Principles

Dalio emphasizes that while setting goals and making decisions are important tasks for individuals and organizations, the process behind them is as important as their results. Making mistakes is an inherent part of this process. Dalio believes that the process begins with setting “audacious goals” before inevitable “failure,” which then inspires learning, improving, and setting even “more audacious goals” (xiii). Thus, Dalio does not see mistakes as something to fear and believes that organizations should celebrate their ability to learn from failure as much as they tout their ability to achieve success.

Embracing mistakes as part of an upwardly mobile, evolutionary process is something Dalio describes practicing during his time as the head of Bridgewater Associates. For instance, he recalls how he suffered huge financial losses and had to lay off all Bridgewater employees after making a very public, very wrong prediction that there would be a major depression in the 1980s. He even had to borrow $4,000 from his father to just to stay financially afloat. He writes, “Losing people I cared so much about and very nearly losing my dream of working for myself was devastating” (34). However, Dalio took a very valuable lesson away from the failure—to never again be so arrogant or sure of himself—and leveraged it to restore Bridgewater and grow it into one of the largest hedge funds.