Principles

Part 3 of Principles opens with a summary and table of the work principles that Dalio discusses in the section. He argues that it is critical for all organizations to spell out their principles. He thinks of organizations as machines “consisting of two major parts: culture and people” (299). Because organizations are rooted in people and culture, it is inevitable that they will change through an “evolutionary/looping process” (303). Most companies fail to evolve and thus decline. Managing the process of growth and change takes commitment to transparency and honesty.

Dalio explains his core argument that organizations should follow the model of an “idea meritocracy,” which is “a system that brings together smart, independent thinkers and has them productively disagree to come up with the best possible collective thinking and resolve their disagreements in a believability-weighted way” (308). Bridgewater has pursued this model by encouraging its employees to openly question practices and goals. Dalio insists that openness fosters better decision making. He closes the introduction by recommending that readings think of his work principles as a practical guide.

Radical transparency is important because it encourages issues to be apparent rather than hidden. When matters are open, then better decisions can be made.