we need to learn how to shift from a threat response to a challenge response.

You know what the ultimate by-product of that mastery is? A mistake-learner’s high.

Welcome to Principle #2: The 5-Step Process to Get What You Want in Life.

This looping process mirrors our prior loop. We start with a Goal then we run into a Problem. We need to Diagnose that problem then Design a solution to it then get to work Doing what needs to get done to execute the solution. (Here’s an elegant image for that.)

Goals + Problems + Diagnosis + Design + Doing. ← I’ve been using this model a TON in my own life and in my 1-on-1 coaching work. It’s REALLY (!!!) powerful.

It’s essentially an even more practical WOOP process designed by an EXTREMELY “believable” and accomplished achiever. Please take the time to walk through it now. (Seriously.)

1. What’s your most important Goal right now? (Clearly define it, know your why, etc.)

2. Now, what Problems are you facing that are preventing you from achieving your goal?

3. Take the time to Diagnose the problem. What, specifically, isn’t working?

4.Now, Design a solution to that problem. What do you need to do?

5. Finally, go do what needs Doing. (And repeat the process with even more audacious goals.)

Here’s how I recently applied to my life/our biz. Goal: Continue to expand impact to fulfill Purpose; specifically: go from 10,000 to 25,000 members. Problem: Our growth was stagnant; Diagnosis: Our marketing sucks (or, more precisely, was nearly non-existent—lol); Design: Insert marketing strategy that will help us grow; Doing: Go crush that strategy.

The important thing to note here is that, when we become hyperrealists, we quit ignoring reality or wish that things were different than they are. Instead, we KNOW that audacious goals come with problems and then we have fun ruthlessly analyzing what’s up and seek solutions.

What’s firing you up these days? What problems are you facing? How will you crush it? 5 step it!

That’s from Principle #5: “Learn How to Make Decisions Effectively.”

For those who may not know, one of Dalio’s strokes of genius was integrating an astonishing amount of historical data with computer-driven algorithms to make investment decisions. He brilliantly combine human intelligence with machine intelligence and tells us that algorithms are SUPER powerful and that “Your children and their peers must learn to speak this language because it will soon be as important or more important than any other language.”

In Principle #4, he talks about how much he loved Charles Duhigg’s The Power of Habit. I want to connect those two concepts here and propose that THE most important algorithms we (and our kids) can learn are the ones that program our brains to do Optimal things on autopilot.

So… I say we have two AIs: Artificial Intelligence—which, of course, is fascinating and powerful. But let’s not forget about another AI: Ancient Intelligence. Specifically, let’s rewind the clock 500 million+ years to the origins of our basal ganglia—that part of our brain that helps put repetitive behaviors on autopilot. Let’s write algorithms to program *that* AI!

How? Precisely the same way Dalio tells us to program our heater and psychologists tell us to set “implementation intentions”: If, then…

Step 1. Decide you want to warm up the house that is your life. Identify the behaviors that keep you nice and warm and happy-toasty. Start programming your AI. For me, it looks like this:

If it’s 5:00 p.m. then it’s shut-down complete and family time. If it’s sundown, then all electronics go off. If it’s after dinner/family time then I read to Emerson. If I’ve read to Emerson then I go to bed. If I wake up in the morning then I meditate, move, and do Deep Work. If my 1,000-second timer goes off and I’m sitting and I haven’t done 25 sets of burpees yet then I stand up and bang out 11 burpees. If I feel fear then I say, “Bring it on!” and do what needs to get done. If this then that. Non-stop Optimize-AI party all day every day.

That’s the ultimate AI. As Dalio says, traditional AI programming can increase productivity by 100,000 fold. Here’s how I do that math with our Ancient Intelligence: If you can make a decision to do the Optimal thing ONCE you save the effort (and enormous amount of willpower) of deciding 1,000+ times. You make 100 wise decisions like that and you just increased your Optimizing efficiency 100,000 fold.

I say we do that. In fact, I challenge you to see if you can come up with 100 algorithms like that! And note: The #1 algorithm? One word: Areté. Here’s to honoring your Principles in pursuit of success in what matters most!