principles.js

var raysPrinciples = [
  "1. Trust in Truth",
  "2. Realize that you have nothing to fear from truth.",
  "3. 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.",
  "4. Be extremely open.",
  "5. Have integrity and demand it from others. a. Never say anything about a person you wouldn't say to them directly, and don't try people without accusing them to their face. b. Don't let 'loyalty' stand in the way of truth and openness.",
  "6. Be radically transparent. a. Record almost all meetings and share them with all relevant people.",
  "7. Don't tolerate dishonesty. a. Don't believe it when someone caught being dishonest says they have seen the light and will never do that sort of thing again.",
  "8. Create a Culture in Which It Is OK to Make Mistakes but Unacceptable Not to Identify, Analyze, and Learn From Them",
  "9. Recognize that effective, innovative thinkers are going to make mistakes.",
  "10. Do not feel bad about your mistakes or those of others. Love them!",
  "11. Observe the patterns of mistakes to see if they are a product of weaknesses.",
  "12. Do not feel bad about your weaknesses or those of others.",
  "13. Don't worry about looking good'worry about achieving your goals.",
  "14. Get over 'blame' and 'credit' and get on with 'accurate' and 'inaccurate.'",
  "15. Don't depersonalize mistakes.",
  "16. Write down your weaknesses and the weaknesses of others to help remember and acknowledge them.",
  "17. When you experience pain, remember to reflect.",
  "18. Be self-reflective and make sure your people are self-reflective.",
  "19. Teach and reinforce the merits of mistake-based learning. a. The most valuable tool we have for this is the issues log (explained fully later., which is aimed at identifying and learning from mistakes.",
  "20. Constantly Get in Synch",
  "21. Constantly get in synch about what is true and what to do about it.",
  "22. Talk about 'Is it true?' and 'Does it make sense?'",
  "23. Fight for right.",
  "24. Be assertive and open-minded at the same time. a. Ask yourself whether you have earned the right to have an opinion. b. Recognize that you always have the right to have and ask questions. c. Distinguish open-minded people from closed-minded people. d. Don't have anything to do with closed-minded, inexperienced people. e. Be wary of the arrogant intellectual who comments from the stands without having played on the field. f. Watch out for people who think it's embarrassing not to know.",
  "25. Make sure responsible parties are open-minded about the questions and comments of others.",
  "26. Recognize that conflicts are essential for great relationships because they are the means by which people determine whether their principles are aligned and resolve their differences. a. Expect more open-minded disagreements at Bridgewater than at most other firms. b. There is giant untapped potential in disagreement, especially if the disagreement is between two or more thoughtful people.",
  "27. Know when to stop debating and move on to agreeing about what should be done. a. However, when people disagree on the importance of debating something, it should be debated. b. Recognize that 'there are many good ways to skin a cat.' c. For disagreements to have a positive effect, people evaluating an individual decision or decision-maker must view the issue within a broader context. d. Distinguish between 1. idle complaints and 2. complaints that are meant to lead to improvement.",
  "28. Appreciate that open debate is not meant to create rule by referendum.",
  "29. Evaluate whether an issue calls for debate, discussion, or teaching. a. To avoid confusion, make clear which kind of conversation (debate, discussion, or teaching. you are having b. Communication aimed at getting the best answer should involve the most relevant people. c. Communication aimed at educating or boosting cohesion should involve a broader set of people than would be needed if the aim were just getting the best answer. d. Leverage your communication.",
  "30. Don't treat all opinions as equally valuable. a. A hierarchy of merit is not only consistent with a meritocracy of ideas but essential for it.",
  "31. Consider your own and others' 'believabilities.' a. Ask yourself whether you have earned the right to have an opinion. b. People who have repeatedly and successfully accomplished the thing in question and have great explanations when probed are most believable. c. If someone asks you a question, think first whether you're the responsible party/right person to be answering the question.",
  "32. Spend lavishly on the time and energy you devote to 'getting in synch' because it's the best investment you can make.",
  "33. If it is your meeting to run, manage the conversation. a. Make it clear who the meeting is meant to serve and who is directing the meeting. b. Make clear what type of communication you are going to have in light of the objectives and priorities. c. Lead the discussion by being assertive and open-minded. d. A small group (3 to 5. of smart, conceptual people seeking the right answers in an open-minded way will generally lead to the best answer. e. 1+1=3. f. Navigate the levels of the conversation clearly. g. Watch out for 'topic slip.' h. Enforce the logic of conversations. i. Worry about substance more than style. j. Achieve completion in conversations. k. Have someone assigned to maintain notes in meetings and make sure follow-through happens. l. Be careful not to lose personal responsibility via group decision-making.",
