An incredibly efficient roadmap from Ray Dalio
Ray Dalio is the 67th richest man in the world with a net worth of $22 billion. From 1975 to 2011, he built the most successful hedge fund in the world, never losing more than 4% during any calendar year from 1991 to 2020 (and only doing so during 3 calendar years).
In his best-selling book Principles, Dalio uses a chapter to talk about a 5-step process he uses to get anything he wants in life. It is the playbook he has used to not only build his hedge fund and beat the markets, but also to face and overcome personal challenges in his own life.
This 5-step system is so incredibly valuable and well-explained that I didn’t edit or change anything about it, I only added my own insights in the parts I found the most relevant and/or relatable as a young entrepreneur. Here is the main outline of the system:
- Have clear goals
- Identify and don’t tolerate problems
- Diagnose problems to get at their root causes
- Design plans that will get you around those problems
- Do what is necessary to push through the plans to get results
Implementing these 5 steps through a virtuous loop will yield results almost every time, as long as you stick to the system. For each goal you have, use the system once and then repeat the process with the next goal:
To bring you even more value, I also replicated this system in a Notion template available here. It includes dynamic tables and linked components to help you get a full overview of your own roadmap to success.
a) Prioritize: you can have virtually anything you want, but not everything you want.
I started and never launched dozens of projects for nearly 10 years because I didn’t know what I want, I was all over the place. I created a t-shirt store, trading algorithms, tried selling art on Instagram, painted on skateboards, tinkered with electronics… Eventually, I picked blogging and told myself I would keep at it for at least 6 months to see where it would take me. 3 years later I’m still at it.
b) Don’t confuse goals with desires.
A goal is something you want to achieve because it inspires you. Desires are things that you want for no clear reason and that usually prevent you from reaching your goals.
c) Decide what you really want in life by reconciling your goals and your desires.
d) Don’t mistake the trappings of success for success itself.
e) Never rule out a goal because you think it’s unattainable.
There is always at least one best possible path. What you think is attainable is only a function of what you know at the moment. I never thought I’d start making money as quickly as I did writing online, and now I can see there is a whole new horizon of business opportunities waiting for me that I had no idea about before.
f) Remember that great expectations create great capabilities.
Don’t limit yourself to what you know you can achieve. The more you seek to achieve, the more you’ll get the skills to achieve.
g) Almost nothing can stop you from succeeding if you have flexibility and self-accountability.
Flexibility is what allows you to accept what reality or people who know better than you teach you. Self-accountability is the ability to acknowledge your personal failures and see where you need to be more creative, flexible, and determined.
h) Knowing how to deal well with your setbacks is as important as knowing how to move forward.
When bad times come, learn to identify whether to minimize your rate of loss or simply let go and move on.
a) View painful problems as potential improvements that are screaming at you.
Each problem you encounter is an opportunity, just like every painful situation, every person you can’t stand, or every challenge you face. I highly recommend you read The Art of Happiness on that matter.
b) Don’t avoid confronting problems because they are rooted in harsh realities that are unpleasant to look at.
Acknowledging your weaknesses is not the same as surrendering to them. In fact, it’s the first step toward overcoming them.
c) Be specific in identifying your problems.
Different problems have different solutions, there’s no “one-size-fits-all” plan.
d) Don’t mistake a cause of a problem with the real problem.
“I can’t get enough sleep” is not a problem but a potential cause. “I am performing poorly in my job” could be an underlying issue.
e) Distinguish big problems from small ones.
You have limited time and energy, so make sure you invest them in the problems that will yield the biggest returns when fixed.
f) Once you identify a problem, don’t tolerate it.
If you identify a problem and still tolerate it, you’ll still live as if you had failed to identify it.
a) Focus on the “what is” before deciding “what to do about it.”
“A good diagnosis typically takes between fifteen minutes and an hour, depending on how well it’s done and how complex the issue is. […] Like principles, root causes manifest themselves over and over again in seemingly different situations.”
b) Distinguish proximate causes from root causes.
