Ray Dalio on Failure, Meaningful Work and Relationships

[tommcginnis]

I'll admit I really don't know who Dalio is.

The first time I saw/heard of him (during the Financial Crisis maybe??), he was the centerpoint of an hour-long video that said *so*much* of what I *personally* thought needed to be said (and that I said myself to econ and polsci classes). I was thinking "Yay, TEAM!!" and was on the Dalio bus for sure.

And maybe a year or two after that, I saw that there was another Dalio video going 'round, and I set aside some time -- you know -- to 'absorb the wisdom-soaked sweat' from the brow of my hero. But I was stunned by 60 minutes of idiocy -- even idiosyncratic idiocy.

So who's Ray Dalio??? Is he the lone voice crying (sense) in the (noisy) wilderness?
Or is he the Kool-Aid mixing/Kool-Aid swilling danger-bat flying around in too many belfries?

Dunno. But in 2017, when I hear "Dalio", I reach for my salt shaker.

 

[Sig]

Dalio has that aura all great founders have and communicates his ideas well. IMO, I still find that blunt honesty isn't well received by most people.

One of the most enlightening books I've read on leadership was by a Navy Seal commander named Jocko Willink. I expected him to espouse the hard charging stereotypical philosophy of an operator.

But he surprised me. One of his precepts is "The indirect way"...not so confrontational or blunt but subtle and effective communication as well as leadership. It's an interesting supplement to Dalio's approach.

The "radical honesty" thing directly conflicts with the "praise in public, criticize in private" concept that is taught in every military leadership class and pretty universally espoused. Officers and senior enlisted in the military spend a great deal of their time studying, discussing, and practicing leadership with a good number of PhDs in leadership among both the officer and enlisted ranks, so it's something that's pretty well thought out. I'm a product of that so I cringe when I read about the Dalio "philosophy", but I try to be open minded and think about the difference in his work force and their mission and how that may require different leadership tenets. Like you I'd tend to think that if you can take the time to criticize in private when people literally die due to mistakes, then you could also to it at a hedge fund, but that's just me.

 

[truetype]

The "radical honesty" thing

"Radical candor" is in vogue these days. The Kim Scott book isn't a bad read.

 

[newwurldmn]

The "radical honesty" thing directly conflicts with the "praise in public, criticize in private" concept that is taught in every military leadership class and pretty universally espoused. Officers and senior enlisted in the military spend a great deal of their time studying, discussing, and practicing leadership with a good number of PhDs in leadership among both the officer and enlisted ranks, so it's something that's pretty well thought out. I'm a product of that so I cringe when I read about the Dalio "philosophy", but I try to be open minded and think about the difference in his work force and their mission and how that may require different leadership tenets. Like you I'd tend to think that if you can take the time to criticize in private when people literally die due to mistakes, then you could also to it at a hedge fund, but that's just me.

I think "radical honesty" has to do with criticizing ideas - not people, and preventing group think from taking over.

I was never in the military but I suspect the chain of command is more important than questioning the assumptions your boss is making.

 

[Sig]

I think "radical honesty" has to do with criticizing ideas - not people, and preventing group think from taking over.

I was never in the military but I suspect the chain of command is more important than questioning the assumptions your boss is making.

Maybe I misunderstood, but how it was related to me was that the core goal is to criticize the individual in order to ensure they strip out their inner weakness and learn to follow "The Principles" (their caps not mine) which are Dalio's rules with their heart and soul. Which everyone has to carry with them as part of a rating system where you constantly evaluate peers and supervisors with respect to how well their following The Principles. The even have Principle Captains who are the enforcers who evaluate how well everyone is following the system, and apparently a layer above that of Overseers who ensure Principles compliance by the department heads.
I can tell you from my experience that the military is if anything the opposite of both what your stereotypes of it would be and what Dalio's little thing, whatever you want to call it, appears to be.

 

[newwurldmn]

Maybe I misunderstood, but how it was related to me was that the core goal is to criticize the individual in order to ensure they strip out their inner weakness and learn to follow "The Principles" (their caps not mine) which are Dalio's rules with their heart and soul. Which everyone has to carry with them as part of a rating system where you constantly evaluate peers and supervisors with respect to how well their following The Principles. The even have Principle Captains who are the enforcers who evaluate how well everyone is following the system, and apparently a layer above that of Overseers who ensure Principles compliance by the department heads.
I can tell you from my experience that the military is if anything the opposite of both what your stereotypes of it would be and what Dalio's little thing, whatever you want to call it, appears to be.

I read the free version of Principles and didn't get any of that. It was really about honest assessment of facts. His implementation could be what you are saying, but none of that is indicated in the 2011 version of the book.

 

[Sig]

I read the free version of Principles and didn't get any of that. It was really about honest assessment of facts. His implementation could be what you are saying, but none of that is indicated in the 2011 version of the book.

I agree, that's the ultimate irony of the whole thing. You have this idea that we need to strip the EQ out of every decision and rely on facts and information. Who can argue with that? But to do that, we need to rigidly follow a set of rules from a messianic leader who literally has enforcers to make sure they aren't questioned. How's that for ultimate irony!

 

[sle]

Well, it's simple really - you just have to care about making money more than you care about being right. I try to build that type of thought process on my team, it's tricky (people tend to get touchy about their egos) but everyone knows that it's about that check at the end of the year. Except, of course, when it does not like at my previous setup.

 

[newwurldmn]

Well, it's simple really - you just have to care about making money more than you care about being right. I try to build that type of thought process on my team, it's tricky (people tend to get touchy about their egos) but everyone knows that it's about that check at the end of the year. Except, of course, when it does not like at my previous setup.

Even within your team though it's not obvious if the right trade is long or short and a judgment has to be made. That is where the challenge is and I suspect there is wisdom in his philosophy on how to resolve that; I just haven't figured it out yet.

 

[sle]

Even within your team though it's not obvious if the right trade is long or short and a judgment has to be made. That is where the challenge is and I suspect there is wisdom in his philosophy on how to resolve that; I just haven't figured it out yet.

My way is to attach more weight to the opinion of the person who knows the most about the topic. Than again, I have never managed a big team so it might not work with 50 people (for example).