Ray Dalio’s Four Guiding Principles for Business and Life (Part 2 of 2)

In Part 1 last week, we shared about Ray Dalio’s first two principles: 1) Embrace reality and deal with it, 2) Practice radical open-mindedness. Today in Part 2, we are continuing with Dalio’s 3rd and 4th principles, all of which have provided clarity and insight to members of the Executive Forum Silicon Valley (EFSV.)   

Principle #3: Use the 5-step process to evolve

Dalio´s third Principle is a 5-step process that he uses to evolve both personally and in his company. Some of these may seem obvious to you but according to Dalio, what inhibits most people´s growth and evolution is the flawed execution of one or more of these steps.

Let’s look at each in greater detail:

1. Have clear goals

  • Prioritize
  • Be audacious
  • Great expectations create great capabilities

2. Identify and don’t tolerate problems

Identify the biggest problems first
Don’t avoid them because they are rooted in the harsh realities of your business. Once we identify a problem, don’t tolerate it

3. Diagnose problems to get at their root causes

  • Focus on “what is” before deciding “what to do about it”
  • Distinguish symptoms from the true root cause
  • Root causes can be found with honest effort

4. Design plans to get around them

  • There are typically many paths to achieve a goal
  • See the plan as a movie script and be creative
  • It may not take a lot of time to design a good plan

5. Do what’s necessary to push through results – Push through to completion

  • Great planners who can’t execute go nowhere
  • Good work habits are vastly underrated
  • Establish clear metrics to follow your progress

The 5 steps must be completed in order. To evolve, we need to do them fast and continuously. Weaknesses don’t matter if we find solutions by either getting better at it yourself, or finding others to cover your weakness.

Principle #4: Understand how people are wired

Both genetics and environment make people think and act in very different ways. Everyone is unique and people often are not aware of which type of person they truly are. People end up not understanding each other and ignoring others’ points of views and values. Our brains are unique in the way they work. Some of the different ways people are wired are:

Big picture vs Detail-oriented

• Big picture thinkers think detail-oriented people have no imagination

• Detail-oriented people think big-picture people are dreamers

Extroverts vs Introverts

• Extroverts love talking out ideas

• Introverts prefer thinking privately and sharing after they’ve grappled with a problem

Planners vs Doers

• Planners stick with a plan and are rigid to adapt

• Doers change direction often based on new information

Left brained vs. Right brained

• Left-brained people reason sequentially, analyze details and excel in linear analysis

• Right-brained or lateral thinkers think across categories, recognize themes and synthesize

The power of knowing how you and others are wired.  Be curious to understand how people who see things differently came to see them that way, try to understand where they came from. Then, seek to understand our and others’ strengths and weaknesses to get the best results out of everyone. One of the ways is using behavior and personality assessments to get a clearer and more objective reading of people and yourself.

The Power of Habit. Habit is inertia, the strong tendency to keep doing what you have been doing. It can take time to change a habit, yet habit is the easiest way to change our behavior. In nurturing new habits, be patient with yourself and others, provide incentives that are tailored to the individual, and celebrate small wins to create positive momentum.

Putting it all together: “Evolution is life’s greatest accomplishment and reward.”

EFSV members’ insights

Members at the EFSV found the above four guiding principles for business and life tremendously inspiring and helpful. They shared with each other their own new insights and discussed the value of establishing, recognizing and evolving key principles as leaders of organizations. 

Some principles of leaders of the Executive Forums Silicon Valley Forum that have contributed to their business and personal success include: 

  • “Do Right by Others”, 
  • “Be Open to Perspectives that Questions Your Assumptions”, “
  • “Care About People”, 
  • “We Don’t Win Alone”, 
  • “Be Comfortable Holding Multiple Conflicting Points of View”, 
  • “Be Grounded in Reality and Discover Others Points of View”, and 
  • “Never Be Outworked by Others.”

Through learning to specifically identify and declare our principles, we as leaders can respond to the challenges of the day in a consistent and principled manner to help our companies thrive. 


If you are interested in participating or learning more about becoming a member at Executive Forum Silicon Valley, please contact @GlennPerkins at gperkins@executiveforums.com or call 408-901-0321. For more information visit https://execforumssv.com/ 


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