Peter Cook's Blog

This content shows Simple View

Learning

Ray Dalio On How To Run A Meeting & Other Business Tactics

Reading a book is easy. It’s much harder to take what’s in the book and incorporate it into our lives. I like to tackle this problem by distilling books down to a few tactics that I can implement quickly. 1

In a previous post, I outlined 4 ways that you can make better decisions using Ray Dalio’s life principles. In this post, I’ll outline what I think are the most impactful and actionable tactics from Dalio’s work principles.

Here they are:

1) How To Run A Meeting

“Meetings are an addictive, highly self-indulgent activity that corporations and other large organizations habitually engage in only because they cannot actually masturbate.” ― Dave Barry

Dalio often describes his organization as an intellectual version of the Navy Seals, and it’s clear from his Principles that like the military, he has an affinity for structure. So it shouldn’t be surprising that he thinks the most important part of running a meeting is to be clear about who is in charge and what the meeting is supposed to achieve:

Make it clear who is directing the meeting and whom it is meant to serve. Every meeting should be aimed at achieving someone’s goals; that person is the one responsible for meeting and deciding what they want to get out of it and how they will do so. Meetings without someone clearly responsible run a high risk of being directionless and unproductive

– Principles, Work Principle 4.4 – A

Dalio’s second Principle for running effective meetings is to assign someone to keep track of both responsibilities and the conversation flow. Said person ensures that any tasks to be done are assigned to specific people and not forgotten. They also ensure that the meeting doesn’t veer too far off topic.

Be careful not to lose personal responsibility via group decision making. Too often groups will make a decision to do something without assigning personal responsibilities, so it is not clear who is supposed to follow up by doing what. Be clear in assigning personal responsibilities.

– Principles, Work Principle 4.4 – H

Watch out for “topic slip.” Topic slip is random drifting from topic to topic without achieving completion on any of them. One way to avoid it is by tracking the conversation on a whiteboard so that everyone can see where you are. (Emphasis mine)

– Principles, Work Principle 4.4 – F

Applying Dalio’s tactics may make people feel uncomfortable at first, but in the long run, it will reduce peoples anxiety about meetings because they’ll know how they’re expected to behave and that their time won’t be wasted.

2) Use Standing Meetings

Our true priorities are defined by where we spend our resources, and that most often means where we spend our precious time. Too often though the distractions of daily business pull us along low-value tangents that take ours and others time away from where it would best spent. Dalio has found that the best way to avoid these distractions is to habituate your time allocations by setting standing meetings. For instance, if your company priority is sales, you should have a weekly sales meeting.

Use standing meetings to help your organization run like a swiss clock. Regularly scheduled meetings add to overall efficiency by enduring that important interactions and to-do’s aren’t overlooked, eliminating the need for efficient coordination, and improving operations (because repetition leads to refinement). It pays to have standardized meeting agendas that ask the same feedback questions in each meeting, (such as how effective the meeting was) and nonstandard meeting agendas that include things done infrequently (such as quarterly budget reviews).

– Principles, Work Principle 13.3 – D

3) Use Daily Updates To Stay In Sync

Use daily updates as a tool for staying on top of what your people are doing and thinking. I ask each person who reports to me to take about ten to fifteen minutes to write a brief description of what they did that day, the issues pertaining to them, and their reflections. By reading these updates and triangulating them, (i.e., seeing other people’s takes on what their doing together), I can gauge how they are working together, what their moods are, and which threads I should pull on.

-Principles, Work Principle 10.6 – C

Imagine if you woke up every morning instantly knowing what everyone in your company intended to work on that day and everyone else knew the same thing. Appealing, because of how incredibly efficient that might make everything, right? And, at the same time, kind of terrifying because you don’t want everyone looking over your shoulder judging what you intend to do every day.

The latter concern was why I first resisted using daily updates. I told myself, “I’m competent. I don’t need someone looking over my shoulder to do the right thing.” But now that I’ve been using it for a few months, I’ve come to see the value in it.

