Principles

Radical transparency is important because it encourages issues to be apparent rather than hidden. When matters are open, then better decisions can be made. To illustrate the virtues of transparency, Dalio shares an anecdote of thinking about redesigning the back house team at Bridgewater. The company considered making the employees responsible for accounting and other functions into a separate company. When considering this option, Bridgewater leadership didn’t keep the plan under wraps. Instead, they told employees about it in a town-hall meeting during the early stages of consideration. The company’s employees appreciated knowing they would hear the truth, even if there would be disagreement. Bridgewater did not move forward with the plan, but the transparency the decision process exemplified contributed to the strength of the company’s culture.

Integrity, or “[a]ligning what you say with what you think and what you think with what you feel” (327), is one of Dalio’s major principles. He advises readers to always speak about people as though they were present. However, Dalio concedes it is realistic to expect some dishonesty. In addition, radical transparency does not mean total transparency. Some things can be kept confidential as needed, both within a company and from the organization’s “enemies.” In general, Dalio argues, transparency can “help enforce justice” through practices like taping meetings (332). With organizational culture in mind, Dalio recommends that people who do not adhere to the goal of transparency should not belong to the organization.

Dalio discusses what meaningful relationships can look like in terms of employers and employees. His approach at Bridgewater is to ensure the protection and well-being of his employees, while also expecting them to take steps to care for themselves. For instance, he explains, Bridgewater offers employee benefits and a healthcare plan, but he expects employees to elect their own dental insurance.

Dalio also encourages generosity in terms of giving to employees. However, he does not believe that generosity has to be “measured and equal” (344). For example, some Bridgewater employees were upset that a chartered bus was used to bring some employees from New York City to the Bridgewater headquarters in Connecticut while those who arranged their own transportation paid for their own gas. Dalio recommends that generosity extend to employee compensation, but he does not think there should be an absolute “quid pro quo” between work and compensation (345). In other words, there may be times when employees have to work more than the norm, and other times when work will be less intense. For their part, employees are expected to have loyalty to the common mission of the organization, and Dalio states that employees who are not consistent with upholding that mission should be let go.

Bridgewater as an organization takes a positive view of mistakes. Dalio explains that it is natural to see mistakes as causing pain, but he encourages readers not to run from mistakes. Accepting them and learning from them, he argues, is a natural process of evolution and is the path to “fail well.” According to Dalio, worrying about mistakes is a sign that looking good is a priority, rather than reaching goals.

Analyzing mistakes offers an opportunity to see patterns that point out weaknesses. Once these deficiencies are identified, Dalio suggests, organizations can work on improving. He recommends that organizations resist the fight or flight response to mistakes, realize that individuals can’t see themselves objectively, and expect to have “blind spots.” Bridgewater has even developed a tool called the “Issue Log” in which employees are expected to record mistakes they make as a first step in working to improve.