Page 420 - Ray Dalio - Principles

a. Ask yourself: “Who should do what differently?” I often hear people
complaining about a particular outcome without attempting to
understand the machine that caused it. In many cases, these

complaints come from people who are seeing the cons of some
decision but not the pros and don’t know how the Responsible
Party weighed them to come to a decision. Since all outcomes
ultimately come from people and designs, asking yourself
“Who should do what differently?” will point you in the
direction of the kind of understanding that you need to actually
change outcomes in the future (versus just chirping about

them).

b. Identify at which step in the 5-Step Process the failure occurred. If a
person is chronically failing, it is due to a lack of training or a
lack of ability. Which is it? At which of the five steps did the
person fail? Different steps require different abilities and if
you can identify which abilities are lacking, you’ll go a long
way toward diagnosing the problem.

c. Identify the principles that were violated. Identify which principles
apply to the case at hand, review them, and see if they would
have helped. Think for yourself which principles are best for
handling similar cases. This will help solve not only this
problem but other problems like it.

d. Avoid Monday morning quarterbacking. Evaluate the merits of a

past decision based not on what you know now but only on
what you could have reasonably known at the time the
decision was made. Every decision has pros and cons; you
can’t evaluate choices in retrospect without the appropriate
context. Do this by asking yourself, “What should a quality
person have known and done in that situation?” Also, have a
deep understanding of the person who made the decision (how
they think, the type of person they are, whether they learned

from the situation, and so on).

e. Don’t confuse the quality of someone’s circumstances with the quality of
their approach to dealing with the circumstances. One can be good and
the other can be bad, and it’s easy to confuse which is which.
Such confusion is especially common in organizations that are
doing new things and evolving fast but haven’t yet gotten the

kinks out.