For me specifically, it’s as simple as sending my colleague a list of things I intend to work on each day. And in addition to it being a useful communication tool, it helps me organize my day and prioritize what I need to work on first. By contrast, my old habit of jumping into my email first-thing would lead me down a rabbit hole that didn’t necessarily reflect my priorities.

4) Use Process Flow Diagrams

Dalio’s ideal is a company that runs like a machine. At its core, a machine is a set of processes. Using process flow diagrams can help you visualize the different processes that make up your organization. These visuals help managers understand how resources will be allocated and interact with each other. But more importantly, they help ensure that everyone understands how the organization is expected to run and their role within it.

Understand that a great manager is essentially an organizational engineer. Great managers are not philosophers, entertainers, doers or artists. They are engineers. They see their organizations as machines and work assiduously to maintain and improve them. They create process flow diagrams to show how the machine works and to evaluate its design. They build metrics to light up how well each of the individual parts of the machine (most importantly, the people) and the machine as a whole are working. And they tinker constantly with its designs and its people to make both better.

– Principles, Work Principles, 10.1 – B

Process Flow Diagrams. Just as an engineer uses flowcharts to understand the workflow of what they’re designing, a manager needs a Process Flow Diagram to help visualize the organization as a machine. It might have references to an organizational chart that shows who reports to whom, or the org chart might supplement the Process Flow Diagram (PFD). Ideally the PFD is made in a way that allows you to both see things simply at a high level and drop down to low level. 

– Principles, Appendix

Since reading Principles, I’ve used process flow diagrams to visualize a number of personal and professional activities. I find that creating visual representations allows people to communicate more effectively about complex processes then they could otherwise.

Here’s an example of how process diagrams can help you visualize things. This was made using Lucid Chart:

 

 

##########

If you enjoyed this post, check out these other posts on Ray Dalio’s Principles:

Ray Dalio’s Principles – 4 Steps To Better Decisions

Ray Dalio’s Secret Sauce – The Truth Machine & The Good Life 

  1. The difference between tactics and strategy is strategy tells you what you should do, tactics tells you what to do. In other words, a strategy is the more general goal and tactics are the things you do to make that goal happen.


Ray Dalio’s Principles – 4 Steps to Better Decisions

In a previous post, I described Ray Dalio’s Truth Machine and formula for a good life. For those who haven’t read it, “Truth Machine” is my term for the core process Dalio has used to become a billionaire investor and achieve everything else he has in life.

One drawback to Dalio’s process is that it involves multiple steps and coordination. Such complexity makes it tempting to dismiss it as a method that’s only suitable for sophisticated organizations. I think that’s a mistake.

In the interest of making the process actionable for regular humans like you and me, here are four things you can do today to help implement Dalio’s process in your own lives:

1) CREATE AN ADVISORY BOARD

For most of us – myself included – critical feedback even with the best of intentions, often feels like criticism. We have a natural tendency to dislike people who criticize us and because other people want to be liked, they often refrain from giving us the kind of feedback we need. Thus we have dynamic where people don’t like getting critical feedback and people don’t want to give it. As a result, we often have situations where we don’t get good outside input when we should.

This dynamic is similar to the problem people face when it comes to exercise: e.g. because we don’t exercise, we have no energy, and because we have no energy, we don’t feel like exercising. And as in the case of exercise, the best way to break the cycle is to create a habit or ritual out of the thing we’d rather not do.

To make a habit of critical feedback, I suggest creating an advisory board. Write down the names of at least two other people whose opinions you value. You don’t have to tell them their new roles, just schedule recurring discussions with these people at least once every three months. Buy them coffee and ask them for their unfiltered opinions when it comes to your most important decisions.

But remember, most people won’t automatically give you the kind of honest feedback you’re looking for. You have to ask for honest feedback and demonstrate that you’ll accept it as a way of improving yourself and your decisions. Don’t make people regret being honest with you.  

2) USE PERSONALITY ASSESSMENTS

“You must not fool yourself, and you are the easiest person to fool.” – Richard Feynman

A core principle of Dalio’s process for getting what you want out of life is that you must know yourself. But because our egos make it difficult see ourselves objectively this is much easier said than done. To paraphrase the great Richard Feynman, you must know yourself, and you are the hardest person to know.

