From the very beginning, I felt that the people I worked with at Bridgewater were a part of my extended family. When they or members of their families got sick, I put them in touch with my personal doctor to make sure that they were well taken care of. I invited all of them to stay at my house in Vermont on weekends and loved it when they took me up on it. I celebrated their marriages and the births of their children with them and mourned the losses of their loved ones. But to be clear, this was no lovefest. We were tough on each other too, so we could all be as great as we could be. I learned that the more caring we gave each other, the tougher we could be on each other, and the tougher we were on each other, the better we performed and the more rewards there were for us to share. This cycle was self-reinforcing. I found that operating this way made the lows less low and the highs higher. It even made the bad times better than the good ones in some important ways.
Think about some of your toughest experiences in life. I bet it is as true for you as it has been for me that going through them with people you cared about, who cared about you, and who were working as hard as you were for the same mission, was incredibly rewarding. As hard as they were, we look back on some of these challenging times as our finest moments. For most people, being part of a great community on a shared mission is even more rewarding than money. Numerous studies have shown there is little to no correlation between one’s happiness and the amount of money one accumulates, yet there is a strong correlation between one’s happiness and the quality of one’s relationships.
I laid this out in a memo to Bridgewater in 1996:
Bridgewater is not about plodding along at some kind of moderate standard, it is about working like hell to achieve a standard that is extraordinarily high, and then getting the satisfaction that comes along with that sort of super-achievement.
Our overriding objective is excellence, or more precisely, constant improvement, a superb and constantly improving company in all respects.
Conflict in the pursuit of excellence is a terrific thing. There should be no hierarchy based on age or seniority. Power should lie in the reasoning, not the position, of the individual. The best ideas win no matter who they come from.
Criticism (by oneself and by others) is an essential ingredient in the improvement process, yet, if handled incorrectly, can be destructive. It should be handled objectively. There should be no hierarchy in the giving or receiving of criticism.
Teamwork and team spirit are essential, including intolerance of substandard performance. This is referring to one’s recognition of the responsibilities one has to help the team achieve its common goals and the willingness to help others (work within a group) toward these common goals. Our fates are intertwined. One should know that others can be relied upon to help. As a corollary, substandard performance cannot be tolerated anywhere because it would hurt everyone.
Long-term relationships are both intrinsically gratifying and efficient and should be intentionally built. Turnover requires re-training and therefore creates setbacks.
Money is a byproduct of excellence, not a goal. Our overriding objective is excellence and constant improvement at Bridgewater. To be clear, it is not to make lots of money. The natural extension of this is not that you should be happy with little money. On the contrary, you should expect to make a lot. If we operate consistently with this philosophy, we should be productive and the company should do well financially. There is comparatively little age and seniority-based hierarchy.
Each person at Bridgewater should act like an owner, responsible for operating in this way and for holding others accountable for operating in this way.
A believability-weighted idea-meritocracy is the best system for making effective decisions.
Unlike Lombardi, whose success depended on having his players follow his instructions, I needed my players to be independent thinkers who could bang around their different points of view and reach better conclusions than any one of us could come up with on our own. I needed to create an environment in which everyone had the right and the responsibility to make sense of things for themselves and to fight openly for what they think is best, and where the best thinking won out. I needed a real idea-meritocracy, not some theoretical version of one. That’s because an idea-meritocracy, i.e., a system that brings together smart, independent thinkers and has them productively disagree to come up with the best possible collective thinking and resolve their disagreements in a believability-weighted way, will outperform any other decision-making system.