Page 397 - Ray Dalio - Principles

10 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. In the next several chapters, I will walk you through a case in which our client
service outcomes began to slip and show how we used the 5-Step Process to improve our machine.

But first, I want to share some high-level principles for building and evolving the machine that is
any organization.

10.1 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.
a. 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.