Page 470 - Ray Dalio - Principles

PROCESS FLOW DIAGRAM

Just as an engineer uses flow charts to understand the
workflow of what they’re designing, a manager needs a
Process Flow Diagram to help visualize the organization as a
machine. It might have references to an organizational chart
that shows who reports to whom, or the org chart might
supplement the Process Flow Diagram. Ideally the Process

Flow Diagram is made in a way that allows you to both see
things simply at a high level and drop down to lower levels of
detail as needed (e.g., when looking at a person in the diagram,
one can click into their Baseball Card and view other info
about them).

At Bridgewater, we’ve created process maps for every
department in the company that show us clearly all the roles

and the responsibilities for each role and how the work flows
among them to reach intended outcomes.

POLICY AND PROCEDURES MANUALS

This is the compendium of policies and procedures that people
can consult as one would an operating manual. It’s a living
document in which the organization’s learning is codified.

METRICS

As the saying goes, “You can’t manage what you can’t
measure.” By measuring how your machine is working, you
can manage it more easily, especially if you can enlist the help
of algorithms to do a lot of your thinking and work for you.

Good metrics come about by first thinking of what

information you need to answer your pressing questions and
then figuring out how to get it. They do not come about by
gathering information and putting it together to see what it
tells you. At Bridgewater, we talk about four helpful steps to
creating good metrics: 1) know what goal your business is
achieving, 2) understand the process for getting to the goal
(your “machine” with its people and design), 3) identify the