Personality assessments are the best tool Dalio has found for building a base of self-knowledge. These tests are useful because they take the conversation about how we are out of own heads and into a space of more objective measures. Dalio has had himself, his family, and every employee at his firm take multiple assessments to help them better understand themselves and one another.

Start by taking one of the following three tests that Dalio has his employees take. 

Myers Briggs Type Indicator

Link: https://www.mbtionline.com/TaketheMBTI

Cost: $50

Time: 15 minutes

Workplace Personality Inventory – II

Link: https://us.talentlens.com/workplace-personality-inventory-ii

Cost: $24-$28

Time: 30 minutes

Team Dimensions Online

Link: https://www.discprofile.com/products/team-dimensions-profile/

Cost: $39.95

Time: Unknown

Once you’ve completed an assessment, examine your results and see how they match up with your self-image and personal track-record. Then consider asking trusted friends or colleagues if they think your results paint an accurate picture of you.

3) FOCUS ON CONSEQUENCES NOT DIFFICULTY

For most problems, we decide whether we need help based primarily on how difficult it feels to determine the right answer. Instead, we should use how important it is to make the right decision as the test of whether we seek other people’s input.

Really bad outcomes are likely to happen not because the decision was hard, but because we were overconfident about an important decision that seemed easy. Shifting the focus from how hard the decision feels to how important it is to get right can help us determine when to call in reinforcements and ultimately make better decisions.

Even when a very important decision feels like a no-brainer, it’s worthwhile to ask for help.

4) BEGIN A MEDITATION PRACTICE

When Ray Dalio was in his 20’s, he punched his boss in the face on New Year’s Eve and was subsequently fired. Clearly, emotional self-control was not his strength then. And yet today the ability to rise above our emotional selves is an integral part of Dalio’s process. For his transformation from brawler to master truth seeker, Dalio credits his practice of transcendental meditation.

Meditation is complementary to Dalio’s process because it is fundamentally self-awareness training. By resting our attention on an unstimulating rhythm like the breathing or chanting a meaningless word, we can observe how subconscious thoughts arise and create emotional experiences. Through practice we learn to recognize and separate our attention from the emotional pull of our thoughts. That separation allows for better focus on the quality of our ideas and more open-minded dialogue with others.

Following Dalio’s example and beginning a meditation practice is something anyone can do to set the stage for better decision making. Having said that, although meditation can seem as easy as sitting on a pillow, developing a practice takes time. Below I’ve listed some helpful resources for taking the first steps to beginning a meditation practice:  

Oak Meditation (Free)

Link: https://itunes.apple.com/us/app/oak-meditation-breathing/id1210209691?mt=8

Headspace (Paid)

Link: https://www.headspace.com/headspace-meditation-app

MUSE Meditation Brainwave Detector (Paid)1

Link: http://www.choosemuse.com/

Transcendental Meditation (Paid)

Link: https://www.tm.org/

 

  1. I hope to have a post reviewing this item soon


Ray Dalio’s Secret Sauce – The Truth Machine and The Good Life

This is Ray Dalio; he has built one of the greatest money making machines the world has ever seen:

Ray Dalio has written a book titled Principles. The book is over 500 pages. It’s mostly words, and there are no wizards, so a lot of people won’t read it which I think is a shame.

The good news is that the core theme of Dalio’s book can be boiled down to the following formula:

But why should you listen to Ray Dalio at all? And does his formula work? As an introduction to Principles, I’ll use what Dalio calls the secret to his success to try and answer those questions.

THE TRUTH MACHINE

According to Dalio, the secret to his success is something he calls Believability Weighted Decision Making. This is a fancy way of describing what I’ll be calling Ray Dalio’s Truth Machine. Here’s what it looks like:

FIND OUT WHO’S BELIEVABLE

Using the Truth Machine is a three-step process, and the first step is finding believable people to listen to. Because we’re looking at just Dalio’s opinion, our first step is to determine how believable he is.

To determine how believable someone is, we need to ask ourselves,

“Does the person making the argument have a track record of success and/or expertise concerning the subject matter?”

The better the track record, the more believable the person.

