Principles – Book Review

One of the most successful investors of the modern era is Ray Dalio who started what is now the largest hedge fund in the world Bridgewater Associates. Dalio has taken a few unique concepts to their extreme and implemented them into his company. These ideas and concepts he has recorded and attempted to automate their use in his company. Principles is his story, his life principles, and his work principles. Bridgewater is an experiment in its own right and Ray has tested many of his principles in real life for an interesting result.

A key takeaway from the book includes the concept of radical transparency. Operating in a manner where as much as possible is out in the open for all employees to see and to hide as little as possible. This is from management meetings about the direction of the company to the strengths and weaknesses of an entry-level analyst. As much information as possible is made available in order to promote trust, understanding, and critique from all those working at Bridgewater. It is a concept which if implemented correctly could truly change a lot of the misunderstandings and promote better decision making. Radical transparency leads to radical accountability, as all intentions, actions, and results are available to all. To me, the implications of radical transparency leading to accountability are tremendous when applied to historically mistrusted or deceitful institutions like Congress or regulatory bodies. Increased transparency leading to increased accountability is a powerful instrument.

Another radical principle worth exploring is an “idea meritocracy.” If you don’t know what that means don’t worry – meritocracy was thrown around in a freshman philosophy class in college and no one wrote it down where I could try to work it out and for a full 3 months, I thought it was Ameritocracy (as in America). I inferred the meaning for the most part but felt silly once I realized all it means is that those with the best abilities or hardest working will win out. It is essentially the American dream that anyone can advance if they work hard enough. Back to Dalio’s concept of idea meritocracy – simply it is that the best ideas should win out no matter who or where they come from. If it is the CEO or if it is the custodian – the best ideas must win in order for an organization or company to flourish. That is much easier said than done as it is more common for the CEO’s idea to be taken as gospel due to his position versus the custodian regardless of the quality of the ideas. Thus for an idea meritocracy to exist employees must have the freedom to share their ideas without judgment or constraints. The first principle radical transparency leading to accountability is crucial for the idea meritocracy to exist.

The last important piece for me which is a theme if not a direct principle is that of experimentation. What I mean by experimentation is the willingness and recognition that iteration and change will always occur. The principles that Dalio lays out are meant to highlight concepts that can be applied to life and work in order to better produce the results you desire from both. I agree with this idea but recognize that another crucial piece is experimenting with new and old things. Life is in a perpetual state of change and only experimenting with new principles – or iterating on old will allow your life and business to adapt and flourish. This willingness to try new things and explore new ways of doing things is how Bridgewater has grown into the company it has. I believe that is a portion of Dalio’s success is due to this experimental environment in which he cultivated. 

I highly recommend this book as I think it touches on a lot of really important themes and highlights many great principles to abide. There are some principles that are core ideas versus tactical implementation. Depending on what type of organization or where your position is in life you will identify different principles that will apply to that situation. Overall a thought-provoking read that will hopefully have you thinking about the implications of each concept.

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