Page 449 - Ray Dalio - Principles

owners to simply turn over the keys to those leaders. That
conflict has to be worked out. Since the purpose of the idea
meritocracy is to produce the best results, and the owners have

the rights and powers to assess that, of course they will make
the determination—though I recommend they choose wisely.

b. Make sure that no one is more powerful than the system or so important
that they are irreplaceable. For an idea meritocracy, it is especially
important that its governance system is more powerful than
any individual—and that it directs and constrains its leaders
rather than the other way around. The Chinese leader Wang

Qishan drew my attention to what happened in ancient Rome
when Julius Caesar revolted against the government, defeated
his fellow general Pompey, seized control of the Republic
from the Senate, and named himself emperor for life. Even
after he was assassinated and governance by the Senate was
restored, Rome would never again be what it was; the era of
civil strife that followed was more damaging than any foreign

war.

c. Beware of fiefdoms. While it’s great for teams and departments
to feel a strong bond of shared purpose, loyalty to a boss or
department head cannot be allowed to conflict with loyalty to
the organization as a whole. Fiefdoms are counterproductive
and contrary to the values of an idea meritocracy.

d. Make clear that the organization’s structure and rules are designed to
ensure that its checks-and-balances system functions well. Every
organization has its own way of doing this. The diagram on
the next page is a sketch of my conceptualization of how this
should work for Bridgewater, which is currently an
organization of about 1,500 people. The principles it follows,
however, are universal; I believe that all organizations need
some version of this basic structure.