Principles are ways of successfully dealing with reality to get what you want out of life.
Ray Dalio, one of the world’s most successful investors and entrepreneurs, cites principles as his key to success.
In 1975, Ray Dalio founded Bridgewater Associates, out of his two-bedroom apartment in New York City. Over forty years later, Bridgewater has grown into the largest hedge fund in the world and the fifth most important private company in the United States (according to Fortune magazine), and Dalio himself has been named to TIME’s list of the 100 most influential people in the world. Along the way Dalio discovered unique principles that have led to his and Bridgewater’s unique success. It is these principles, and not anything special about Dalio, that he believes are the reason behind whatever success he has had. He is now at a stage in his life that he wants to pass these principles along to others for them to judge for themselves and to do whatever they want with them.
Work Principle
Build the organization around goals rather than tasks.
Giving each department a clear focus and the appropriate resources to achieve its goals makes the diagnosis of resource allocations more straightforward and reduces job slip. As an example of how this works, at Bridgewater we have a Marketing Department (goal: to market) that is separate from our Client Service Department (goal: to service clients), even though they do similar things and there would be advantages to having them work together. But marketing and servicing clients are two distinct goals; if they were merged, the department head, salespeople, client advisors, analysts, and others would be giving and receiving conflicting feedback. If asked why clients were receiving relatively poor attention, the answer might be: "We have incentives to raise sales." If asked why they weren't making sales, the merged department might explain that they need to take care of their clients.
Work Principle
- Design Improvements to Your Machine to Get Around Your Problems
Build the organization around goals rather than tasks.
- Build your organization from the top down.
- Remember that everyone must be overseen by a believable person who has high standards.
- Make sure the people at the top of each pyramid have the skills and focus to manage their direct reports and a deep understanding of their jobs.
- In designing your organization, remember that the 5-Step Process is the path to success and that different people are good at different steps.
- Don't build the organization to fit the people.
- Keep scale in mind.
- Organize departments and sub-departments around the most logical groupings based on "gravitational pull."
- Make departments as self-sufficient as possible so that they have control over the resources they need to achieve their goals.
- Ensure that the ratios of senior managers to junior managers and of junior managers to their reports are limited to preserve quality communication and mutual understanding.
- Consider succession and training in your design.
- Don't just pay attention to your job; pay attention to how your job will be done if you are no longer around.
- Use "double-do" rather than "double-check" to make sure mission-critical tasks are done correctly.
- Use consultants wisely and watch out for consultant addiction.
- When evaluating whether to outsource a function you currently do in house, make sure to weigh quality, economics, the loss of institutional knowledge, and security.
Any person or organization can adopt Principles to better achieve their goals.
Learn what Principles are and how they are applied at Principles.com