  "34. Make sure people don't confuse their right to complain, give advice, and debate with the right to make decisions.",
  "35. Recognize that getting in synch is a two-way responsibility.",
  "36. Escalate if you can't get in synch. To Get the People Right'",
  "37. Recognize the Most Important Decisions You Make Are Who You Choose to Be Your Responsible Party",
  "38. Remember that almost everything good comes from having great people operating in a great culture.",
  "39. First, match the person to the design. a. Most importantly, find people who share your values. b. Look for people who are willing to look at themselves objectively and have character. c. Conceptual thinking and common sense are required in order to assign someone the responsibility for achieving goals (as distinct from tasks..",
  "40. Recognize that the inevitable responsible party is the person who bears the consequences of what is done.",
  "41. By and large, you will get what you deserve over time.",
  "42. The most important responsible parties are those who are most responsible for the goals, outcomes, and machines (they are those higher in the pyramid..",
  "43. Choose those who understand the difference between goals and tasks to run things.",
  "44. Recognize that People Are Built Very Differently",
  "45. Think about their very different values, abilities, and skills.",
  "46. Understand what each person who works for you is like so that you know what to expect from them.",
  "47. Recognize that the type of person you fit in the job must match the requirements for that job.",
  "48. Use personality assessment tests and quality reflections on experiences to help you identify these differences.",
  "49. Understand that different ways of seeing and thinking make people suitable for different jobs. a. People are best at the jobs that require what they do well. b. If you're not naturally good at one type of thinking, it doesn't mean you're precluded from paths that require that type of thinking.",
  "50. Don't hide these differences. Explore them openly with the goal of figuring out how you and your people are built so you can put the right people in the right jobs and clearly assign responsibilities.",
  "51. Remember that people who see things and think one way often have difficulty communicating and relating to people who see things and think another way.52. Hire Right, Because the Penalties of Hiring Wrong Are Huge.",
  "53. Think through what values, abilities, and skills you are looking for.",
  "54. Weigh values and abilities more heavily than skills in deciding whom to hire.",
  "55. Write the profile of the person you are looking for into the job description.",
  "56. Select the appropriate people and tests for assessing each of these qualities and compare the results of those assessments to what you've decided is needed for the job. a. emember that people tend to pick people like themselves, so pick interviewers who can identify what you are looking for. b. Understand how to use and interpret personality assessments. c. Pay attention to people's track records. d. Dig deeply to discover why people did what they did. e. Recognize that performance in school, while of some value in making assessments, doesn't tell you much about whether the person has the values and abilities you are looking for. f. Ask for past reviews. g. Check references.",
  "57. Look for people who have lots of great questions.",
  "58. Make sure candidates interview you and Bridgewater.",
  "59. Don't hire people just to fit the first job they will do at Bridgewater; hire people you want to share your life with.",
  "60. Look for people who sparkle, not just 'another one of those.'",
  "61. Hear the click: Find the right fit between the role and the person.",
  "62. Pay for the person, not for the job.",
  "63. Recognize that no matter how good you are at hiring, there is a high probability that the person you hire will not be the great person you need for the job.",
  "64. Manage as Someone Who Is Designing and Operating a Machine to Achieve the Goal",
  "65. Understand the differences between managing, micromanaging, and not managing. a. Managing the people who report to you should feel like 'skiing together.' b. An excellent skier is probably going to be more critical and a better critic of another skier than a novice skier.",
  "66. Constantly compare your outcomes to your goals.",
  "67. Look down on your machine and yourself within it from the higher level.",
  "68. Connect the case at hand to your principles for handling cases of that type.",
  "69. Conduct the discussion at two levels when a problem occurs: 1. the 'machine' level discussion of why the machine produced that outcome and 2. the 'case at hand' discussion of what to do now about the problem.",
  "70. Don't try to be followed; try to be understood and to understand others. a. Don't try to control people by giving them orders. b. Communicate the logic and welcome feedback.",
  "71. Clearly assign responsibilities.",
  "72. Hold people accountable and appreciate them holding you accountable. . Distinguish between failures where someone broke their 'contract' from ones where there was no contract to begin with.",
  "73. Avoid the 'sucked down' phenomenon. a. Watch out for people who confuse goals and tasks, because you can't trust people with responsibilities if they don't understand the goals.",
