Thursday, May 3, 2018

Ray Dalio's five steps to success

This was an answer from Dalio near the end of his podcast chat with Shane Parrish (Farnam Street Learning Community members can also access the transcript):
As I say, there are five steps to success. 
First, your goals. You want to have audacious goals. You have to know what the goals are. 
Second, on your way to your goals you’re going to have your problems, your mistakes. So you have to identify and not tolerate your problems. 
Then, third, you have to diagnose your problems to get at the root cause. Root cause may be your weaknesses or somebody else’s weaknesses or maybe the mistakes. You’ve got to diagnose them deeply.
Once you have the diagnosis, then you have the fourth step, which is design what you’re going to do differently in the future. And then once you have that design, then fifth step is you’ve got to do it. You have to follow through with those results. And you keep doing that and it produces this looping, as I’m calling it, this evolutionary process. 
It’s that process....this five-step process, that we’re always living by. Mistakes instinctually cause the change. 
...Our whole attitude about mistakes has changed dramatically. It’s like mistakes trigger puzzles. If I solve the puzzle, I get a gem. 
So the puzzle is....What should I [have done] differently that would’ve produced a different result? That’s a principle. You write down the principle. The gem is the principle that lets you do better in the future. It’s that kind of accumulation of learning and making the connection between the mistakes and the learning. That’s the process.

[Slightly edited for clarity.]