Ray Dalio oversees Bridgewater Associates, one of the largest hedge funds in the world. Dalio writes about his most fundamental life and management principles in his text titled Principles which is required reading for all employees at Bridgewater. A major part of Bridgewater’s corporate culture is a relentless focus on the open discussion of mistakes and weaknesses.
I like to expose myself to motivational texts, videos, or self improvement books from time to time for my personal journey of constant advancement. Around 95% of all self improvement texts are crap, but every once in a while, I’ll come across some ways of thinking that are used by people that have actually achieved a significant level of success and aren’t focused on just selling books or some sort of program. Ray Dalio is one of these people.
Dalio writes about making mistakes and weaknesses, something that individuals generally try to suppress and cover up — even to themselves:
Unlike any other species, man is capable of reflecting on himself and the things around him to learn and adapt in order to improve. He has this capability because, in the evolution of species man’s brain developed a part that no other species has – the prefrontal cortex. It is the part of the human brain that gives us the ability to reflect and conduct other cognitive thinking. Because of this, people who can objectively reflect on themselves and others – most importantly on their weaknesses are – can figure out how to get around these weaknesses, can evolve fastest and come closer to realizing their potentials than those who can’t.
However, typically defensive, emotional reactions – i.e., ego barriers – stand way of this progress. these reactions take place in the part of the brain called the amygdala. As a result of them, most people don’t like reflecting on their weaknesses even though recognizing them is an essential step toward preventing them from causing them problems. Most people especially dislike others exploring their weaknesses because it makes them feel attacked, which produces fight or flight reactions; however, having others help one find one’s weaknesses is essential because it’s very difficult to identify one’s own. Most people don’t like helping others explore their weaknesses, even though they are willing to talk about behind their backs. For these reasons most people don’t do a good job of understanding themselves and adapting in order to get what they want most out of life. In my opinion, that is the biggest single problem of mankind because it, more than anything else, impedes people’s abilities to address all other problems and it is probably the greatest source of pain for most people.
Some people get over the ego barrier and others don’t. Which path they choose, more than anything else, determines how good their outcomes are. Aristotle defined tragedy as a bad outcome for a person because of a fatal flaw that he can’t get around. So it is tragic when people let ego barriers lead them to experience bad outcomes.
People who worry about looking good typically hide what they don’t know and hide their weaknesses, so they never learn how to properly deal with them and these weaknesses remain impediments in the future. These people typically try to prove that they have the answers, even when they really don’t. Why do they behave in this unproductive way? They typically believe the senseless but common view that great people are those who have the answers in their heads and don’t have weaknesses. Not only does this view not square with reality, but it also stands in the way of progress.
This explains why people who are interested in making the best possible decisions rarely are confident that they have the best possible answers. So they seek to learn more (often by exploring the thinking of other believable people — especially those who disagree with them) and they are eager to identify their weaknesses so that they don’t let these weaknesses stand in the way of them achieving their goals.
So, what are your biggest weaknesses? Think honestly about them because if you can identify them, you are on the first step toward accelerating your movement forward. So think about them, write them down, and look at them frequently.
Successful people understand that bad things come at everyone and that it is their responsibility to make their lives what they want them to be by successfully dealing with whatever challenges they face. Successful people know that nature is testing them, and that it is not sympathetic. How much do you let yourself off the hook rather than hold yourself accountable for your success?
In summary, I believe that you can probably get what you want out of life if you can suspend your ego and take a no-excuses approach to achieving your goals with open-mindedness, determination, and courage, especially if you rely on the help of people who are strong in areas that you are weak.
If I had to pick just one quality that those who make the right choices have, it is character. Character is the ability to get one’s self to do the difficult things that produce the desired results. In other words, I believe that for the most part, achieving success – whatever that is for you – is mostly a matter of personal choice and that, initially, making the right choices can be difficult. However, because of the law of nature that pushing your boundaries will make you stronger, which will lead to improved results that will motivate you, the more you operate in your “stretch zone,” the more you adapt and the less character it takes to operate at the higher level of performance. So, if you don’t let up on yourself, i.e., if you operate with the same level of “pain,” you will naturally evolve at an accelerating pace. Because I believe this, I believe that whether or not I achieve my goals is a test of what I am made of. It is a game that I play, but this game is for real.
Read the full text of Ray Dalio’s Principles here.
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The first thing I ask myself when reading this sort of tripe is: What are the motives of the guy writing? In this case it’s a f**king employee manual, AKA a fancy way to impose your will on the grunts working for you and still pay lip service to their egos. Ask yourself this: if this guy wasn’t concerned with looking good, why did he go to all this trouble to come off like some kind of self-help guru in his employee manual for Pete’s sake? Answer: he wants to get the mindf**king started early and started strong.
