In this latest edition of Byron’s Book Club, Byron Udell, Founder and CEO of AccuQuote, reviews “Principles: Life & Work” by Ray Dalio.
Are there actual “rules” for success? Or is being successful just a matter of luck and good fortune? Ray Dalio, founder of Bridgewater Associates, one of the most successful U.S. investment firms, argues that there are certain “principles” that, if applied, increase one’s likelihood of attaining personal growth and economic prosperity.
Dalio founded Bridgewater in 1975, in his New York City apartment. Over the last 40 years, he built one of the most successful hedge funds in financial history. Through this four-decade journey, Dalio created a concrete set of principles for success. In his #1 New York Times bestseller, aptly titled, “Principles: Life & Work,” author Dalio lays out his life-lessons learned in rich detail.
One of his founding “principles” centers on creating a “Radical Transparency” when it comes to consensus-building in the workplace. “Create an environment in which everyone has the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up about it,” the book says. This level of creative transparency can help keep team members on-board and on-message.
Part of this “transparency” come from utilizing what Dalio calls the “Radical Truth.” In short, it means that if you’re a manager or business owner, you should brutally evaluate the strengths and weaknesses of all of your employees, not just a select few. Knowing the capabilities of your entire staff…warts and all…will give you a more truthful picture of your talent pool. No rose-colored glasses. “I believe that one of the best way of getting at truth is reflecting with others who have opposing views and who share your interest in finding the truth rather than being proven right,” says Dalio in his book.
Dalio also believes that, as a business owner, one should be surrounded by smart, free-thinking people. “To be a successful investor, you have to be an independent thinker who bets against the consensus and is right,” says Dalio, in a recently interview in Forbes. He continues: “Over time and through a lot of painful mistakes, I learned that the best way for me to do that would be to surround myself with the smartest independent thinkers I could find who would push my thinking and point out where I might be wrong.” The author calls this “Idea Meritocracy” an essential component to any successful investor.
In his book, he also notes that creative disagreements should actually be encouraged, not denounced. Resolving disagreements and achieving consensus are the most effective ways to keep your team in synch.
There’s a lot of great insights in “Principles,” including:
• Recognize that People are Built Very Differently
• Manage as Someone Who is Designing and Operating a Machine to Achieve the Goal
• Evaluate People Accurately, Not “Kindly”
• Diagnose to Understand What the Problems are Symptomatic of
• Recognize the Power of Knowing How to Deal with Not Knowing
Those “principles” earned Dalio a place on Time magazine’s “The World’s 100 Most Influential People” list for 2012. I highly recommend this book.