Page 447 - Ray Dalio - Principles

16 And for Heaven’s

Sake, Don’t Overlook

Governance!

All that I’ve said thus far will be useless if you don’t have
good governance. Governance is the oversight system that
removes the people and the processes if they aren’t working
well. It is the process that checks and balances power to assure
that the principles and interests of the community as a whole
are always placed above the interests and power of any

individual or faction. Because power will rule, power must be
put in the hands of capable people in key roles who have the
right values, do their jobs well, and will check and balance the
power of others.

I didn’t realize the importance of this sort of governance
until after I transitioned out of the CEO role, because I was an
entrepreneur and company builder (as well as an investment

manager) who largely did what I thought was best. While I
needed and developed double-checks on myself—I created a
Management Committee that I put above me so that I had to
report to it—I always had the power of my equity to change
things, though I never used it. Some might say that I was a
benevolent despot because while I had all the power (the

complete voting rights), I exercised my power in an idea-
meritocratic way, recognizing that the good of the whole was
best for us all, and that I needed to be double-checked. I
certainly did not create the sort of governance system
appropriate for Bridgewater, given its scale.

For example, Bridgewater didn’t have a board of directors

overseeing the CEOs, there were no internal regulations, no