I just read a fascinating treatise on corporate culture and radical honesty called Principles, written by Ray Dalio. If the name is not familiar to you, he founded and is the co-CEO of Bridgewater Associates. With $152 billion in assets and 1500 employees, it is the world’s largest hedge fund.
Dalio started investing when he was twelve years old, using money he earned as a golf caddy. Since then he has grown the company into a wonder of the financial world. It was one of the few hedge funds to actually make money for its clients during the 2008 financial meltdown. As a business leader, he’s in the same league as Steve Jobs, Bill Gates, and George Soros so I was interested to read his thoughts on how he created the organizational culture that drives and maintains such success. His basic premise is that radical honesty and transparency are king, and therefore everyone must be willing to be brutally honest and absolutely open.
To support this kind of culture, he developed the principles described in the treatise with which every employee must be intimately familiar and abide by. I’ll not try to cover all the principles described in the document in this blog (there are many. You can download them for free if you want to read them all. It’s like a small book at 106 pages.) Since I’m very interested in cultures of honesty and candor, though, I’ll comment on three of the principles that caught my eye and that you as a manager might want to implement if you too are interested in creating such a culture on your team.
1. Realize that you have nothing to fear from truth
In our book Absolute Honesty my co-author Bob Phillips and I identify eight common reasons why people fear telling the truth: retribution, hurting other people’s feelings, change, being disliked, losing support, paying the price, losing competitive advantage, and losing face. And these all sound like reasonable fears, but Dalio points out that fear of truth keeps individuals and the organization from improving and growing. So, if you’re afraid to give someone feedback that they need to get better, they never improve and you are forced to figure ways to work around them, which can be a huge drain of energy. If you’re afraid of being disliked, you’ll never make tough decisions that might make someone angry. If you fear losing face, you never take a risk that has the potential to embarrass you…and so on. So Dalio makes it a company mantra that truth rules, and the only thing to fear is failing to be truthful or foisting retribution on some who is. That’s radical honesty.
2. Create an environment in which everyone has the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up about it.
If you’ve read Absolute Honesty, you can guess why I like this principle. It fits in with Absolute Honesty Law #3, which is Disagree and Commit. An organization cannot progress if people withhold their opinions, especially when they disagree with whatever is being discussed. I love the way Dalio phrases it as not having the right to not share what you think. His position appears to be that what the company is paying for is your wisdom, thoughts and opinions and when you don’t volunteer them, you are cheating the company out of its just due.
It also speaks to the practice of transparency. At Bridgewater, almost all meetings are recorded (except those where there’s an overriding reason for privacy, ie private information about a client.) Anyone can have access to these recordings. Dalio appears to be of the strong conviction that leaders should never treat people like mushrooms (keep them in the dark, feed them “mushroom food” and then can them.)
3. Be extremely open (radical honesty)
Dalio puts it this way: “The main reason Bridgewater performs well is that all people here have the power to speak openly and equally and because their views are judged on the merits of what they are saying. Openness leads to truth and trust. Being open about what you dislike is especially important, because things you don’t like need to be changed or resolved.”
Of course, if you are at the receiving end of some of the corrective openness, it can be painful and embarrassing. Dalio basically says to “get over it.” That’s part of the culture. In fact, behaviors that are rewarded at Bridgewater include being open about your own weaknesses, mistakes and shortcomings and asking for help to correct them.
Now that’s a culture where radical honesty is celebrated and according to Dalio, it nurtures a meritocracy of people who are the best in the industry. Their track record certainly proves that.