Don’t lower the bar. You reach a point in all relationships when you must decide whether you are meant for each other, that’s common in private life and at any organization that holds very high standards. At Bridgewater, we know that we cannot compromise on the fundamentals of our culture, so if a person cannot operate within our requirements of excellence through radical truth and transparency in an acceptable time frame, he or she must leave. Tough love is both the hardest and the most important type of love to give.
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.
Look down on your machine and yourself within it from the higher level. Higher-level thinking isn’t something that’s done by higher-level beings. It’s simply seeing things from the top down. Think of it as looking at a photo of yourself and the world around you from outer space. From that vantage, you can see the relationships between the continents, countries, and seas. Then you can get more granular, by zooming into a closer-up view of your country, your city, your neighborhood, and finally your immediate environment. Having that macro perspective gives you much more insight than you’d get if you simply looked around your house through your own eyes.
Constantly compare your outcomes to your goals. You must always be simultaneously trying to accomplish the goal and evaluating the machine (the people and the design), as all outcomes are reflections of how the machine is running. Whenever you identify a problem with your machine, you need to diagnose whether it is the result of a flaw in its design or in the way your people are handling their responsibilities. Sample size is important. Any problem can be a one-off imperfection or a symptom of root causes that will show up as problems repeatedly. If you look at enough problems, which one it is will become clear.