The 5-step Process

This idea originally came from the book Principles by Ray Dalio. He is the former co-Chief Investment Officer for Bridgewater Associates, the world's largest hedge fund with over $150 billion dollars of assets under management. I think we should all learn a few things from him.

Here's a summary diagram:

🥇 1. Set Clear Goals

The most difficult step in this process. When you choose a goal, you are rejecting everything that isn’t the goal. The goal becomes the focus of your tunnel vision. Choosing to reject all of the things you want in exchange for the things you want the most is tough.

Never rule out a goal because your think it's unattainable.

❌ 2. Identify and don't tolerate problems

Most problems are potential improvements screaming at you. The more painful the problem, the louder it is screaming. People will subconsciously avoid problems, because they are harsh realities. You on the other hand, must actively seek them.

Remember that identifying problems is like finding gems embedded in puzzles; if you solve the puzzles you will get the gems that will make your life much better. Doing this continuously will lead to your rapid evolution.

🧠 3. Diagnose the problem

Don't jump to solving the problem yet, which is a big mistake everyone makes. Find the root causes (not just proximate causes) and their cause-effect relationships. As Ray puts it:

Proximate causes typically are the actions or lack of actions that lead to problems — e.g., “I missed the train because I didn’t check the train schedule.” So proximate causes are typically described via verbs.

Root causes are the deeper reasons behind the proximate cause: “I didn’t check the schedule because I am forgetful” — a root cause. Root causes are typically described with adjectives, usually characteristics about what the person is like that lead them to an action or an inaction.

Identifying the real root causes of your problems is essential because you can eliminate your problems only by removing their root causes. Most people skip this step and find that all their hard work doesn't translate into results because they fail to address the real root causes behind problems.

✍🏻 4. Design plans

Most of the progress you experience will come from designing how to remove the root causes of your problem. It is important to think of each problem individually, and not tackle them all together at once.

There are typically many paths toward achieving your goals, and you need to find only one of them that works, so it’s almost always doable.

This step requires an ability to visualize and a practical understanding of how things work in the real world. You have to plan broadly, as well as in detail; clearly defining and navigating between these levels.

This is an iterative process, alternating between sketching out your broad steps (e.g., hire great people) and filling these in with more specific tasks with estimated timelines (e.g., in the next two weeks choose the headhunters to find the great people) that will have implications (e.g., costs, time, etc.). These will lead you to modify your design sketch until the design and tasks work well together. Being as specific as possible (e.g., specifying who will do what and when) allows you to visualize how the design will work at both a big-picture level and in detail.

🚀 5. Doing

The final step is obviously execution. You will need determination to do whatever's necessary to push your design through to results. Establish clear metrics and benchmarks to make certain that you are following your plan.

Know that everyone has at least one big thing that stands in the way of their success; find yours by looking at the pattern of your mistakes, and deal with it. You can either fix it, or get help from others.

Remember that weaknesses don't matter if you find solutions. There are two paths to success: 1) to have what you need yourself or 2) to get it from others. The second path requires you to have humility. Humility is as important, or even more important, as having the strengths yourself. Having both is best.

After completing one of the steps you will probably have acquired relevant information that leads you to modify the other steps. If this process is working, goals will change much more slowly than designs, which will change more slowly than tasks.

Conclusion

Ray Dalio has used the 5 step process in order to solve difficult problems and got what he wanted out of life, which is meaningful work and meaningful relationships.

Remember that this is an iterative process, keep going back to refine each step as new information arises.

Understand that everyone will have one big thing that stops them from acheiving what they want. You can either fix it, or find others who can do it to go alongside you on your journey.

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