To be great, you can never compromise the uncompromisable. To Dalio, the uncompromisable is finding out the objective truth and making the best decision.
Many other things are compromisable—people’s emotions, ego, anxiety, and “little deals” that distract from the “big deal” of knowing and acting on the truth. All of these can be sacrificed in the name of making the best decision and finding the objective truth.
Radical truth and transparency are critical to building the best idea meritocracy. If you have access to more truthful information, you can make better decisions. When everyone is able to hear what everyone else is thinking, learning compounds and the organization gets better.
In contrast, hiding the truth from people is like letting your kids grow up while still believing in the Tooth Fairy.
Radical truth means not putting a filter on your thoughts. You reveal your thoughts and questions relentlessly. You surface issues immediately instead of hiding them.
When the entire organization does this, it creates opportunities to have thoughtful disagreement and see things through each other’s eyes. It surfaces disagreements when they first appear, rather than letting them fester under the surface.
In contrast, at many workplaces, people tend to hide their real thoughts, and they bury problems and disagreements. This aggravates misunderstandings or disagreements, and it leads to larger conflicts and distance between team members.
At Bridgewater, everyone has not only the privilege but also the obligation to speak up publicly. For example, an employee sent Ray an email that read, “you deserve a D- for your performance in the meeting...it was obvious that you did not prepare at all.” In how many companies is it encouraged to send the founder/CEO an email like this?
People at Bridgewater are obligated to say what they say to people’s faces, instead of talking behind their backs. Gossip shows a lack of integrity and is considered the worst thing possible at Bridgewater. People who do this are called “slimy weasels.”
As discussed in the decision-making chapter, some good things in life cause short-term pain but long-term gains. This applies to radical truth.
Often the cost to radical truth is open criticism and the discomfort that follows. But this should be seen as a sign of tough love. It’s a sign of caring and respect to tell people what they need to improve.
Dalio expects that when he does something dumb, other people should tell him so immediately and to his face. To do otherwise would be unproductive and unethical.
In essence, radical truth is an organizational reflection of the idea, “Pain + Reflection = Progress.” People who can internalize this on an individual level can operate similarly on the organizational level.
If you’re clear about why you’re being radically truthful, there won’t be any misunderstandings about your intent. People will understand why you’re being tough on them—because your purpose is to arrive at the truth, not to prove that any one person is right or wrong.
Radical truth creates a powerful freedom of thought. When you align what you feel and what you say, life gets simpler. You can focus on the most important things, and you’ll be happier.
In many organizations, hiding mistakes is standard, and people feel they’ll be punished for mistakes. This has the counterproductive effect of hiding the organization’s weak points and lowers performance.
In reality, mistakes are key opportunities for learning. They inevitably cause pain, but that pain is the signal to reflect and diagnose the mistake. You should create a culture that has this mindset as a core value. Ideally, everyone embodies the Life Principles described in the previous part of this summary.
In the organization, it should be OK to make mistakes, admit them, and learn from them. It should never be OK to hide mistakes or to avoid learning from them.
Radical transparency lets everyone see everything. Everyone gets access to the full truthful information, rather than having it filtered through other people first. In turn, people with better information can make better decisions, and the organization draws on the full power of its people.
At Bridgewater, radical transparency means:
Radical transparency has a range of important benefits:
Dalio suggests that you should be radically transparent as a default, with very few exceptions. Often the most difficult information to share is the most important to share, because it builds the trust of people you are sharing it with. Consider the second- and third-order consequences of not sharing something.
Bridgewater has only a few exceptions to radical transparency:
When practiced well, radical truth and radical transparency have a flywheel effect that gets stronger. The more care you give each other, the tougher you can be on each other, the better you will perform, and the more rewards you get.
Radical truth and transparency aren’t easy to execute. Dalio cautions against a few issues:
People will continue to lie, and there will be dishonest people no matter what you try to do. Don’t be naive about this. When they’re caught, they’ll say they’ll never do it again, but they most likely will.
Yet Dalio doesn’t see it as an absolute rule, since firing everyone who has ever lied would mean he’d have no one to work with.
Instead, treat each case of dishonesty independently, and decide it based on the severity of the transgression and the prior history. Get rid of habitual liars.
Then deter future bad behavior with “public hangings” where violators are made examples of.
Radical truth and transparency are so different from how most places operate that most people need an adjustment period. Bridgewater finds that new employees can take 18 months to adjust fully, and many people never adjust at all and leave.
Radical truth and transparency also need to be managed to avoid excesses. With access to all this information, people can get involved in more things than they should. Likewise, people who can’t weigh information responsibly may draw the wrong conclusions from all the data they see.
Getting in sync means getting alignment on all levels, and resolving misunderstandings and disagreements. While it can cost time and energy in the short-term, getting in sync is a great investment, because it helps people resolve their differences and move closer to the truth.
Radical truth, thoughtful disagreement, and radical open-mindedness are necessary to get in sync.
There are endless numbers of disagreements that can possibly be resolved. Prioritize getting in sync on the most important issues with the most believable parties. Make a list of disagreements in priority, then go down the list.
To resolve disagreements, you need to be open-minded and assertive at the same time. You must see things through the other’s eyes while communicating clearly how you see things. This is essential to the idea meritocracy.
Most people find it easier to be assertive, since it’s easier to share how you see things than to empathize with the other person. Remind these people that the real winners are those who change their minds, since they learned something.
Other people are not assertive enough, and they’re too willing to accept others’ conclusions. Hiding your viewpoints hampers the idea meritocracy, since the best ideas result when all ideas are laid on the table.
Keep in mind that suggesting things and questioning are not the same as criticizing. This is the difference between “watch out for the ice” vs “you’re being careless and not looking for the ice.” Your ego may confuse the two.
A person making suggestions may not have concluded a mistake will be made—they’re just double checking.
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