Ray Dalio is kind of a legend in financial circles. He started Bridgewater Associates, a hedge fund company, in 1975 in his apartment. By 2012 it had become the largest hedge fund in the world with over $160 billion in assets under management. To do that you have to be good at what you do, but not just you. A single person can’t do this by themselves, they need to have partners, associates, staff, that have the same sort of philosophy and ideology as the founder. And guess what the founder thinks?
Ray Dalio wrote a book, Principles: Life and Work, that talks about the principles that he used in his life and in his work, to achieve the success he has had both personally and professionally. His Life Principles talk about the sort of principles that he tries to embody personally to make his personal life more effective, more meaningful.
From a Work Principles perspective, he has 16 different principles that he feels were effective for him with regard to Bridgewater Associates. He further divided these principles into three general areas that I think everyone can agree, need to be in harmony to be successful:
- To Get the Culture Right
- To Get the People Right
- To Build and Evolve Your Machine
Since Culture seems to be key to a lot of things, let’s focus on how to get the culture right. And, you guessed it, that familiar refrain is there:
Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn From Them.
Seem familiar? It should, as I’ve written about it again and again. In order for a business to be successful, an organization to be successful, it has to learn from failure. Not commit failures and accept them, but to learn from them.
By creating an environment in which it is okay to safely make mistakes so that people can learn from them, you’ll see rapid progress and fewer significant mistakes.
I don’t know about you but there seems to be a significant, not just a blip, but a significant body of experiential knowledge around this simple fact: people/organizations that learn from mistakes thrive. And yet it is sometimes difficult to understand why some people and a lot of organizations fail to embody this concept, fail to make it a part of their culture.
Blame and credit don’t exist. As Ray Dalio says “Remember that what has already happened lies in the past and no longer matters except as a lesson for the future.” Too many organizations base raises / promotions on who was responsible, who got credit for the good things and who got blamed for the bad things. As a result, people look at accumulating as much “credit” as they can to counteract the “blame”. A failure is always seen as blame and as a result, the people in that culture do what they can to avoid being blamed. They will avoid risky decisions, risky projects, situations in which failure is a possibility.
They avoid learning because in order to learn you need to make mistakes.