Bridgewater Associates: Leadership Lessons and Super-mind Organizations
“Thinking is easy, acting is difficult, and to put one’s thoughts into action is the most difficult thing in the world.” – Johann Wolfgang von Goethe
Leaders should love organizations. I’m excited that more business dialogue acknowledges this point for reasons other than positional power or economic gain. An increased appreciation for the value that intentionally-designed, well-administered organizations bring to team member’s lives and personal development, to customer’s well-being and satisfaction, and to local stakeholder’s enablement; is evident and exciting.
I have been fortunate to be a part of organizations at the forefront of this mindset shift with leaders that are true originals. Leaders who have clearly given deep thought to the organizations they are building and to the internalized values they are embedding within their workplace communities. Below I attempt to unpack some of the practices that have enabled one such organization and its leaders to deliver both outstanding business and individual growth outcomes.
Of focus is Bridgewater Associates and Ray Dalio. While some engaged discussions have occurred, given the publication of multiple books and various media appearances, I question whether some of the magic gets lost via media translation. Personally, I found Bridgewater to be a uniquely high-performing learning organization at scale. Most importantly, they achieved this status via rigorous, intentional, and continuous designs by its leadership team. Bridgewater devised innovative ways to integrate their values, ideas, and actions within a dynamic, growing community.
First, some trends that materially impact our business world today and that particularly manifest at Bridgewater within the hyper-competitive alternative investment industry:
(a) Insight is an increasing component of business outcomes – see Capitalism without Capital. As stated by Dalio, “in order to be successful you are betting against the consensus”. With increasing customer choice, higher stakeholder expectations, and blurred barriers between traditional industries - this is becoming true whether your product is investment returns, iPhones, or children’s movies. In addition, the dimensions of this "insight" continue to expand: cognitives, aesthetics, embodiments, purpose...; we are witnessing additional commercialization of human intangles;
(b) Collaborative genius and collective Super-minds are recognized as the compounding competitive advantage. Leading to many observed “superstar effects” in our global economy;
(c) Communities and affective incentives (“new alphas”) are key to engagement and to accreting discretionary efforts from highly skilled, highly motivated knowledge workers. New alphas, along with technological enablement, are the ingredients to Super-minds.
These trends require a different type of organization and a different type of leader. I believe Ray Dalio is a demonstrated member of this new class. Below are 7 brief descriptions of habits and practices that I witnessed Dalio intentionally displaying and embedding within Bridgewater’s leadership DNA. Resulting in an interesting case study of an innovation machine at scale.
1. A Cognitive Apprenticeship:
“Fortunately, most human behavior is learned observationally through modeling from others.” ― Albert Bandura
Somewhat akin to a traditional apprenticeship of observing a master demonstrate, coach, and provide scaffolding for the acquisition of new skills and talents; Dalio, and Bridgewater, through the application of radical transparency unlock hidden accelerants for adult learning and higher-order skills attainment. At Bridgewater, you are asked to ‘expose your thinking.’ Importantly, you are surrounded by others who are doing the same, including the highest-level leaders. Through the communal practices of articulation, reflection, and exploration of abstract, complex, integrative knowledge spaces; you essentially get a masterclass from one of the best. This drives personal growth and real-time, on-the-job leadership development.
In some ways, Bridgewater is one big cognitive apprenticeship across investment, technology, and management thinking. You are learning these domains while being exposed to methods of innovation, discovery, and knowledge creation which are not covered in any textbook or classroom. You can turn on your TV screen (or iPad) and see multidimensional thinking in practice which awakens you to new and different modes of processing experience.
2. Reflections-in-Action:
“We do not learn from experience... we learn from reflecting on experience.” ― John Dewey
Reflections-in-action continues the theme of enabling adult learning and development, which is a core feature of organizations that intentionally align business, team, and community goals. At Bridgewater, the daily log is essentially an institutionalized work journaling exercise. As acknowledged by many studies of top performers, journaling is one key to compounding 10 years of experiences versus experiencing 1 year, 10 times.
