# Principles

Ray Dalio wrote a book, Principles on how he translated his beliefs into a set of organisational rules.

• Very few industries work in the structured, measurable way that his wealth management world does.
• When everybody must adopt a set of principles, such as in a company, they should be up for debate at all times.

How I think about principles

Principles are useful for encoding wisdom, solving future problems by abstracting lessons from previous problems. Meta problem-solving.

Principles offer consistency & predictability, which are ever more useful in large organisations, where people impacted by your future decisions want to subscribe to some sense of what you will do.

Principles are also a strategic tool: This is who we are, what we do, and what we don’t.

They are personal & contextual. They depend entirely on your position & priorities. Principles that work great for my set of circumstances may be adjectly terrible for you, and vice versa.

My Principles for Problem Solving, Decision Making, etc

Simplify & guard simplicity

• Complexity looks smart. Simplicity is smart.
• Prefer several small things, that do obvious & repurposable jobs.
• Simplicity requires clarity, raising the bar for understanding.
• Simplicity usually protects agility & reduces overhead.
• Prefer less to more: Can this problem be solved by subtraction?
• Standardise. Rising tides lift all ships.

Don’t passively accept conventional wisdom

• Most conventional wisdom is correct.
• If it’s right and you don’t know why, you didn’t learn anything.
• If it’s wrong, you verify or you pay.
• Where are the underlying data or first principles?

Agility & Speed are the most important attributes

• You will be wrong & you will make mistakes. It is high-effort to reduce error rates.
• If you’re twice as quick, you can afford twice as many wrong turns.
• Do nothing that reduces long-term speed & agility.
• Prefer the option that leaves the most options. Optionality is agility.
• FEEDBACK. LOOPS.
• Make it safe to change your mind. People double down on their mistakes out of identity & shame.

Attack uncertainty first

• Don’t start with what’s easy.
• Don’t start with what has the most dependency.
• Start with what is unknown. All risk is there.
• Unpicking uncertainty early is a creative endeavour.

Everything is a system, whether you like it or not

• There are always knock-on effects
• Think systematically, or play Whack-a-mole

Invest in world class fundamentals

• There are a limited set of building blocks in any area. Advanced things are just combinations of a few basic things. Nail the basics.
• How you do anything is how you everything. I’ve seen companies obsess over milliseconds in meetings that routinely started 10 minutes late.
• Be precise. Never sloppy.
• Communicate explicitly with a shared vocabulary.
• Sharpen the axe before chopping the tree.

Manage all of your resources

• Where are you investing time, energy, heart? Before you create sunk cost, is the potential ROI worth it?

The problem is the solution

• A sophisticated solution means nothing to the wrong problem.
• Like any jigsaw, every piece should be assessed only by its fit to the puzzle you currently have.
• When a problem is analysed carefully & understood deeply, the solution is often obvious.
• Solutions can be rote & sound sensible. (Don’t passively accept conventional wisdom.) Instead ask “What is the root cause?” and “What can we do this week to make it better?”