We applied these ways of operating to the businesses of investing and managing. In the process of investing I developed a practical understanding of what makes businesses and economies succeed, and in the process of managing my company I had to develop a practical understanding of how to manage businesses well. And I liked that my understanding of these subjects could be objectively measured via our investment performance as well as our business performance.
Because Principles is an evolving document, with new principles being added and old ones getting refined all the time, they will be changed.
You have to work in a culture that suits you. That’s fundamental to your happiness and your effectiveness. You also must work in a culture that is effective in producing great outcomes, because if you don’t, you won’t get the psychic and material rewards that keep you motivated. In this section on culture I will share my thoughts on how to match your culture to your needs, and I will explain the type of culture that I wanted and that has worked so well for me: an idea-meritocracy.
In Chapter One, I explain what an idea-meritocracy looks like, and explore why radical truth and radical transparency are essential for it to work well. Being radically truthful and radically transparent are probably the most difficult principles to internalize, because they are so different from what most people are used to. Because this way of being is frequently misunderstood, I tried especially hard to be crystal clear in conveying why we operate this way and how it works in practice.
In Chapter Two, we will turn our attention to why and how to build a culture that fosters meaningful relationships. Besides being rewarding themselves, meaningful relationships enable the radical truth and transparency that allow us to hold each other accountable for producing excellence.
I believe that great cultures, like great people, recognize that making mistakes is part of the process of learning, and that continuous learning is what allows an organization to evolve successfully over time. In Chapter Three, we will explore the principles for doing that well.
Of course, an idea-meritocracy is based on the belief that pulling people’s thinking together and stress-testing it produces better outcomes than when people keep their disparate thoughts in their own heads. Chapter Four contains principles for “getting in sync” well. Knowing how to have thoughtful disagreements is key.
Idea meritocracies carefully weigh the merits of its members’ opinions. Since many opinions are bad and virtually everyone is confident that theirs are good, the process of being able to sort through them well is important to understand.
Since disagreements sometimes remain even after decisions are made, one also needs principles for resolving them that are clearly communicated, consistently adhered to, and universally recognized as fair.
Make your Idea-meritocracy work in a way that suits you
While all of what you read here may seem challenging and complicated in practice, if you believe as I do that there is no better way to make decisions than to have believable people open-mindedly and assertively surface, explore, and resolve their differences, then you will figure out what it takes to operate that way. If an idea-meritocracy doesn’t work well, the fault doesn’t lie in the concept; it lies in people not valuing it enough to make sure that it works.
If you take nothing else away from this book, you owe it to yourself to see what it’s like to experience an idea-meritocracy. If it makes sense to you, I hope you will take the plunge. It won’t take long for you to understand what a radical difference it will make to your work and your relationships.
To have an Idea-meritocracy you need to: put your honest thoughts on the table, have thoughtful disagreement and lastly, abide by agreed-upon ways of getting past disagreement
Trust in Radical Truth and Radical Transparency
Understanding what is true is essential for success, and being radically transparent about everything, including mistakes and weaknesses, helps create the understanding that leads to improvements. That’s not just a theory; we have put this into practice at Bridgewater for over forty years, so we know how it works. But like most things in life, being radically truthful and transparent has cons as well as pros.
Being radically truthful and transparent with your colleagues and expecting your colleagues to be the same with you ensures that important issues are apparent instead of hidden. It also enforces good behavior and good thinking, because when you have to explain yourself, everyone can openly assess the merits of your logic. If you are handling things well, radical transparency will make that clear, and if you are handling things badly, radical transparency will make that clear as well, so it helps to maintain high standards.