As we finished Life Principles in Part 1 of the book review on Principles by Ray Dalio, we noted the power of relationships in our lives and how they influence us and how we in turn can influence others. It is also true that your ability to get what you want out of life is much greater when working with others than it is when working at it alone. Many of the Life Principles can be applied to groups by taking individual decision making and converting it to group decision making.
Foundational to work principles is the idea that your business is a machine consisting of two major parts: people and culture. In our work, we seek to produce outcomes that are driven from our goals. But to achieve our planned outcomes, the people around us and the culture we create will define the effectiveness of accomplishing those outcomes.
When we are looking from a top down perspective at our business as a machine, our responsibility is to build it to accomplish what you set out to do. This starts by building it around goals, rather than tasks. These goals should be things that both you and the whole business are excited about. However, be careful to not build your business to fit the people. And be sure to think both about the big picture as well as the granular details in your machine.
Our work principles are driven by the quality of our relationships – with team members, with suppliers, with customers, and with our investors (yes, even ourselves). Dalio is a staunch believer in evolutionary processes for people and things around us. As individuals changing and adapting to our circumstances, we must be in a constant state of anticipatory change. The Five Step Process is foundational to our own personal evolution. As we consider the amount of change that we undergo individually, we must recognize that our responsibility lies in training, testing, evaluating and sorting people based on their own strengths and weaknesses.
When we get personal evolution right and our people are evolving quickly, our outcomes will be produced faster. With our people, we must remember the following:
- Provide constant feedback
- Evaluate accurately, not kindly
- Give tough love
- Don’t hide observations about people
- Conduct performance assessments and make learning about others an ongoing process
- Don’t rehabilitate people
- Don’t lower the bar
The beauty of people working together is to leverage our collective strengths to accomplish our personal missions in bigger and better ways than we could alone – and we can then do it as part of a healthy community.
A great culture is one that can openly share disagreements and solve the problems that exist for a business. There is great power in a company culture that is committed to understanding truth – about themselves and about the problems we face. Dalio’s perspective for a great company culture lies in an Idea Meritocracy.
This is an environment where the best ideas win out. Rather than an anarchy where a single leader decides or a pure democracy where everyone equally decides, an idea meritocracy puts our thoughts on the table, listens to thoughtful disagreements, and gets past these disagreements. An idea meritocracy has the primary goals of meaningful work and meaningful relationships that are shaped by radical truthfulness, so that you can say anything and radical transparency, so that you can see everything. This idea meritocracy produces an environment where everyone has an opportunity and the responsibility to bring their thoughtful perspectives together.
Idea Meritocracy = Radical Truth + Radical Transparency + Believability-Weighted Decision Making
This is more than a theoretical decision making approach, it is a practical process that weighs the opinions of believable people alongside an environment of radical truth and radical transparency. Getting to the right decision is accomplished by taking time for thoughtful input and disagreement and applying a believability weighted ranking to the people involved in the issue at hand. As mentioned in Life Principles, one of the most important decisions is deciding who should you ask questions of. You then give rank to the quality of their opinions based on subject matter expertise, creativity, or their ability to synthesize the entire issue. When decisions are then made and the underlying principles used in the decision-making process are adhered to, everyone should get behind it. This could be exceptionally challenging because we are human after all. Radical truth and radical transparency seems to allow for the right to give advice or additional input, however if the idea meritocracy is to be successful, the group must trust the process that is agreed upon by all.
This important decision making approach may seem daunting to accomplish with a small staff size and the number of individual decisions that are required every day. Bridgewater Associates uses a Dot Collector tool that they developed in house. This very algorithmic tool is not readily available on the market. However, before any kind of tool is considered, an idea meritocracy requires people do three things:
- Put honest thoughts on the table for everyone to see.
- Have thoughtful disagreements where there is quality back and forth discussions that help people evolve in their thinking to come up with the best collective answers.
- Abide by internal methods of getting past the remaining disagreements
See this article for a hint to start somewhere in this process using Slack (or another company wide chat tool). A company culture is impacted not only by the people, but by the decisions made by those very people. Believability weight your decision making.
These two books reviews have attempted to lay out the primary concepts and ideas from Ray Dalio’s book, Principles. One of the most liberating things about Dalio’s approach is that he is sharing from his experience, but he also recognizes that everyone has a set of principles that shape who they are and why they do the things they do. If nothing else, Dalio hopes that we all…
- See our world and circumstances as part of a machine which helps us to address our own reality in a better way, and
- Replace the thrill of being right with the joy of knowing what is true with believability weighted decision making.
As the founder of Kregel & Company, Scott holds the firm accountable to keeping a customer-focused mindset every day. He is passionate about coming alongside others in their pursuit of doing good. You can often find him within a 10 mile radius of the office training for his next marathon. He also loves bringing out the best in his three children, reading business and leadership books, and dreaming up his next great idea.