Ray Dalio

If you really go look, if you go back to the Bridgewater case and Ray Dalio, there’s a unique individual who built the largest and arguably most successful hedge fund in the world. If you go back to his methodology from the time he started his business in his apartment in New York, he wrote down each day his decision about each trade, why he made that trade, and what were his assumptions, and he wrote down the results. The thing about it is he was using thinking rehearsal, or mental rehearsal.

You’ve got to have some processes that slow you down to where you’re thinking about how you think, and thinking about how you relate. Just saying that you’re going to do it is not enough. Good intent is not enough. It works, and everybody that I’ve worked with or talked with that has tried some of these techniques in my book, they work.

The other thing I can’t stress enough is the mental rehearsal, and keeping the journal. Just by doing that, grading yourself in the sense of, “Where can I improve? What happened today? What would I do differently in how I think? What would I do differently in that conversation as to how I relate?”

Over years of doing this, it comes back to, at least for me, to two related things, intellectual humility and quieting my ego. Because if I can quiet my ego, I can listen better. I can be more empathetic. I do suspend judgment. I can inquire. I can actively consider other views. Much of this is a discipline. Much of this is psychological.
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When I was talking with Ray Dalio about doing this, he very up front said, “I’m going to lay out one condition.” I said, “OK, what is it?” He said, “I want you to agree to take the role of a new recruit coming to join Bridgewater as an employee. I’m going to send you a Bridgewater iPad, and you will basically watch over 10 hours of various films and answer questions, and get graded on your questions, to immerse yourself before you come in having some understanding of the Bridgewater way.”

He said, “In addition, to help you prepare, I’m going to send you lots of other stuff that, da-da-da.” It was a structured and planned immersion. It’s a fascinating place. It vets wonderful people.

You know from my book they allowed me to use quotes and tell their stories. They’re stories that made for change. Genders can sometimes change, too. They’re very compelling stories about how this transformation took place, what Ray calls getting to the other side.

It’s somewhat also analogous to my studies with the United States Marine Corps. As I write in the book, I had the Marine Corps transformation process, where a general once phrased it this way to me. He says, “Take very average people and put them in the most difficult environments and they perform consistently exceptionally well.”

Why? Because of how they, if you will, how they’re trained to think, behave, and the values. When you look at Bridgewater and you look at any organization – whether it’s UPS or someone like W. L. Gore or Pixar – all four of those organizations and the Navy SEALS or the Marine Corps or the Special Forces or the US Army, they all have strong cultures and they all have strong process. They all have a similar, what I call leadership model that is very, very humanistic and people-oriented. I do a lot of this inside companies.

You know. You’ve been around the block, too. There’s a lot of people who talk the talk that don’t walk the walk. I had read Bridgewater’s management principles. I’d used them in my classroom for a couple of years and got a surprising negativity about it all from my students. That also happened when they were used in the Harvard class, which only piqued my interest.

When I went in there and saw it, sat in meetings, and watched the process happen, where people’s thinking was challenged and there were in-sync conversations which were trying to get to the bottom of why certain things were not working, whether it was a process or whether it was a thinking pattern or whether whatever.

Watching that happen, what he writes and what I write is the reality of what they get. The interesting thing is the transformation process. If you think about a firm like Bridgewater, it hires very, very bright people who were then, generally speaking, very successful in school and very successful in extracurricular activities their entire educational life, and are nice people and know how to get along with other people.

They come in there and … it’s the first negative feedback they’d ever received in their life.

How do people change their mental model of what being smart is and change their mental model about mistakes and their emotional defensiveness to, in effect, protect their ego. That’s what it’s all about.

It’s fascinating. Many of the places I’ve studied and got involved in, each of them are different. Gallo has built a learning system. It’s got a culture. It’s got processes, measurements are lower, et cetera, all designed to mitigate…our natural inclination for System 1 thinking and System 1 conversations.

Defend, deny, deflect, protect the ego…The thing that I find amazing is that I think that if you close your eyes and think of 2025, 2030, you think of an operationally excellent company going to be set primarily by smart robots, smart machines with a small human contingent that have got to be the big thinkers. Modelled inside that company of the future is going to be something similar to what the model is in Bridgewater.

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