Business Strategy

Billionaire Investor Ray Dalio’s Top 20 Management Principles

Billionaire Investor Ray Dalio’s Top 20 Management Principles

Billionaire Investor Ray Dalio's Top 20 Management Principles

Ray Dalio is the founder of Bridgewater Associates, largest       hedge fund in the world, with $160 billion in possessions.         Since the beginning of 2010, Bridgewater made profits from     its Investments in developed-market currencies                           commodities, equities, and emerging-market debts.

Ray Dalio is a genius and peculiar one at his work. He’s             worth an estimated $15.2 billion himself.

Dalio is a firm believer of “radical transparency”.

“Radical transparency” connotes that each and everything should be under constant surveillance – be it meetings, interviews or interactions and what not. At Bridgewater, all occurrences are taped. Bridgewater is currently being developed according to 210 principles collected by Dalio for his employees. All these rules are the foundation of Bridgewater and bring immense success to the firm.

Here is a summary of Dalio’s 20 core management principles-

Truth deserves an utmost importance

According to Dalio – Truth can be scary sometimes but it’s necessary for all round development. Many employees at Bridgewater got fired for talking after a colleague’s back. According to Dalio – “If you talk behind people’s back at Bridgewater, you are called a slimy weasel.”

Enlighten your team with the fact that failure has no effect if it taught you something positive and progressive

Managers should expect slip-ups from both their employees and themselves. Great problems are created by varying attitudes such as when one gets credit for something good or gets blamed for something wrong. Worrying about ‘blame’ and ‘credit’ or ‘positive’ and ‘negative’ feedback hinders the recursive process crucial to learning.

Get synchronized

There should be a great level of mutual understanding among the employees of what needs to be acquired and how to do that? One way to realize this is by going for discussions about a certain project for attaining results rather than just thinking over the matter again and again. He also considers that, it is the sole responsibility of the managers to meditate on the value of other’s opinions.

Choosing a person to be your employee decides a great part of your success

Look for values along with qualifications in your employees. Those specific qualities that you want your employees be endowed with should be the deciding factor during your hiring process.

Be acquainted with the fact that everyone is different

It is extremely important to realize the fact that each and everyone has his/her strengths. Two people cannot be equally good at doing the same thing. In fact, a good manager takes advantage out of this fact by extracting the best out of his employees.

Team building is a critical process

You need to be the leader of a good and efficient team to perform and expect the best. Dalio considers values at first place, then abilities and after this he goes for skills. He puts great stress on finding a candidate who doesn’t just want the job but wants to be one of the components for the company.

Run your team like a machine

Not managing is having your employees do their jobs without your supervision and concern. Managing includes-

1) Getting an insight on how well your group and designs are functioning to turn your dreams into reality.

2) Constantly improving your employees.

To be successful, you have to learn how to manage. For this, everyone needs to consider the team’s long term goals.

Directness and honesty with employees plays a major role

As believed by Dalio – managers and their employees should not consider the conflicts among them but work together to fight them all. By doing so even the smallest issues will get addressed and chances of improvements and growth will increase many folds.

Don’t be kind with evaluations, just be accurate

One should not wait for periodic evaluations. Constant and no-exception feedback is primary too good training. Also don’t live with this thought that condemning your employees will work negatively for them. Do about their performance in a proper manner that leads to some objective.

Evolve your employees

If an employee is told about exactly what he/she needs to do, to complete a job, it can lead to hopelessness for him/her. “So give people your thoughts on how they might approach their decisions or how and why you would operate in their shoes, but don’t dictate to them,” Dalio says.

Assign roles to employees according to their interest and caliber

Evaluate each of your employees by considering their strengths and assign them work accordingly. Don’t lose on yourself by assigning something non-interesting to your employees.

Define and set standards for what is to be considered as problems and spot them when they happen

Avoid generalizations when you get to root of a difficulty. Point out specific names and exact ways responsible for the difficulty. Set principles defining mistakes and stick to them.

Catch up the roots of problems

Don’t treat problems as if they are one-time occurrences. Problems are just the expression of a certain behavior or bias, so don’t treat them as one-time happenings. Figure out the root of the problem by indulging with your employees so that chances for its repetition are lowered.

Facilitate employees to recognize their problems and how to resolve them

Carry out a detailed analysis on resolved problems and place them in the past and the future framework. Place all in the context of how you want your “machine,” your team, to function at its peak.

Create teams for accomplishing your goals

In Dalio’s words – “An organization is the opposite of a building – the foundation is at the top.”  The goals of a company should be established by the head. She/he should also search and get the managers who can help them achieve these goals.

Constantly attain what you set out to do

Don’t choose great things rather choose to make great things happen.

Be acquainted with what you don’t know

Those who are great at asking and finding answers to significant questions are closer to success. When you encounter any problem, first ask yourself for the solution. It’s well and good if you get satisfied otherwise be the one who is good at asking open-mindedly from the believable ones.

Minimize risk

Dalio manages people the same way as he manages his investments. “Recognize opportunities where there isn’t much to lose and a lot to gain, even if the probability of the gain happening is low,” he writes.

Keep in mind the 80/20 Rule – 20% of the causes lead to 80% of the effects

Dalio says that, leaders must be able to conclude the importance of the tasks in front of them and should also be able to prioritize them.

Go for the outcomes that will induce improvements in you

Dalio advocates considering the events of a day and then deciding whether they exceeded the expectations, met them, or fell below them. Over a particular time period, the regularity of met and exceeded expectations should be on a rising trajectory.

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