Principles

Believability weighting refers to the process of giving more credit to “the opinions of more capable decision makers [than] those of less capable decision makers” (371). Dalio explains that people who have had repeated success in areas related to the matter to be decided and who are capable of explaining the logic behind their ideas ought to be considered more believable. Dalio repeatedly argues that no matter how good the idea may seem, if the logical rationale behind it cannot be explained, then it is not as believable. Believability weighting ideas, Dalio explains, helps make the decision process much easier. The tool is heuristic to ensure that the ideas most likely to succeed are selected instead of simply falling back on the word of an authority or mere group consensus.

The Dot Collector is an app utilized by Bridgewater that allows users to voice their support or rejection of an idea in real time by tracking responses on a grid. According to Dalio, the Dot Collector is invaluable in meetings because it helps people gauge their decision making relative to others using data as evidence rather than relying on gut feelings. Ultimately, he suggests, the Dot Collector helps facilitate believability-weighted decisions.

Dalio defines idea meritocracy as “a system that brings together smart, independent thinkers and has them productively disagree” in order to ignite superior “collective thinking and resolve their disagreements in a believability-weighted way” (308). Like many of Dalio’s principles, the concept of idea meritocracy is centered on helping individuals and organizations make more informed decisions that are most likely to result in success. Dalio calls idea meritocracy his “headline” and notes, “of all approaches to decision making, [it] is the best” (540). Thus, Dalio’s principles can essentially be boiled down to the importance of idea meritocracy.

Throughout Principles, Dalio recommends that readers view mistakes positively, as opportunities to learn and grow. At Bridgewater, he instituted the Issue Log, which is a “tool for recording our mistakes and learning from them” (548). Dalio explains that any mistake an employee or team makes must be recorded in the Issue Log, along with details about who committed the mistake and what its repercussions where. The point is not to punish employees, Dalio insists. In fact, he explains that employees will not be punished for a mistake as long as it is recorded in the Issue Log, but not recording a mistake in the log is unacceptable. The purpose of the Issue Log, according to Dalio, is to acquire data on issues that have arisen and to have a reference to turn to when making improvements in future decisions.

Dalio encourages readers to increase their self-awareness, knowledge of their blind spots, and comfort dealing with difficulties. In addition, Dalio recommends that readers develop humility, realizing that they are often wrong or do not have all the information that they need and that they need input from other people around them to make successful decisions. Taken together, these habits prevent people from being stuck and limited in their thinking and help them instead cultivate open-mindedness. As he explains in the autobiographical portions of Principles, Dalio attributes his belief in open-mindedness both to experience from business and to his study of meditation and other cultural forces aimed at raising consciousness.

Dalio recommends that leaders of organizations readily share information with their employees and that they expect employees to be forthcoming with them as well. This radical transparency requires a level of trust because “being radically transparent rather than more guarded exposes one to criticism” and also takes away confidentiality (136). According to Dalio, the benefits of radical transparency are manifold, including a stronger organizational culture and a more diverse range of contributions to discussions because all employees are more likely to feel trusted and respected. As a result, Dalio argues, organizations are in a better position to make the right decisions and advance their missions.