It’s worth mentioning that most people find Ray Dalio believable because of his professional track record. Specifically, because Dalio has accomplished two objectively difficult things:

  1. He and his team at Bridgewater have delivered market-beating returns for the past 30 years.1
  2. He built (from scratch) the world’s largest hedge fund, Bridgewater Associates which currently manages ~$140 billion of assets.2

Thus, Dalio is believable when it comes to the topics of investing, leadership and achieving your goals. But great professional success doesn’t always mean a fulfilled life. The question is whether or not Dalio has achieved a good life using his formula.

Because it’s nearly impossible to take a reliable measure of another person’s subjective experience, the best evidence of a track-record we have is Dalio’s own report about his life. And according to him, he’s lead an extremely fulfilling life full of meaningful work and meaningful relationships.

For me, Dalio’s report on his own life in combination with a track-record as someone who can achieve difficult goals is enough to consider him a believable person.

Open Minded Critical Thinking

After we’ve gathered believable people’s opinions, the Truth Machine process requires that all these believable people turn their brainpower toward critically and open-mindedly evaluating the logic of each other’s opinions. Critical thinking is necessary because even a person with a great track-record can be wrong.3 And sometimes a person with no track record can be right.4

While getting a group of smart people in a room together and having them open-mindedly search for the best ideas sounds good on paper, it’s worth pausing for a moment and consider how rare it is for this to actually happen.

It’s rare is because we don’t just have an idea and then carry it along with us independent of ourselves.




What does happen is that our ideas get wrapped up in our feelings and egos. So when we have ideas, we grow attached to them in a way that turns them from just thoughts in our heads to extensions of our self-worth.5

The result is that when people come together in the real world, they come to fight for their ideas, instead of looking for the best idea.

Because it goes against fundamental aspects of human nature, this is the hardest step in the Truth Machine to get right. Asking people to be critically open-minded about their best ideas is like asking master craftsmen to bring their best work to a contest where they know that if it’s not chosen as the winner, it will be destroyed.

A large part of Dalio’s success as an investor has been the result of training himself and other people to be open-minded enough to engage in just this type of process. 

Dalio’s Good Life Formula

Critical thinking means examining the underlying logic of other’s ideas. So that you can apply your critical thinking to Dalio’s opinion, I’m going to try and provide a quick and dirty explanation of his reasoning.

The first principle in Dalio’s formula is that a good life is a life full of things you value. For example, Dalio’s values are meaningful work and meaningful relationships.

Your values may be money and nice cars, and that’s ok. What is important is that you make an effort to truly know yourself in order to accurately diagnose what your values are.

Once you understand your values, the next step is to set goals that will bring these values into your life. A goal could be an amount of money, a change you want to see in the world or a job you’d like to have.6

As we all know, goals don’t just happen. Therefore the next step is to craft processes to achieve our goals. Our ability to achieve our goals comes down to two factors, our decisions, and luck. Since by definition we cannot control luck, the question of achieving our goals becomes how to make the best decisions. Good decisions, Dalio argues, can only be achieved by accurately understanding how the world works.

For example, if we want to bet on the results of a coin toss, our best method for making good decisions (bets) will be figuring out whether the coin is fair (a 50/50 chance of heads or tails) or weighted in some other way that skews the odds of the results.

As in life, the result of any single toss will have an element of luck but over many coin tosses, the weighting of the coin will act as a signal that overcomes the noise of luck.

Dalio believes that most people’s biggest obstacle to understanding how the world works is not a lack of intelligence, but a tendency to avoid confronting painful realities. When confronting the reality of the world would violate a long-held belief or entail a truth about ourselves that we don’t want to face, we avoid acknowledging the truth to protect our ego’s.

 

When we turn away from reality and make decisions based on a flawed model of how the world works. The result is decisions based on fantasy that presumes the world is one-way when really, in the immortal words of Marlo Stanfield, “it’s the other way.”  

As I hope you can see, the Truth Machine plays an integral role in Dalio’s process for getting around ego and confronting reality so that he can make good decisions, achieve his goals, get things he values, and have a good life.

