This note is the first of a seven-part series of the book Principles by Ray Dalio. The introductory note can be found here.
“Everything is a machine” is the fundamental mental model that shapes Dalio’s perspective in the background and will help you understand how the principles explained in the book are applicable to anything and everything once you start seeing it as a machine. While you won’t see this stated anywhere explicitly in the book, as you grasp the perspective described in the book, you will observe the reflections of this fundamental when he talks about life, work and organizations.
By calling anything and everything a machine, Dalio means to assume the following aspects of any given entity in question:
- The sense of purpose: Any machine comes with an inherent sense of purpose that can be anything and everything but it needs to be clearly identified. We call this purpose the goal of the machine that it repeatedly tries to achieve irrespective of how macro or micro the goal is.
- The sense of motion: Any machine organically remains in a state of motion towards achieving its goal irrespective of how good or bad it is designed to achieve these goals. This is an important aspect of the machine-based view because the perspective is essentially a meta-level decision making system. For such a model, it is assumed that there will be automated machinery for execution that is always running and just needs to be corrected with feedback.
- The sense of recursion: Any machine is made up of smaller machines that interact with each other and have independent goals for themselves. In another sense, any machine is also a part of a larger machine that is meant to achieve its own goals as well. For the best results, the machine should be designed in a way that the goals of its pieces and the goals of the machine are aligned with each other.
When you start seeing something as a machine in the context of its goals, it becomes possible to diagnose and debug the machine so that you can learn from feedback. This process is what Dalio calls the process of evolution. Dalio argues human beings to be machines that are working towards some specific goal irrespective of how myopic or far-sighted it is. Dalio argues that for that matter an organization is also a machine to achieve some goals and a manager is an organizational engineer. Someone who constantly diagnoses, debugs, and rectifies the people machine to efficiently move towards its goals.
We use this as the underlying framework as we move ahead to explore the different pieces of Dalio’s perspective. However, the perspective of machines comes with a word of caution, a dimension of human life that this perspective completely fails to account. This is the emotional aspect of life as a significant dimension of human life is emotional satisfaction. Seeing everything as a machine working towards its goal might prime you in some situations to ignore the emotional aspect altogether. While this approach will still be consistent with the pursuit of the goals, but would fail to be consistent with living a happy life. This forms the last fundamental of Dalio’s perspective that I keep aside for the end and is the only fundamental that thinks outside the mental model of “everything is a machine”.
Approaches to experimenting with this perspective in life
In this section, I want to plan out some experiments that can be used to develop this component of Dalio’s perspective.
- Thinking of things as machines: The most basic experiment that we can try in this regard is more of a thought experiment. We need to start seeing different entities as machines, the goals they are approaching and the components that they have. We need to think about the individual goals of those component machines and need to assess the health of the machine in that aspect. We should also think about the first-order, second-order and third-order goals of a machine.
- Machine model based diagnosis thinking: We work in an environment where we are constantly encountering situations where a machine does not perform in line with its goal expectation. We need to start thinking pictorially about the diagnosis of a problem and where the expected flow has been obstructed. This requires an active effort to get into creating flow charts on the interactions between component pieces of a machinery. Once we start drawing out these component machineries we will be able to utilize this framework for effective diagnosis.
These can be the stepping stones for building a machine based mental model. I think by trying to experiment with the other six fundamentals as well we will essentially be reinforcing our machine-based view.
In the next note, I will share the next fundamental principle of Dalio's perspective, Goal Orientation in a Multi-level Perspective.