  "74. Think like an owner, and expect the people you work with to do the same.",
  "75. Force yourself and the people who work for you to do difficult things. a. Hold yourself and others accountable.",
  "76. Don't worry if your people like you; worry about whether you are helping your people and Bridgewater to be great.",
  "77. Know what you want and stick to it if you believe it's right, even if others want to take you in another direction.",
  "78. Communicate the plan clearly. a. Have agreed-upon goals and tasks that everyone knows (from the people in the departments to the people outside the departments who oversee them.. b. Watch out for the unfocused and unproductive 'we should (do something..'",
  "79. Constantly get in synch with your people.",
  "80. Get a 'threshold level of understanding'.",
  "81. Avoid staying too distant. a. Tool: Use daily updates as a tool for staying on top of what your people are doing and thinking.",
  "82. Learn confidence in your people'don't presume it.",
  "83. Vary your involvement based on your confidence.",
  "84. Avoid the 'theoretical should.'",
  "85. Care about the people who work for you.",
  "86. Logic, reason, and common sense must trump everything else in decision-making.",
  "87. While logic drives our decisions, feelings are very relevant.",
  "88. Escalate when you can't adequately handle your responsibilities, and make sure that the people who work for you do the same. a. Make sure your people know to be proactive. b. Tool: An escalation button.",
  "89. Involve the person who is the point of the pyramid when encountering material cross-departmental or cross sub-departmental issues.",
  "90. Probe Deep and Hard to Learn What to Expect from Your 'Machine'",
  "91. Know what your people are like, and make sure they do their jobs excellently.",
  "92. Constantly probe the people who report to you, and encourage them to probe you. a. Remind the people you are probing that problems and mistakes are fuel for improvement.",
  "93. Probe to the level below the people who work for you.",
  "94. Remember that few people see themselves objectively, so it's important to welcome probing and to probe others.",
  "95. Probe so that you have a good enough understanding of whether problems are likely to occur before they actually do. a. When a crisis appears to be brewing, contact should be so close that it's extremely unlikely that there will be any surprises. b. Investigate and let people know you are going to investigate so there are no surprises and they don't take it personally.",
  "96. Don't 'pick your battles.' Fight them all.",
  "97. Don't let people off the hook.",
  "98. Don't assume that people's answers are correct.",
  "99. Make the probing transparent rather than private.",
  "100. Evaluate People Accurately, Not 'Kindly'",
  "101. Make accurate assessments. a. Use evaluation tools such as performance surveys, metrics, and formal reviews to document all aspects of a person's performance. These will help clarify assessments and communication surrounding them. b. Maintain 'baseball cards' and/or 'believability matrixes' for your people.",
  "102. Evaluate employees with the same rigor as you evaluate job candidates.",
  "103. Know what makes your people tick, because people are your most important resource.",
  "104. Recognize that while most people prefer compliments over criticisms, there is nothing more valuable than accurate criticisms.",
  "105. Make this discovery process open, evolutionary, and iterative.",
  "106. Provide constant, clear, and honest feedback, and encourage discussion of this feedback. a. Put your compliments and criticisms into perspective. b. Remember that convincing people of their strengths is generally much easier than convincing them of their weaknesses. c. Encourage objective reflection. d. Employee reviews:",
  "107. Understand that you and the people you manage will go through a process of personal evolution.",
  "108. Recognize that your evolution at Bridgewater should be relatively rapid and a natural consequence of discovering your strengths and weaknesses; as a result, your career path is not planned at the outset.",
  "109. Remember that the only purpose of looking at what people did is to learn what they are like. a. Look at patterns of behaviors and don't read too much into any one event. b. Don't believe that being good or bad at some things means that the person is good or bad at everything.",
  "110. If someone is doing their job poorly, consider whether this is due to inadequate learning (i.e., training/experience. or inadequate ability.",
  "111. Remember that when it comes to assessing people, the two biggest mistakes are being overconfident in your assessment and failing to get in synch on that assessment. Don't make those mistakes. a. Get in synch in a non-hierarchical way regarding assessments. b. Learn about your people and have them learn about you with very frank conversations about mistakes and their root causes.",
  "112. Help people through the pain that comes with exploring their weaknesses.",
  "113. Recognize that when you are really in synch with people about weaknesses, whether yours or theirs, they are probably true.",
  "114. Remember that you don't need to get to the point of 'beyond a shadow of a doubt' when judging people.",
  "115. Understand that you should be able to learn the most about what a person is like and whether they are a 'click' for the job in their first year.",
