This is a book review of ‘Principles’ by Ray Dalio, who founded Bridgewater Associates back in 1975. Bridgewater is one of the largest hedge funds and asset managers in the world.
Dalio has been called ‘the Steve Jobs of investing’ and from day 1 he built his business using a set of his unique Principles that he believes are the reason behind his success.
After a background and history of Ray and Bridgewater itself, the rest of the book splits into Life Principles and then Work Principles.
There are 5 broad Life Principles:
1 – Embrace reality and deal with it
2 – Use his 5-step process to get what you want in life
3 – Be radically open-minded
4 – Understand how people are wired differently
5 – Learn to make decisions effectively
There are 3 broad headline Work areas which then break down into Principles:
1 – Get the Culture Right – this breaks down into
- Adopting Radical Truth and Radical Transparency
- Nurturing Meaningful Work and Meaningful Relationships
- Making it a cultural norm to learn from mistakes
- Getting people in sync
- Using Believability-Weighted-Decision-Making
- Having an agreed resolution process
2 – Get the People Right – this breaks down into
- Put WHO before WHAT
- Hire right
- Fit the right people into your business by continually testing, evaluating and sorting them
3 – Build and Evolve your Machine – this breaks down into
- Running your machine as a manager/designer
- Not tolerating problems
- Diagnosing problem root causes
- Continually improving your machine design
- Executing your plans
- Using tools and protocols to shape habits
- Paying attention to governance
A key message is the shift to an idea meritocracy where power is based on performance and merit in order to harness the wisdom of each person in the business.
This short summary cannot even begin to do justice to the content in this book. This is a sizeable book and goes into great detail for each of the above principles and provides examples and shows how these principles were first developed and then how they have grown and been adapted as the business grew. A lot of this revolves around systemising the business. Dalio first did this for the investment side of the business and then for the management and people side of the business.
I found the book really interesting and alongside the book, there are a number of other free resources including the website www.principles.com and a free app which provides the actual content and the templates behind many of the principles contained in the book.
Well worth a read but might take a little while to get through it all.