“You can only truly solve your problems by removing their root causes, and to do that, you must distinguish the symptoms from the disease.”
c) Recognize that knowing what someone (including you) is like will tell you what you can expect from them.
a) Go back before you go forward.
Analyze what led up to where you are to decide where you’re going.
b) Think about your problem as a set of outcomes produced by a machine.
Look at your machine and think about how it can be changed to produce better outcomes. Life then becomes a game.
c) Remember that there are typically many paths to achieving your goals.
You only need to find one that works.
d) Think of your plan as being like a movie script in that you visualize who will do what through time.
Think of who the actors will be in your movie, what the turning points are in the script, and execute according to those elements. Again, life becomes a game.
e) Write down your plan for everyone to see and to measure your success against.
Accountability increases your odds of success.
f) Recognize that it doesn’t take a lot of time to design a good plan.
The execution is the hardest in 99% of cases, yet most people either never thought of a plan in the first place, or keep changing their plan as they move along. Don’t drive the car as you’re building it. Build it first and then start driving, because it will be a bumpy ride.
a) Great planners who don’t execute their plans go nowhere.
Planning is only half the battle, it takes a lot more than that to win the game of life. Similarly, practice without talent beats talent without practice.
b) Good work habits are vastly underrated.
Especially in the corporate environment, hyper-productivity is praised more than anything else even if it leads nowhere. You don’t need 20 meetings a day to get things done, you need checklists, fewer emails, and more focus time at your desk.
c) Establish clear metrics to make certain that you are following your plan.
If you work in an organization with multiple people involved, I believe the OKR strategy is one of the best systems out there, and I’ve written about it here. If you’re on your own, the Wheel of Life approach is my favorite, and I’ve made a video about it here. Both systems have the same foundation: identify the goals, then the tasks that will help you get there. Then, implement those tasks on a realistic timeline and start executing.
Everyone has weaknesses. You, me, Bill Gates, Ray Dalio… even Elon Musk. Nobody will be excellent at each of the 5 steps presented in the system above, because nobody can think well in all the ways the system requires. Some people will be good at analyzing and diagnosing but terrible at executing. Some people will be great at planning but bad communicators. Some people have strong self-discipline and others have close to none.
That’s why it’s very important to stay humble and get help from others when necessary. Nobody ever succeeded 100% on their own, without the help of anyone else and that’s the great paradox of individual success: teaming up with others is the only way to get there.
Even with the best plan in the world, most people won’t have all the skills required to achieve it. You’ll find that there are only 2 ways to get those missing skills:
- Learning them yourself (time-consuming)
- Getting them from others (requires humility)
“Some people are good at knowing what to do on their own; they have good mental maps. Maybe they acquired them from being taught; maybe they were blessed with an especially large dose of common sense. Whatever the case, they have more answers inside themselves than others do. Similarly, some people are more humble and open-minded than others. […] Having both open-mindedness and good mental maps is most powerful of all.” — Ray Dalio
I’ve always known what I wanted to do with my life, and I guess I’m lucky in that way. Yet I’m almost 30 now, and for the better part of my life, I’ve been terrible at executing. I never stopped experimenting and trying new things, which is good, but I never committed to anything in the long run, which is bad. I kept switching from one project to the other. Around 3 years ago, I decided to stop kidding myself and stick to one project for at least 6 months, and I haven’t looked back since.
Maybe you have the opposite problem, and you’re excellent at staying focused and executing on one thing but don’t know what that thing could be. Maybe you have none of the above because you haven’t found your purpose in life yet. Then I encourage you to always experiment with new projects and to talk to as many different people as possible. It will help you get inspiration and ideas and hopefully set you on your own path to personal success.
Always remember to never discard a goal or an idea because it sounds too crazy, there is almost always a way.
And no matter which path you decide to take to get there, remember to enjoy the journey.
Author: Joseph Mavericks