 

Take A (Believability Weighted) Vote

The final step in the Truth Machine’s process is to put believable people’s opinions to a vote. But it is not a normal one, man, one vote situation. Instead, each person’s vote is weighted by their believability. More believable people’s votes count for more and less believable people’s count for less.

Each person’s weighted vote is tallied up and the opinion or course of action with the most votes selected and voila! You have a truth machine decision. 

Although it may seem a little strange at first, believability weighted voting really just a more formal way of expressing what we do in ordinary life.

For example, if you’d never studied physics and need the right answer to a physics problem, you would value someone with a degree in physics opinion much more highly than your own. In fact, you’d value their opinion so highly that even if their answer didn’t make sense to you, you’d probably use their opinion over yours.  7

When it comes to physics, it’s easy to see that only an idiot would believe the best answer was already in their own head. That’s because we understand that physics is difficult and complex. But when it comes to other areas like relationships, careers, politics and investing, we tend to presume that we can come up with the best answers on our own. And of course, that’s where we get into trouble.  

Unfortunately, we can’t take a believability weighted vote on Dalio’s formula. But you can make your opinion heard in the comments, or discuss it with your friends to get more than just your own opinion on the subject. 

The Best Worst Truth Machine

In an ideal world, by using the Truth Machine, every decision would reflect the truth about how the world works. But of course, even the Truth Machine isn’t perfect. As Dalio would be the first to admit, all the Truth Machine does is get you closer than any other system he has found.

Most of us go through life using only our own brains to make our decisions. The insight that’s made Dalio a billionaire has been to realize that his own brain isn’t that great and that that’s ok. It’s ok because he’s discovered that if he can get a lot of pretty good brains together and train them to only care about the best answer, they can get a much better view of how the world works than he ever could on his own. 

That’s the essence of Ray Dalio’s Truth Machine and the foundation of his formula for the good life. In an upcoming post, I’ll discuss some methods to bring Dalio’s process into your own life and business.

###

Thanks for reading. If you enjoyed this post, you may also enjoy these other articles related to Principles:

Ray Dalio’s Principles – 4 Steps For Better Decisions

  1. This is hard. Billions of dollars a year are spent on out-performing the markets and few have been able to do it consistently for as long as Dalio and his team at Bridgewater.
  2.  It’s worth noting that being the largest hedge-fund does not necessarily happen because you beat the markets. It’s an accomplishment in and of itself. Becoming the world’s biggest requires strong returns but it also requires a world-class organization to support it.
  3. Einstein’s Mistakes – https://www.amazon.com/Einsteins-Mistakes-Human-Failings-Genius/dp/0393337685
  4.  Unknown Mathematician Proves Elusive Property of Prime Numbers – https://www.wired.com/2013/05/twin-primes/
  5.  Dalio writes that this is due to fundamental properties of how our brains work. Specifically, that the amygdala plays a large role in creating the feelings that give our ideas an emotional character.
  6. It’s interesting to note that this assumes you can accurately estimate the time it will take to get the things you value and that either your preferences will be stable through time or that you can accurately estimate the preferences of your future self.
  7. Is Gravity An Illusion? – https://youtu.be/NblR01hHK6U


The Secret To Finding Work You Love – The ABP Criterion

Finding work we consider meaningful and enjoyable, in short, work we love, is one of the most important and difficult challenges we face. Important, because the majority of our waking lives are spent at work, and difficult because of the complete lack of attention devoted to the question by our educational system.

Indeed, given how much of our lives are spent working, consider how strange it is that you are infinitely more likely to spend a semester taking calculus, greek, or acting than you are seriously addressing how to go about finding what meaningful work means for you. In this absence of any coherent framework for addressing the problem, it’s no wonder that many people feel lost and depressed as they struggle to find the answer on their own.

The good news is that intelligent people have given the matter some serious thought, and there are tools you can use to dramatically increase your odds of success.  Among the most powerful of these tools is a three word decision rule that, if used consistently, will naturally guide you towards work you truly love.1

The rule goes like this:

A always

B be

P producing

And that’s it; Always Be Producing or ABP for short, is simply a way of saying that the true test of whether you’re making progress towards doing work you love is whether you’re producing.