  "116. Continue assessing people throughout their time at Bridgewater.",
  "117. Train and Test People Through Experiences",
  "118. Understand that training is really guiding the process of personal evolution.",
  "119. Know that experience creates internalization.",
  "120. Provide constant feedback to put the learning in perspective.",
  "121. Remember that everything is a case study.",
  "122. Teach your people to fish rather than give them fish.",
  "123. Recognize that sometimes it is better to let people make mistakes so that they can learn from them rather than tell them the better decision. a. When criticizing, try to make helpful suggestions. b. Learn from success as well as from failure.",
  "124. Know what types of mistakes are acceptable and unacceptable, and don't allow the people who work for you to make the unacceptable ones.",
  "125. Recognize that behavior modification typically takes about 18 months of constant reinforcement.",
  "126. Train people; don't rehabilitate them. a. A common mistake: training and testing a poor performer to see if he or she can acquire the required skills without simultaneously trying to assess their abilities.",
  "127. After you decide 'what's true' (i.e., after you figure out what your people are like., think carefully about 'what to do about it.'128. Sort People into Other Jobs at Bridgewater, or Remove Them from Bridgewater",
  "129. When you find that someone is not a good 'click' for a job, get them out of it ASAP.",
  "130. Know that it is much worse to keep someone in a job who is not suited for it than it is to fire someone.",
  "131. When people are 'without a box,' consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them.",
  "132. Do not lower the bar. To Perceive, Diagnose, and Solve Problems'133. Know How to Perceive Problems Effectively",
  "134. Keep in mind the 5-Step Process explained in Part 2.",
  "135. Recognize that perceiving problems is the first essential step toward great management.",
  "136. Understand that problems are the fuel for improvement.",
  "137. You need to be able to perceive if things are above the bar (i.e., good enough. or below the bar (i.e., not good enough., and you need to make sure your people can as well.",
  "138. Don't tolerate badness.",
  "139. 'Taste the soup.'",
  "140. Have as many eyes looking for problems as possible. a. 'Pop the cork.' b. Hold people accountable for raising their complaints. c. The leader must encourage disagreement and be either impartial or open-minded. d. The people closest to certain jobs probably know them best, or at least have perspectives you need to understand, so those people are essential for creating improvement.",
  "141. To perceive problems, compare how the movie is unfolding relative to your script.",
  "142. Don't use the anonymous 'we' and 'they,' because that masks personal responsibility'use specific names.",
  "143. Be very specific about problems; don't start with generalizations.",
  "144. Tool: Use the following tools to catch problems: issues logs, metrics, surveys, checklists, outside consultants, and internal auditors.",
  "145. The most common reason problems aren't perceived is what I call the 'frog in the boiling water' problem.",
  "146. In some cases, people accept unacceptable problems because they are perceived as being too difficult to fix. Yet fixing unacceptable problems is actually a lot easier than not fixing them, because not fixing them will make you miserable. a. Problems that have good, planned solutions are completely different from those that don't.",
  "147. Diagnose to Understand What the Problems Are Symptomatic Of",
  "148. Recognize that all problems are just manifestations of their root causes, so diagnose to understand what the problems are symptomatic of.",
  "149. Understand that diagnosis is foundational both to progress and quality relationships.",
  "150. Ask the following questions when diagnosing.",
  "151. Remember that a root cause is not an action but a reason.",
  "152. Identify at which step failure occurred in the 5-Step Process.",
  "153. Remember that a proper diagnosis requires a quality, collaborative, and honest discussion to get at the truth.",
  "154. Keep in mind that diagnoses should produce outcomes.",
  "155. Don't make too much out of one 'dot''synthesize a richer picture by squeezing lots of 'dots' quickly and triangulating with others.",
  "156. Maintain an emerging synthesis by diagnosing continuously.",
  "157. To distinguish between a capacity issue and a capability issue, imagine how the person would perform at that particular function if they had ample capacity.",
  "158. The most common reasons managers fail to produce excellent results or escalate are",
  "159. Avoid 'Monday morning quarterbacking.'",
  "160. Identify the principles that were violated.",
  "161. Remember that if you have the same people doing the same things, you should expect the same results.",
  "162. Use the following 'drilldown' technique to gain an 80/20 understanding of a department or sub-department that is having problems.",
  "163. Put Things in Perspective",
  "164. Go back before going forward. a. Tool: Have all new employees listen to tapes of 'the story' to bring them up to date.",
  "165. Understand 'above the line' and 'below the line' thinking and how to navigate between the two.",
  "166. Design Your Machine to Achieve Your Goals",
