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5 Takeaways from Ray Dalio’s “Life & Work Principles” That Everyone Should Adopt Today
By Tom Murray | Managing Director, Agency
Ray Dalio, the founder of Bridgewater Associates, which is one of the largest hedge funds in the world, came out with an amazing book called Life & Work: Principles, where he goes through the management systems that he has used for decades. The book is highly worth the read for anyone who is in a management position, or looking to be in one in the future. Ray has become one of the richest humans in the world, and his management style is a bit unorthodox to say the least. Here are five of the biggest takeaways from the book from my perspective!
1) Radical transparency is vital to an organization’s success
Transparency is a word that often gets thrown around without much action. At Bridgewater though, Ray was all about transparency. He installed various processes such as the “Dot Collector,” which was a way of giving public, anonymous feedback on your peers in real-time. Most companies barely give feedback on a quarterly or even yearly basis, but Ray made it part of the culture to offer feedback multiple times PER DAY.
Perhaps my favorite example of his atypical view of transparency was when he decided to record all meetings. As a hedge fund, many people found this to be a bit odd, as this would literally create evidence for the SEC if something were to go wrong. Ray believed that if people knew of the cameras, they would be less likely to exhibit any of these types of behaviors that other hedge funds often got caught up in. His intuition was correct, having never had a major litigation dispute from the SEC.
2) Great leaders take their time to come to a decision, understanding all levels of potential consequences
When leaders are confronted with issues or decisions, often times they will act quickly in order to make a decision and move on. However, this often is a short-sighted move that doesn’t take all potential consequences into account. Leaders must stop and take a step back and think about decisions and how they will affect not only what Ray calls the “first order of consequences” but also the second, third, and fourth order of consequences. These are the effects down the road, that dovetail based on the original decision. Too often these are forgotten about, or dealt with with a mindset of “we’ll cross that road when we get there.”
3) Pain + Reflection = Progress
There will be tough decisions you make as a manager or a leader. Sometimes they will hurt and be incredibly challenging to navigate (firing someone, dropping a client, admitting mistakes, etc) but this pain, coupled with the reflection afterward will lead to accelerated progress. Without being able to have these tougher conversations, you won’t be able to succeed.
4) Sticking to this five step process will lead to constant & iterative growth
Consistency is the key to athlete’s success, and this is no different in business. By sticking to this five step process in the same order every single time, you will continue to see growth over time.
The order is simply the following:
- Setting goals
- Identify problems
- Diagnosis of the problems to find the underlying causes
- Designing the solution
- Doing those tasks to get to the solution state
5) View your company as a machine
Machines, even the most expensive ones in factories, breakdown from time to time. If you find any problems, realize that this might mean the machine is broken and needs fixing. In a company, the problems could be a wide variety of things – your people, your culture, your clients, the list goes on. Being able to identify and diagnose those kinks in the machine will set you on the right track towards become a well-oiled machine again.