Abhishek Ranjan

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Lessons from Ray Dalio

27 Feb 21

5 Steps to get what you want

Tags: Life Lesson

“Truth — more precisely, an accurate understanding of reality — is the essential foundation for producing good outcomes.” ―Ray Dalio

By this time of the year many of us are writing new year’s resolutions and goals we want to accomplish throughout the year. While this is a wonderful practice that invites for self-reflection and looking ahead at how to bridge our desired future self with our current one, many people forfeit their goals within one to two weeks after setting them.

The big question we must ask ourselves is why? and how can I distinguish myself from that group?

To answer the first question “why?” it is important to analyze what lies behind every goal or objective:

In order to accomplish any task, you first need to design what you want your future state to be like — as an architect would do, you sit down and answer the basic questions: why do I want this and what does success looks like for me within this area.

After the planning stage comes the *doing.* This is where most of us fall-back and tend to slowly drift back to our previous state. While there are many reasons this happens — enough to make a full-article about them — the main reasons are:

  1. Lack of Proper Working Habits
  2. Lack of Self-Accountability (Self-Discipline)
  3. Lack of Flexibility

Now that we’ve defined why do most people (or businesses) miss their goals and targets it is time to outline how we can differentiate from the crowd and use the 5-Step Process to achieve our objectives.

On a nutshell it looks like this:

5-Step Process

  1. Have clear goals.
  2. Identify and don’t tolerate the problems that stand in the way of your achieving those goals.
  3. Accurately diagnose the problems to get at their root causes.
  4. Design plans that will get you around them.
  5. Do what’s necessary to push these designs through to results.

According to Dalio:

First you have to pick what you are going after — your goals. Your choice of goals will determine your direction. As you move toward them, you will encounter problems. Some of those problems will bring you up against your own weaknesses. How you react to the pain that causes is up to you. If you want to reach your goals, you must be calm and analytical so that you can accurately diagnose your problems, design a plan that will get you around them, and do what’s necessary to push through to results.

Breaking these 5-steps down and putting them into context we can see how to apply them to our own objectives:

Have Clear Goals

What does having clear goals mean? One of the most important factors we must consider is why are we pursuing that goal. Victor Frankl said “He who has a why can bear almost any how”. If you truly have a hunger for that goal and is not just a “nice-to-have” then you may proceed for the next set of steps and iterations.

Key Principles:

  • Prioritize: How bad do you want this goal? If you really want to achieve your set objective you must prioritize it over your other “nice-to-haves” and single-handedly work towards your objective.
  • Great Expectations Create Great Capabilities: It doesn’t matter if you don’t have the knowledge, skills, or physical abilities to achieve your desired objective. By pursuing a goal that is just above your current level you will inevitably grow and strengthen your skills.

A great quote that goes along with this principle comes from Kamal Ravikant, a Venture Capitalist and best-selling author who says “If I only did things I was qualified for I’d be pushing a broom somewhere.”

  • Nothing can stop you if you have A) Flexibility and B) Self-Accountability: Flexibility allows you to take unknown paths towards your final objective and self-accountability allows you to take responsibility for fall-backs instead of blaming things outside of your locus of control.

Identify & Don’t Tolerate Problems

“If you’re not failing, you’re not pushing your limits, and if you’re not pushing your limits, you’re not maximizing your potential”― Ray Dalio

According to the book Principles, all problems are hidden “gems” which by reflecting on them and figuring out their true lesson we gather the sufficient knowledge to overcome them and come ahead stronger. Ray Dalio adds that “Pain” is nature’s way of telling you to change and evolve past your current state.

In order to reflect on “pain moments” Bridgewater Associates - the largest hedge fund in the world - developed a “pain-button” that prompts you to write a brief journal entry when you’re facing a personal or professional challenge. (I normally use Notion for these purposes)

Key Principles:

  • View painful problems as potential improvements that are screaming at you: See each problem as nature’s way of telling you specifically where you need to improve.
  • Don’t tolerate problems: if you really desire your goal you must be willing to do anything it takes to go past your current obstacle.

Diagnose Problems

Strategic thinking requires both, diagnosis and design. Careful diagnosis could be reserving fifteen minutes to an hour and reflecting upon the causes of your specific problem.

According to Dalio, life principles tend to manifest themselves repeatedly in seemingly different situations. What was a common issue when we lose item or forget an email may have to deal with a deep root-cause problem which could be our inattention to details.

Key Principles:

  • “What differentiates people who live up to their potential from those who don’t is their willingness to look at themselves and others objectively and understand the root causes standing in their way.”

Design Plans Around Obstacles

“We forget: In life, it doesn’t matter what happens to you or where you came from. It matters what you do with what happens and what you’ve been given.” — Ryan Holiday

Once we’ve set our goals and diagnosed what obstacles we might encounter in our way it is time to design plans to go around them.

In his book “The Obstacle Is The Way”, Ryan Holiday comments how many of our idols faced important challenges throughout their path. What made them stand-out was that they a) changed the perception of these obstacles as an opportunity to better themselves and b) were flexible to consider a different path towards their desired objective.

Another example of this is Nelson Mandela’s story and how he used his time in prison to read dozens of books and become a more calm and thoughtful individual when he was finally freed and set to govern the country and eliminate apartheid.

A great question to ask ourselves here is: “How is my current situation training me for the future? How can I leverage this current job to get me closer to my personal goals?”

Key Principles:

  • Think about your problem as a set of outcomes produced by a machine: What he argues here is practice higher-level thinking upon ourselves and observe what “fix” or “upgrade” could we make on our own operating system to achieve our desired objectives.
  • Write down your plan for everyone to see and measure your progress against: Here they recommend us to be granular about our established path. “The tasks, the narrative, and the goals are different; the tasks are what connect the narrative to your goals”

Push through Results

“I saw that to do exceptionally well you have to push your limits and that, if you push your limits, you will crash and it will hurt a lot. You will think you have failed — but that won’t be true unless you give up.” ― Ray Dalio

How do we push through success? Establish habits that go in-line with your desired path and diligently organize your environment so you’re surrounded by the right triggers. At the beginning it might require some time to get used to this new routine, however, with due time it will become part of our nature.

Key Principles:

  • Great planners who don’t execute their plans go nowhere: It is important that we don’t stop at planning and we constantly remember ourselves of our “why”.

Lose sight of your why and you will lose sight of your goals — Ray Dalio

  • Good work habits are vastly underrated
  • Establish clear metrics and follow-up: Many great leaders have mentors with whom they establish accountability and periodically report their goals’ progress.

According to Dalio, the 5-step process is a balance of synthesizing and *shaping.*

Synthesizing consists of the first three steps we establish where we want to go and what’s going on; after that comes shaping where we design solutions and push through our plan to shape the future we want for ourselves. He adds how this is an iterative process and every time we finish it we will end-up with new goals and new challenges.

At the end of the day, what matters is not looking good but achieving our goals. By being flexible, pushing through, and sticking to reality not only can we achieve our goals but we also set-out a cascade effect that rewards us in many other areas of our life.