- Ray Dalio runs Bridgewater Associates, the world’s largest hedge fund, according to the principles of “radical truth” and “radical transparency.”
- Employees rate each other across over 100 attributes on a 1-10 scale in an iPad app called “Dots.”
- Dalio demoed the app to the TED 2017 audience in April, now publicly available to watch.
At Bridgewater Associates, the world’s largest hedge fund, all 1,500 employees are constantly rating each other across more than 100 attributes on a 1-10 scale.
In a newly released presentation from the TED 2017 conference in April, Bridgewater founder, chairman, and co-CIO Ray Dalio explained to the audience how this approach fit into his life philosophy.
“My objective has been to have meaningful work and meaningful relationships with the people I work with, and I’ve learned that I couldn’t have that unless I had that radical transparency and that algorithmic decision-making,” he said. “I want to show you why that is. I want to show you how it works.”
Dalio founded Bridgewater in 1975 out of his apartment, and today the Westport, Connecticut-based firm has $US103 billion in hedge fund assets and $US150 billion in total assets under management. Dalio attributes his firm’s success to the investing principles he began developing in the ’80s and the management principles he began developing in the ’90s.
“Dots” is a proprietary iPad app that is a crucial element of radical transparency at Bridgewater, and Dalio gave a demo to the TED audience.
“I warn you that some of the things that I’m going to show you probably are a little bit shocking,” he said.
Dalio pulled up footage of a research team meeting held a week after Donald Trump's presidential victory, where they forecasted economic results of his upcoming presidency.
The footage was available because nearly every meeting is recorded at Bridgewater, primarily so that they may be cited in company-wide emails or weekly teaching assignments.
All employees at the meeting had Dots running on their iPads. There are more than 100 total attributes to choose from, and measure aspects like values and thinking.
Dalio highlighted one of the employees at the meeting, 24-year-old Jen. She felt that Dalio did not hold up to his own standards in the meeting.
Dalio has long said that one of his favourite aspects of his culture is that employees fresh out of college can give him, the founder of the company, harsh critiques without fear of retribution. In fact, they're encouraged to do so, if the situation calls for it.
Jen selected the trait 'Assertive and Open-Minded' around the beginning of the meeting and selected 3 out of 10 (10 being the highest, with 7 considered average). She believed that Dalio was not sharing his reasoning clearly, and wasn't open about it.
Larry, an employee who had been with the firm longer, thought Dalio was actually doing an excellent job at leading the discussion.
Everyone in the meeting could see how the other was rating them and their colleagues on the most important traits pertaining to that meeting, in real time.
Dalio was keeping track of how those present felt he was doing explaining himself and cultivating the discussion.
The Dots app gets its name from how the ratings look in aggregate. Together, the form averages are compiled into an employee's 'baseball card.'
Aside from real-time critique, Dots is used in Bridgewater's 'believability-weighted decision making' process, where questions are posed at meetings. He gave an example where there was a clear popular vote winner.
When each voter's baseball card, their averaged collection of Dots, was considered, the answer was the opposite -- because some people's votes counted more.
Dalio said that an 'idea meritocracy' is not a true democracy. In the example Dalio used, the four people who chose 'no' had much higher Dots ratings on relevant traits like 'Synthesizing through time' and 'Higher level thinking' than did the popular majority that chose 'yes,' and so 'no' was determined to be the better answer.
'So when you leave this room, I'd like you to observe yourself in conversations with others,' Dalio told the TED audience.
He continued: 'Imagine if you knew what they were really thinking, and imagine if you knew what they were really like ... and imagine if they knew what you were really thinking and what were really like.
'It would certainly clear things up a lot and make your operations together more effective. I think it will improve your relationships,' he said, adding that he thinks it is inevitable elements of Bridgewater's radical transparency will emerge in other organisations -- and that, he thinks, is a great thing.
You can watch the full presentation below.
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