Black and white portrait of Ray Dalio: Narrator and Creator of Life Principles

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.

Work Principle

Manage as Someone Operating a Machine to Achieve a Goal

No matter what work you do, at a high level you are simply setting goals and building machines to help you achieve them. I built the machine that is Bridgewater by constantly comparing its actual outcomes to my mental map of the outcomes that it should be producing, and finding ways to improve it.

I won't say anything specific about how you should set your own organization's goals other than that the high-level principles about goal setting I covered in Life Principles apply equally to individuals and organizations. I will, however, point out that in running your organization, you and the people you work with must be clear on how your lower-level goals--whether they're to produce things cost-effectively, achieve high customer satisfaction, help a certain number of people in need, whatever--grow out of your higher-level goals and values.

No matter how good you are at design, your machine will have problems. You or some other capable mechanic needs to identify those problems and look under the hood of the machine to diagnose their root causes. You or whoever is diagnosing those problems has to understand what the parts of the machine--the designs and the people-- are like and how they work together to produce the outcomes. The people are the most important part, since most everything, including the designs themselves, comes from people. Unless you have a clear understanding of your machine from a higher level--and can visualize all its parts and how they work together--you will inevitably fail at this diagnosis and fall short of your potential.

At Bridgewater, the high-level goal of all of our machines is to create excellent outcomes for our clients--in the returns on their investments, of course, but also in the quality of our relationship and our thought partnership in understanding global economies and markets more broadly. Before we had anything else at Bridgewater, we had this commitment to excellence. Maintaining these extremely high standards has always been a challenge, especially as the pace of our growth and change accelerated. In the next several chapters, I will walk you through a case in which our client service outcomes began to slip and show how we used the 5-Step Process to improve our machine.

But first, I want to share some high-level principles for building and evolving the machine that is any organization.

Work Principle

Find a Meaningful Principle for You

Learn to get more of what you want out of life.

Life Principles

Work Principles

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