What I’ve learned working at firms founded by these hot shots is this: whatever the secret sauce is, you ain’t gonna find it in the manual. You won’t find it in the interviews they give to the FT or the books they write for Wiley. Why would they give that away??? Might as well read a book about pasta and expect to understand Fiat.
The other thing I’ve learned is that the culture of the firm, the salary/benefits/working conditions, color of the carpet, personality of the GP or GPs: none of this has anything to do with how much capital they attract or what their investment philosophy is. I’ve seen utter a**holes and really, really nice people alike sitting in that corner office with all the perks.
Still, for pretentious, it’s hard to beat this particular passage quoted above. Yes, the guy runs the largest fund on the block. And yes, he had to claw his way up from nothing, so it’s understandable that he might get a little high on himself. But guess what? A lot of us out here have had to claw our way up from nothing. And it’s a pretty big f**king jump, in my humble opinion, from running a big pile of other people’s money to telling other people how best to “naturally evolve at an accelerating pace”.
As for the self-criticism sessions and the rest of it, that just sounds like plain old mind games, oldest trick in the con man’s book for keeping people in line by making them jumpy all the time, wondering what the f**k kind of crazy-ass bullsh*t bossman is going to throw at them next, with a nice thick layer of undermined self-confidence as icing on the cake.
If you really want people to do better and fix mistakes, open criticism sessions where everyone sits around in a self-flagellation contest completely defeat the purpose. All that happens is three things: a) truly smart, independent thinkers without a mortgage or kids to think about leave and b) talented people who are tied down with that mortgage and kids or otherwise too encumbered to make a bold move decide to stick around and pay lip service to the cult, while at the same time doing the minimum to stay employed and c) asskissers and fakers suck on the “culture” aspect like addicts on a crack pipe and will fall all over themselves for a chance to beat themselves up before the big man even sets foot in their cell/office with whip in hand. Meantime, whatever made the company cool or special in the first place starts to slowly decay and morbidity sets in. It might happen in a matter of months or it might take years, but you can bet your ass that nobody who is bright, talented, independent, and with choices in front of them is reading sh*t like “suspend your ego and take a no-excuses approach to achieving your goals with open-mindedness” and thinking “aw gee that sounds like a FUN place to work!”
That said, I love your blog and please keep up the good work, it’s great reading and I appreciate your putting your thoughts out there. Pardon my strong opinions, they’ve gotten me in trouble before but funny thing, I always wind up “evolving” anyhow. Thumbs up on your blog, I’ve learned a lot from reading it and appreciate the resource!
Here’s Dalio (perhaps the most successful hedge fund manager ever) suggesting how the ego limits achievement and performance — and a reply by one HF_Nomad who provides a great example of how ego blinds one to truth even when it slaps him/her in the face. Also a great example of the mentality of a real bitter loser in the market; and the vitriolic response illustrates how threatened this person’s ego is by higher levels of truth. There is no way a winning trader would EVER respond like this because a real winner in the marketplace understands how important it is to lose the ego and would applaud & value Dalio’s explanation.
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I’ll be the first to admit that I don’t have the answers when it comes to a recipe for success in business, or in life for that matter. So when I read the excerpt above I tried to put it the context of my own career. I fully agree that we would all benefit by putting ego aside, admitting our weaknesses, and being open to the opinions of others, but how many of us would have stopped dead in our tracks if we were honest with our own abilities? Sometimes you have to fool yourself into thinking you can do something just so that you can rally the courage to try it.
That said, I think what Ray has to say sounds like an interesting read.
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This dude was on Charlie Rose tonight.
He’s an idiot.
Caught Dalio on Rose and don’t recall a guest struggling to utter sentences in quite the same manner. Maybe he is just not articulate but he came off as a seasoned car salesman getting pushed out of the dealership for wetting right many a nipperkin at the legion hall.
All the cultese and misuse of the English language makes him sound like snake oil salesman. When people in the hierarchy start misusing words like transparent there is usually an agenda of trying control people through deceit. By the way that is not how Aristotle defined tragedy. You would have to understand words like Anagnorisis and Stichomythia. Aristotle had a little more going on than Ray Dalio. Ray showed extraordinary ignorance hailing Arnie Duncan and I am pretty sure if I was at Bridgewater and I stepped to him like this I would one of the thirty percent fired rather than being thanked for helping Ray undertand his weaknesses.
Loved the interview and all the comments ! I take what I think will benifit me
and place in my breast pocket near my heart, the balance I put in my hip
pocket near my **
enjoy the ride,”it is a GREAT life !!