Journaling and real-time reflections (both individual and collective) enable deeper work and deeper learning. These practices serve as internalization tools which transform Bridgewater’s ideas into our ideas; then into my ideas. The degrees of understanding, ownership, and expansion of insights, via continuous ‘ah-ha’ moments, are unmatched. You essentially have an entire organization applying action-inquiry methods to daily interactions.
3. Analogies and Near/Far Transfers:
“Because our educational system is hung up on precision, the art of being good at approximations is insufficiently valued. This impedes conceptual thinking.” ― Ray Dalio, Principles: Life and Work
“Since my world picture approximates reality only crudely, I cannot aspire to optimize anything; at most, I can aim at satisficing. Searching for the best can only dissipate scarce cognitive resources; the best is the enemy of the good.” – Herbert Simon
“Intuition is nothing more and nothing less than recognition.” ― Herbert Simon
The first two practices touch on deepening learning and development. This practice continues that focus while introducing an increased emphasis on collaboration across silos by achieving near-far transfers. By studying polymaths, cognitive scientists have proven that the use of analogies and metaphors enable their ability to understand and integrate content across multiple knowledge domains. They navigate between the precision within a domain and the fuzziness across domains to construct knowledge schemas which allow them to recognize patterns and similarities where others do not.
How does this relate to high-performing organizations?
It has been acknowledged by business leaders that the major impediments to artificial intelligence transformation are internal inertia and team/culture impediments. Barriers of understanding create barriers to collaboration. AI transformation is a collective exercise requiring new thinking from each participant and their respective functions.
Through the meticulous and intentional use of abstractions, objects, scaffoldings, and principles; Dalio enables an expanding group of individuals with different backgrounds and specialized knowledge to see similar constructs and to speak with common terms. By navigating communication between the precise and the fuzzy, Bridgewater has teams of scientists, technologists, investors, strategists, and designers problem solving together. Enabling team members to transfer knowledge from one area to a totally different area (a ‘far’ transfer) which fills in a critical missing piece to integrative excellence.
Not surprisingly, Bridgewater is at the frontier of using AI to transform investment, business, and organizational processes; expanding its collective Super-mind advantages.
4. Developing Bilinguals and Richer Possibilities:
“If you can define the problem differently than everybody else in the industry, you can generate alternatives that others aren’t thinking about.” ― Roger Martin ― Opposable Mind
By embracing cognitive diversity and enabling groups to coalesce into Super-minds with common symbols and constructs; Bridgewater generates not only more ideas but different ideas. A transformation occurs. Science and business discussions become scientific commercial discussions with all participants on equal footing. This integration or higher order meshing increases the possibility space. This enables increasing insights as components of output. In Bridgewater’s case, this manifests via superior investment returns and differentiated organizational design concepts (including their recent Operations co-development arrangement with Genpact).
The benefits to Bridgewater team members are at least twofold. First, by understanding thinking differences, Bridgewater can find ideal roles for team members to exercise their superpowers. Too frequently other organizations take the path of firing or not hiring someone because they do not fit a traditional template. It has been shown that the right job fit has huge impacts on happiness, well-being, and performance. Second, by valuing interdisciplinary integration, Bridgewater offers developmental and learning opportunities to grow in knowledge and functional areas that would be more difficult in other organizations.
The MIT Schwarzman College of Computing was created as “the world needs more Bilinguals”. Bridgewater illustrates the potential that is latent and available to be unlocked.
5. Experimentation and Generativeness:
“the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.” ― Peter Thiel, Zero to One: Notes on Start Ups, or How to Build the Future
I hope these are starting to blend together. As seamless integration may be the major idea at play. Next, are practices that enhance execution, experimentation, and innovation. The appreciation of difference, along with the creation of shared understanding, enables what is called “psychological safety”. Team members become more comfortable disagreeing or exposing original thoughts. Dalio, as a leader, further contributes to this by openly talking about his personal failures and limitations. Many of the principles are related to this objective.
