Principles 1.5

"Evolving is life’s greatest accomplishment and its greatest reward."

Dalio presents several sub-Principles here that he links together, but this post will separately expand upon a few that speak to me.

First, he writes about incentives: "The individual’s incentives must be aligned with the group’s goals."

I’m all in.

For example, let's say a coach is incentivized to 'not break' players, but the group's goals necessitate the creation of outlier talent. This requires high risk, high reward behavior. In this case, the coach's goals and the group's goals are not aligned. Friction will arise as different parties work towards different goals. If this coach were instead incentivized to produce outlier talent, then incentives would be aligned and friction would be reduced.

Dalio moves on to discuss a key aspect of growth, writing, "Adaptation through rapid trial and error is invaluable."


This encourages us to test small, quick solutions to a problem, narrowing down possibilities until we're confident in our path. Only then should we invest significant resources into a solution.

I didn't make this up (it's a Jim Collins idea), but the concept is to fail fast in a way that won't hurt, as many times as necessary. With each failure comes knowledge, and with that knowledge comes a better solution.

It's this iterative process that defines evolution. Ancient fish didn't jump onto land with ten fingers and ten toes. It took millions of years of gradual change for hands and feet to develop. In that time, innumerable species became extinct. Why should we expect to get it right the first time?

This idea can be summed up by Samuel Beckett in one of my favorite quotes:

“Try again. Fail again. Fail better.”

Towards the end of this section, Dalio gets pretty philosophical, stating:

"Through our own eyes, we are everything—e.g., when we die, the whole world disappears. So to most people (and to other species) dying is the worst thing possible, and it is of paramount importance that we have the best life possible. However, when we look down on ourselves through the eyes of nature we are of absolutely no significance."

This is deep, and it rings true. In 1.4 I talked about feeling simultaneously big and small. It is this understanding of our insignificance that can put our trivial issues in perspective. Conversely, we must realize that every decision we make can meaningfully impact the lives of those around us, and in turn the lives of those around them - a network effect that will impact the world.

So don't get too up, because you're not that important. And don't get too down, because you absolutely matter.


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