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5 Leadership Lessons: Thoughts on How the World Works from Ray Dalio

Dalio How the World Works

PRINCIPLES matter, and they are most readily seen in history. Sadly, many people today have not been exposed to thoughtful history if they have studied it at all. Many things change over time, but human nature doesn’t. It operates along predictable lines. And it is a mistake to ignore them.

Ray Dalio examines history’s most turbulent economic and political periods in Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. What is significant is that what we have and will experience in our lifetimes has precedence in history. It has happened before in a similar pattern. He places these patterns in a framework that he calls the Big Cycle to illuminate the forces that have driven successes and failures throughout history.

While there is much to learn in this book, I present five excerpts that and general in nature that we can use to challenge our thinking and use to make more thoughtful choices.

1  One’s ability to anticipate and deal well with the future depends on one’s understanding of the cause/effect relationships that make things change, and one’s ability to understand these cause/effect relationships comes from studying how they have changed in the past.

2  I believe that the reason people typically miss the big moments of evolution coming at them in life is because they experience only tiny pieces of what’s happening. We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within cycles, and what’s likely to transpire.

3  Most people don’t have [the ability to learn from history], which is an impediment, though it varies by society. For example, the Chinese are excellent at this. Learning from one’s own experience is not adequate because, as explained earlier, many of the most important lessons don’t come in one’s lifetime. In fact, many encounters in the future will be more opposite than similar to what one encountered before in life. More specifically, in my opinion, if you don’t understand what happened since at least 1900 and how that rhymes with what is happening now, there is a high likelihood that you will find yourself in trouble.

4  Those societies that draw the widest range of people and give them responsibilities based on their merits rather than privileges are the most sustainably successful because 1) they find the best talent to do their jobs well, 2) they have diversity of perspectives, and 3) they are perceived as the fairest, which fosters social responsibility.

5  When winning becomes the only thing that matters, unethical fighting becomes progressively more forceful in self-reinforcing ways. When everyone has causes that they are fighting for and no one can agree on anything, the system is on the brink of civil war/revolution.

Here is a caution that applies to individuals, families, organizations, and nations: “History has taught us that when there are leadership transitions and/or weak leadership at the same time that there is big internal conflict, the risk of her enemy making an offensive move should be considered elevated.”

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Posted by Michael McKinney at 08:24 AM
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