Principles

Dalio states that a successful organization will work as a machine but that problems will inevitably arise. He thus defines a manager as an “organizational engineer” who can rely on data and analysis to achieve goals. Policies enacted by managers, Dalio argues, should always extend from principles.

Managing people involves both delegation and collaborative relationships, instead of micromanagement or a hands-off approach. Responsibilities should be clearly outlined to prevent “job slip” in which individuals do work outside of their position. In addition, employees should be treated appropriately but not necessarily equally across the board. Good managers will be close to their employees but not too close and keep the big picture in mind without being distant.

Leadership, Dalio suggests, is not about acquiring followers and ensuring that people fall in line, but rather about building a strong, resilient culture that accepts questioning and disagreement. Strong leaders will not worry whether people like them or expect others to tell them what to do. Instead, they will seek to make good decisions to support an organization’s mission and to have their goals understood.