Ray Dalio’s Principles : A Review

Speaking generally , a book should be read and evaluated in its own merits. But Ray Dalio’s Principle comes with a bit of historical baggage though, some over 40 years, in fact.

The American billionaire claims in his book Principles that his company Bridgewater Associates was founded and built on the principles enumerated in the book.

Bridgewater Associates is a hedge fund with over 180 billion American dollars under management. Hedge funds are known to value investments, not principles . I must admit, I initially approached the book with a thin sense of enquiry sandwiched between thick slices of cold bias.

But as I swiped left through my epub copy of the book on my phone, I was reminded of an earlier interaction with Covey’s Seven Habits, as a youngish management trainee in 1999.

Principle starts on familiar grounds; goals are based on your values. And when it is in an organization, it is important that conscripted members share congruence with those values.

People who join organizations and pretend to adopt the published values of such wholesale usually turn out to be hypocrites, as we all know from our interactions with members of our various religious congregations .

Dalio had a wonderful approach to achieving values congruence. I’ll reach back into my management trainee manual and call his solution “ Goals Congruence” .

Every employee should be aware she is working not for any other person’s benefit except her intimate self. She should not put in any effort beyond what would advance personal goals. Altruism gets no space in this open plan office layout.

When one considers that generations of job seekers had been tutored to smile winsomely while professing emphatically that they were born with the same exact corporate values some bank or detergent maker’s consultants thought up, this is a refreshing , even revolutionary change This is radical honesty, a concept thoroughly explained and explored in the Principles.

The backhand of Goal Congruence Principle , in case you missed it, is that either party, the employee or employer , is ready to annul the contractual relationship if their ends are not met.

Now having done away with the clichéd assumptions and introduced ourselves properly as genteel pirates, let’s move on to the topic of corporate goal setting proper.

Principles make it clear Goals are different from Desires. Goals have a root in value systems, they are not ephemeral passing wishes that may be amended after the fact, certainly not in the performance review season.

After determining your goals, the next question, according to Dalio is, “What is true? “. This question deserves a thorough treatment .

We are all products of differing socialization processes and arrive at adulthood with peculiar notions of virtue and commonsense. These parochial opinions need not be treated equally if our principal object is to achieve Goals, considering that early socializations generally make us value being liked over and above becoming overachievers .

This situation therefore demands a reorientation of our cognition of what is right and wrong towards a goals focused philosophy. I will still come back to this.

The key invention in Principle, which defined Dalio’s management genius, is the concept of the machine. Great goals requires greater resources than you already own. To achieve them, you need to build a machine, which will muster resources, financial or mental, beyond what you currently own.

The invention of the concept of the machine takes us back to the need for a goals focused philosophy. Remember the question , What is true? Here you have an answer. In the market place for resources , factors operate based on natural laws that are beyond the manipulation of an individual. The market works to the general good as its invisible hands rewards what is right and punishes slackness.

As the owner of your goal machine, you are responsible for attracting the resources you need. Right are the things you do that gets you to achieve your goals. Wrongs are the things that deter your goals. There, fixed it for you.

Invariably, goals might have obstacles. I don’t want to spill the whole plot, you should really read this book. So I won’t go into details beyond this point; you own your goal machine, no excuses.

I call this approach to management revolutionary. But to Ray Dalio, it is just evolution at work.

Let me illustrate his notion with an apt story. Around 250 BC, a mathematics genius called Eratosthenes was able calculate the diameter of the earth without the utilities of modern computers. Today, my smartphone can get that information, just as it did get me Eratosthenes’ biographical details . The evolution of knowledge has happened at such a pace that barely above average habitues of corporate cubicles can outperform third century world geniuses.

Your lack of any skill or resources should not hobble the attainment of set goals if your goals machine is properly designed and operated.

Dalio’s message is disarmingly simple. To achieve your goals, you should operate at a higher plain, not just as an operator but as the inventor of the goal machine. It is the blueprint for an entrepreneurial organization.

When you work from Principles and take a no excuses approach to the “ What is true?” question, you get to build your goal machine, and then you get to build anything.