Page 109 - Ray Dalio - Principles

people are like to build pointillist pictures of them to help us
match people to responsibilities well. Doing this in an
evidence-based way would enhance the idea-meritocratic

process of aligning people’s responsibilities with their merits.

While this all seemed so clear and commonsensical to me,
it was much harder to achieve in practice. About a year into
my transition, I saw that many new managers (and some older
ones) still couldn’t see the patterns of people’s behaviors
through time (in other words, they couldn’t connect the dots
between what people are like and the outcomes they produce).

Their reluctance to probe hard to get at what people are like
was making things more difficult.

But then I had a breakthrough, which grew out of an
observation that the challenges we were having with making
management decisions didn’t exist in our investment decision
making. I realized that, by using big data analytics and other
algorithms, our computers could connect those dots more

efficiently than any of us could, just as they had helped us
make connections in the markets. These systems also didn’t
have personal biases and emotional barriers to overcome, so
those being analyzed couldn’t be offended by the data-driven
conclusions the computers were coming up with. In fact, they
could look at the data and algorithms, assess them for
themselves, and suggest changes if they wanted. We were like

scientists trying to develop tests and algorithms for analyzing
ourselves objectively.

On November 10, 2012, I shared my thoughts with the
Management Committee in an email. Its subject line was “The
Path Out: Systemizing Good Management”:

It is now clear to me that the main difference behind why

the investment management part of Bridgewater is likely to
continue to do well and most of the other parts of
Bridgewater are unlikely to do as well (if we don’t change
how we are operating) is that the decision-making
processes for investment management have been so
systemized that it’s hard for people to screw them up
(because they are largely following the systems’

instructions) while the other areas of Bridgewater are