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Meet Ray Dalio

by Rand Golletz

Note From Rand

As I write this, it’s 75 degrees in Maryland on February 24th. I’m looking out at the intersection of the Miles River and the Chesapeake Bay. Usually the cove outside my window has patches of ice in the winter, but not this year. Despite how unusual this feels, I’m enjoying being able to go outside in my tee shirt and jeans (my favorite attire) to stare at the natural beauty and to reflect on my gratitude.

This month’s column focuses on Ray Dalio and the corporate culture he created at Bridgewater Associates – the world’s most successful hedge fund. Their uniqueness informs their performance in a significant way. They’re a lesson in the power inherent in “walking the talk.”

I’ll see you in April. Until then and as always: Get real, get tough and get going!

Meet Ray Dalio

I’ve written previously about the importance of objectivity and the many ways in which our minds make objective thinking, acting, and deciding almost impossible. I’ll not belabor that point here. Suffice it to say that we all operate with personal hard drives that are full of biases and judgments.

We regard our own thoughts as facts, so it follows that we regard people whose thinking refutes our own as wrong.

When extrapolated to families, companies or other social systems, everyone believing that they’re right undermines productivity, success, and happiness. Books like Nudge, Freakanomics, and Predictably Irrational describe the ways in which our minds compromise so-called rational decision-making. What follows relates to organizational effectiveness, which is my personal interest.

Ray Dalio is the founder and CEO of Bridgewater Associates, which is the largest and most successful hedge-fund in the world. They manage about $122 billion in investments for pension funds, endowments, foundations, foreign governments, and central banks. They employ about 1200 people and operate out of offices in Westport, Connecticut. By any measure, they are wildly successful. Here’s why that’s important in my context:

After founding Bridgewater in 1975 in an office in his New York apartment, Dalio became increasingly concerned that his own perspective was insufficient to make good investment decisions. In order to out-perform the market over time, he believed he needed to hire REALLY smart people and to create mechanisms to stimulate candor and reflection about EVERYTHING. Fast forward to today.

Bridgewater’s culture has been described as “weird” by some and “cult-like” by others. The truth is that their culture is unique rather than weird, and focused and steadfast rather than cult-like. Per John Cassidy for the New Yorker: “The word ‘cult’ clearly has connotations that don’t apply to an enterprise staffed by highly paid individuals who can quit at any moment.” He continues that Bridgewater is headed by a “strong-willed leader” and that employees use a “unique vocabulary.”

In this case, Ray Dalio decided that if he was to establish meaningful “norms” for how Bridgewater would operate, he himself would have to adhere to those norms. Otherwise, they would be regarded as irrelevant or hypocritical, as they are in most companies.

Dalio developed the belief over time that he wanted to create and to lead a company that strived for “meaningful work and meaningful relationships based upon radical truth and radical transparency.”

Some of the beliefs that guide the people at Bridgewater:

• The people at Bridgewater strive for truth. They do that by creating mechanisms and systems that demand rational decision-making. The right answer is always paramount. That answer requires aggressive disagreement and debate. It insists that ego or job titles are not factors in arriving at the right answer. Approaches to problem-solving, which are institutional, formally documented and rigorously applied, can create confrontation. In Dalio’s view, confrontation supported by respectful and non-personal challenge is the best way to implement an open environment that has billions at stake.

• They maintain very high standards. These are people handling lots of money, making lots of money, and making high-level decisions (their corporate parking area has a lot of Bentleys). That requires superior intellect, insightful reasoning and the ability to operate in an environment in which EVERYTHING and EVERYBODY is challenged. Standards are never lowered to accommodate mediocrity or fragile egos.

• They exploit people’s differences. They understand that everyone has different strengths. Assignments and jobs reflect their recognition of that.

• They maintain excruciatingly high performance standards and NEVER lower the bar.

• People at Bridgewater “own” their personal contribution. Total ownership means that people are not obsessed with “looking good;” they are obsessed with “doing good.” The goal is always to find the best answer; it’s NEVER to find the easy answer or the best one that is readily available.

• Rigorous analysis is complimented by rigorous synthesis. If analysis means breaking a problem down into its component parts and understanding those parts, then synthesis means “connecting the dots” … seeing patterns … understanding the white spaces between the dots … having a systemic world-view.

There are no private meetings at Bridgewater. Except for sessions that discuss proprietary investor information, every meeting is recorded. Those video recordings are available to EVERYONE. That includes, for example, meetings at which people’s performance and development are discussed. NOTHING is off limits. That’s “radical transparency.”

The idea of a company operating this way sounds great in the abstract. Most people espouse the desire to work in this kind of environment. In practice, however, Bridgewater’s relentless dedication to their culture makes it very hard for lots of very bright, high-achieving people to fit in. Leaving one’s ego at the door sounds terrific until one has to do it.

I have worked with many companies who espouse the importance of culture. One CEO even asked me to “install” a new culture in his company, as if doing so was as easy as changing the oil in a car.

Every organization has a culture; some of those are by default. Most of the time the “espoused culture” (what the CEO SAYS it is) bears little resemblance to the “daily culture” (what is going on, in practice). At Bridgewater, the walk and the talk are the same. Where do you and your organization stand relative to culture? Does the walk resemble the talk, or is the culture prescribed by senior leaders but not practiced by them? What mechanisms are in place in your company to make sure that the elements of culture are precisely defined and relentlessly practiced?

To find out more about Ray Dalio and his philosophies, Google “Principles by Ray Dalio” and take the time to read it and to reflect.

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