Page 378 - Ray Dalio - Principles

b. Recognize that performance in school doesn’t tell you much about whether a
person has the values and abilities you are looking for. Largely because they
are the easiest to measure, memory and processing speed tend to
be the abilities that determine success in school, so school
performance is an excellent gauge of these qualities. School
performance is also a good gauge of a person’s determination to
succeed, as well as their willingness and ability to follow
directions. But when it comes to assessing a candidate’s common

sense, vision, creativity, or decision-making abilities, school
records are of limited value. Since those traits are the most
important, you must look beyond school to ascertain whether an
applicant has them.

c. While it’s best to have great conceptual thinkers, understand that great
experience and a great track record also count for a lot. There are all sorts of
jobs and they require all types of people to handle them. I am
frequently biased toward finding the entrepreneur type—a clever,
open-minded scrapper who will find the best solution—and I have
often been disappointed. On the other hand, sometimes I have
found a master craftsman who has devoted decades to his
specialty who I could completely rely on. What keeps coming to
my mind is Malcolm Gladwell’s rule that it takes ten thousand
hours of doing something to build expertise—and the value of
looking at batting averages to judge how well a person can hit.
One way you can tell how well a talented rookie will do relative to
a proven star is to get them into a debate with each other and see
how well they each hold up.

d. Beware of the impractical idealist. Idealistic people who have
moralistic notions about how people should behave without
understanding how people really do behave do more harm than
good.

As a global macroeconomist and businessman and as a
philanthropist I have seen this repeatedly in all those domains. I

have come to believe that as well-intentioned as they are,
impractical idealists are dangerous and destructive, whereas
practical idealists make the world a better place. To be practical
one needs to be a realist—to know where people’s interests lie and
how to design machines that produce results, as well as metrics
that measure those benefits in relation to the costs. Without such
measures, waste will limit or erase the benefits, and with them the
benefits will keep flowing.