By Ray Dalio
Principles are concepts that can be applied over and over again in similar circumstances as distinct from narrow answers to specific questions. Principles are ways of successfully dealing with the laws of nature or the laws of life.
By putting them out there and stress testing them, the probabilities of their being right will increase.
Those principles that are most valuable to each of us come from our own encounters with reality and our reflections on these encounters – not from being taught and simply accepting someone else’s principles.
So, when digesting each principle, please...
...ask yourself: “Is it true?”
We will begin by examining the following questions:
1) What are principles?
Your values are what you consider important, literally what you “value.” Principles are what allow you to live a life consistent with those values. Principles connect your values to your actions; they are beacons that guide your actions, and help you successfully deal with the laws of reality.
2) Why are principles important?
All successful people operate by principles that help them be successful. Without principles, you would be forced to react to circumstances that come at you without considering what you value most and how to make choices to get what you want.
3) Where do our principles come from?
Sometimes we forge our own principles and sometimes we accept others’ principles, or holistic packages of principles, such as religion and legal systems.
While it isn’t necessarily a bad thing to use others’ principles—it’s difficult to come up with your own, and often much wisdom has gone into those already created—adopting pre-packaged principles without much thought exposes you to the risk of inconsistency with your true values.
4) Do you have principles that you live your life by? What are they?
Your principles will determine your standards of behavior. When you enter into relationships with other people, your and their principles will determine how you interact. People who have shared values and principles get along.
5) How well do you think they will work, and why?
To be most effective, each principle must be consistent with your values, and this consistency demands that you ask: Why? Is the reason you won’t steal because you feel empathy for your potential victim? Is it because you fear getting caught?
By asking such questions, we refine our understanding, and the development of our principles becomes better aligned with our core values. To be successful, you must make correct, tough choices.
You must be able to “cut off a leg to save a life,” both on an individual level and, if you lead people, on a group level. And to be a great leader, it is important to remember that you will have to make these choices by understanding and caring for your people, not by following them.