For Ray Dalio, making good decisions requires maintaining a true and rich picture of the realities that will affect your decision. To do that, you have to be able to synthesize an enormous amount of information. And to do that, you have to be able to successfully navigate what Dalio calls “levels”.
Reality exists at different levels and each of them gives you different but valuable perspectives. It’s important to keep all of them in mind as you synthesize and make decisions, and to know how to navigate between them.
Let’s say you’re looking at your hometown on Google Maps. Zoom in close enough to see the buildings and you won’t be able to see the region surrounding your town, which can tell you important things. Maybe your town sits next to a body of water. Zoom in too close and you won’t be able to tell if the shoreline is along a river, a lake, or an ocean. You need to know which level is appropriate to your decision.
To synthesize and communicate well, we learn to keep track of the high-level narrative. Dalio has a nice diagram:
Sometimes we need to go into the lower level details — but only when necessary, and we return to the high-level thread when we’ve accomplished what we need to at lower levels. Here’s what that might look like:
But sometimes things go awry. For example, we might get lost in the weeds:
Or, we might lose the thread entirely:
To avoid these pitfalls, Dalio recommends these four steps:
1. Remember that multiple levels exist for all subjects.
2. Be aware on what level you’re examining a given subject.
3. Consciously navigate levels rather than see subjects as undifferentiated piles of facts that can be browsed randomly.
4. Diagram the flow of your thought processes using the outline template shown on the previous page.
From his book Principles: Life and Work (p. 250).