For example, say you think you’d love to work as a Hollywood screenwriter.  The Always be Producing (ABP) rule asks, are you consistently producing (or trying) to turn out screenplays? Or, if say you want to be fashion designer, are you expending time and effort towards creating production quality designs?

The ABP rule states that if the answer to those questions not an unequivocal yes – if you’re not consistently producing – then you’re not doing what it takes to find work that you love.

Using the ABP criterion is that simple. The next time you start daydreaming about work you think you’d love, ask yourself why you’re not already doing it or better yet, just get started.

How ABP Works — Avoiding Psychological Traps

The ABP rule works in large part because it helps you avoid and overcome some common psychological tendencies or “traps”. Traps are detours that take us off the path of discovering what we truly love.

First among these is our tendency to assume the work we love is simply to create the things we like to consume. This a potent misconception because like any good lie it contains a grain of truth.

For example, the fact that you enjoy watching films seems to lend credence to the notion that you should be working in the film industry. The truth is that while it may in fact be an indicator that you could have a fulfilling career in the film business, enjoying films is actually a very weak predictor of what work you’ll love. This is because the experience of actually working to produce something is almost always materially different than you imagine it will be when you consume the end-product.

Take music for example. Many people love consuming it so much that it seems natural that they would love to work on creating music as work. But the act and experience of creating music is much more like sifting through and struggling with bad music than it is like consuming good music. Similarly, while an appreciation of good food is probably necessary for being a competent chef, the act of producing good food involves struggling to control the textures and flavors of ingredients under extreme pressure and is nothing like the act of eating at your favorite restaurant.

The ABP rule overcomes this psychological trap by forcing us to confront the fact that the reality of production is very different than we presume. Thus ABP keeps you from naively assuming the things you love to consume, are the things you’d love to make.

A related but distinct flavor of self delusion is our tendency to think that consuming things related to work we’d like to do is is getting us closer to doing work that we love. This trap is insidious because it feeds off our own good intentions. Our thinking often progresses along the lines of: we want to make progress towards finding work that we love, and what better way to do that than by immersing ourselves in the content of our respective passions?

As an example of this, consider the case of an aspiring film-maker who every night upon finishing her 9–5, plops down on the couch to expand her knowledge of critically acclaimed cinema. It is tempting to assume that the time she spends increasing her familiarity with great films is getting her closer to being a film-maker. But this is a dangerous misconception.

Dangerous because the superficial similarity of what we like to consume, to what we want to work on can lead us to spend time on activities that are effectively opiates. Meaning activities that make us feel like we’re making progress, when we are actually just avoiding the sometimes difficult reality of what’s required to discover where our true passion lies. The ABP rule overcomes this by rightly asserting that instead of sitting on the couch, the aspiring film-maker would be much better served by attempting even a terrible amateur film project.

Finally, there is the trap of assuming we’ve put in enough work and stopping. Especially because work that we love can sometimes feel unexpectedly like work, it’s tempting to assume that one act of creation should be enough and with one project under our belt, all we need to do is wait for the tide to roll in.

Imagine for instance an aspiring writer, he’s set his jaw and summoned the discipline, and clarity of vision necessary to complete a first book. Maybe he even finds a publisher for the book but it fails to take off in the way he expected, and in frustration he concludes that by writing this book he’s proved he wants to be a writer but in this unfair world he just can’t. The world can definitely be unfair. But according to the ABP rule, his conclusion is false; the only way to honestly say you still want to be a writer is to keep producing.

To be clear, the ABP rule isn’t saying you can’t give up. It’s just saying that you can’t delude yourself by blithely assuming that you want to be a writer or anything else, unless you’re actively trying to produce. It’s ok to change your mind about what you want to work on, the world changes, people change. The ABP rule just keeps you from lying to yourself about when you do.

Good decisions come from confronting reality. The ABP criterion is incredibly powerful because it is at it’s core a test of whether or not you’re willing to do just that. ABP works because the demands of production, consistent production, are like a knife that cuts through the veil of bullshit we use to protect our egos. Protect them from the fact that like most worthwhile things, finding what we love may not be easy, may not come quickly, may not be what we expected.




top