Yet, I believe the true synergy comes when you combine safety and vulnerability, plus common language and collective engagement, along with an unmatched curiosity and commitment to generativeness (trying new things and being willing to fail). For example, Bridgewater has developed terms like “shaper” and “idea generator” to emphasize that they are in an innovation and insights creation business. Their leadership team has created an environment and the infrastructure for experimentation and rapid prototyping. Their discovery-driven operating models always capture learning from failures and keep moving forward. Leading from the top, senior executives conduct pre- and post-mortems that team members can access, learn from, and be encouraged by.
“The most important thing in communication is to hear what isn't being said.” ― Peter Drucker
Leadership development practitioners created the term ‘vertical development’ to reference an expanding category of capacities and competencies needed for 21st-century leadership. Business schools are using the framework 'Be-Know-Do' to re-design curriculum. Vertical development focuses on the ‘Be’ part. As Dalio would say in management meetings, “…it all comes from a place…”.
By putting unusual emphasis on ‘being’ or the essence from which machines, practices, and outcomes manifest; Dalio has demystified and invited Bridgewater leadership to think more about purpose and creating meaningful experiences with others.
Tactically, this is supported by offering transcendental meditation sessions for team members and by encouraging mindfulness practices (among other things). More important, is on a daily basis seeing wisdom-in-practice and the willingness to make principled, long-term oriented decisions over short-term opportunism.
In some ways, this is related to the Level 5 leader from Jim Collins. The meta-thinking and being exhibited by Dalio can relate to several observations made by adult development researcher Aliki Nicolaides. She has illustrated that cultivating a relationship with ambiguity (or “not knowing”) is a key differentiator of transformational leaders. Engaging ambiguity, not as something to avoid, but as a constant companion, a teacher, and a coach; is a way to expand your capacity to influence others and to transform societal institutions. At Bridgewater, via Dalio, this is modeled and encouraged both explicitly and implicitly.
Though all are related, what separates this one from "bilinguals" is a healthy dose of affective thinking. This is about becoming, as much as problem-solving, by being willing to look deep within.
“Facts are rarely self-explanatory; their significance, analysis, and interpretation—depend on context and relevance.” – Dr. Henry Kissinger
“No two men living in the same time live in the same time.” ― Dr. Elliott Jaques
At Bridgewater, you see frontier ideas both conceived and put into practice. As the original quote from Goethe references, this is incredibly difficult to achieve. It requires a high degree of complexity. Thinking across time is another practice exhibited by Dalio which encourages the development of more nuanced understanding and more robust judgment.
Harvard Business School (via Harvard Law School) is recognized as a first-mover in the use of case studies for leadership education. Education for Judgment is a book where HBS professors talk about the strategies, approaches, and challenges of creating real-world contexts for teaching leadership agility. Foundational is openness to reality and acknowledgment of your limitations. By thinking across time, you realize you are one small iota and remain open to learning from the lived experiences of others, including those from other ages and spheres.
In some ways, this brings the practices full circle, as the idea of standing on the shoulders of giants is clear in Bridgewater’s history, methods, and successes.
One of Dalio's stated goals of publishing The Principles was to pass on observations so that others could benefit. My hope is that by contributing to this discussion we can lead to a wider awareness and a larger uptake of these win/win/win practices across organizations.
The practices are consistent with and integrated across knowledge domains including cognitive psychology, adult development, neuroscience, social psychology, sociology, anthropology, and others. The whole-brained individual wants to work in whole-brained organizations. Dalio and Bridgewater recognized this and implemented related practices at scale. To capitalize on similar opportunities, we need to develop leaders who can facilitate and enable these shifts across our organizations. When we look closely similar stories are told at places like Pixar, Apple, Spotify, and Salesforce. Ed Catmull openly expresses his love for Pixar, the organization, and the intentional designs he brought to its development. Not surprising, Pixar would appear on any shortlist of Super-mind enterprises and has the consistent, long-term results to support its case. Future-forward roadmaps are emerging, the challenge is ours to capitalize on them!
