Principles are ways of successfully dealing with reality to get what you want out of life.
Ray Dalio, one of the world’s most successful investors and entrepreneurs, cites principles as his key to success.
As the saying goes, "You can't manage what you can't measure." By measuring how your machine is working, you can manage it more easily, especially if you can enlist the help of algorithms to do a lot of your thinking and work for you.
Good metrics come about by first thinking of what information you need to answer your pressing questions and then figuring out how to get it. They do not come about by gathering information and putting it together to see what it tells you. At Bridgewater, we talk about four helpful steps to creating good metrics: 1) know what goal your business is achieving, 2) understand the process for getting to the goal (your "machine" with its people and design), 3) identify the key parts in the process that are the best places to measure, so you know how your machine is working to achieve that goal, and 4) explore how to create levers, tied to those key metrics, that allow you to adjust your process and change your outcomes. To that end, we encourage employees to construct our metrics in conjunction with process flow diagrams and procedures manuals.
The test of the effectiveness of metrics lies in whether they can tell you what and who is doing well and poorly, all the way down to specific people. We aim to have metrics that cascade from the most important matters the CEOs are responsible for at the company level, down through the departments, to the teams within them and the people responsible in each role.