  "167. Remember: You are designing a 'machine' or system that will produce outcomes. a. A short-term goal probably won't require you to build a machine. b. Beware of paying too much attention to what is coming at you and not enough attention to what your responsibilities are or how your machine should work to achieve your goals.",
  "168. Don't act before thinking. Take the time to come up with a game plan.",
  "169. The organizational design you draw up should minimize problems and maximize capitalization on opportunities.",
  "170. Put yourself in the 'position of pain' for a while so that you gain a richer understanding of what you're designing for.",
  "171. Recognize that design is an iterative process; between a bad 'now' and a good 'then' is a 'working through it' period.",
  "172. Visualize alternative machines and their outcomes, and then choose.",
  "173. Think about second- and third-order consequences as well as first-order consequences.",
  "174. Most importantly, build the organization around goals rather than tasks. a. First come up with the best workflow design, sketch it out in an organizational chart, visualize how the parts interact, specify what qualities are required for each job, and, only after that is done, choose the right people to fill the jobs. b. Organize departments and sub-departments around the most logical groupings. c. Make departments as self-sufficient as possible so that they have control over the resources they need to achieve the goals. d. The efficiency of an organization decreases and the bureaucracy of an organization increases in direct relation to the increase in the number of people and/or the complexity of the organization.",
  "175. Build your organization from the top down. a. Everyone must be overseen by a believable person who has high standards. b. The people at the top of each pyramid should have the skills and focus to manage their direct reports and a deep understanding of their jobs. c. The ratio of senior managers to junior managers and to the number of people who work two levels below should be limited, to preserve quality communication and mutual understanding. d. The number of layers from top to bottom and the ratio of managers to their direct reports will limit the size of an effective organization. e. The larger the organization, the more important are 1. information technology expertise in management and 2. cross-department communication (more on these later.. f. Do not build the organization to fit the people.",
  "176. Have the clearest possible delineation of responsibilities and reporting lines. a. Create an organizational chart to look like a pyramid, with straight lines down that don't cross.",
  "177. Constantly think about how to produce leverage. a. You should be able to delegate the details away. b. It is far better to find a few smart people and give them the best technology than to have a greater number of ordinary and less well-equipped people. c. Use 'leveragers.'",
  "178. Understand the clover-leaf design.",
  "179. Don't do work for people in another department or grab people from another department to do work for you unless you speak to the boss.",
  "180. Watch out for 'department slip.'",
  "181. Assign responsibilities based on workflow design and people's abilities, not job titles.",
  "182. Watch out for consultant addiction.",
  "183. Tool: Maintain a procedures manual.",
  "184. Tool: Use checklists. . Don't confuse checklists with personal responsibility. b. Remember that 'systematic' doesn't necessarily mean computerized. c. Use 'double-do' rather than 'double-check' to make sure mission-critical tasks are done correctly.",
  "185. Watch out for 'job slip.'",
  "186. Think clearly how things should go, and when they aren't going that way, acknowledge it and investigate.",
  "187. Have good controls so that you are not exposed to the dishonesty of others and trust is never an issue. a. People doing auditing should report to people outside the department being audited, and auditing procedures should not be made known to those being audited. b. Remember: There is no sense in having laws unless you have policemen (auditors..",
  "188. Do What You Set Out to Do",
  "189. Push through!To Make Decisions Effectively'190. Recognize the Power of Knowing How to Deal with Not Knowing",
  "191. Recognize that your goal is to come up with the best answer, that the probability of your having it is small, and that even if you have it, you can't be confident that you do have it unless you have other believable people test you.",
  "192. Understand that the ability to deal with not knowing is far more powerful than knowing. a. Embrace the power of asking: 'What don't I know, and what should I do about it?' b. Finding the path to success is at least as dependent on coming up with the right questions as coming up with answers.",
  "193. Remember that your goal is to find the best answer, not to give the best one you have.",
  "194. While everyone has the right to have questions and theories, only believable people have the right to have opinions.",
  "195. Constantly worry about what you are missing. a. Successful people ask for the criticism of others and consider its merit. b. Triangulate your view.",
  "196. Make All Decisions Logically, as Expected Value Calculations",
  "197. Considering both the probabilities and the payoffs of the consequences, make sure that the probability of the unacceptable (i.e., the risk of ruin. is nil. a. The cost of a bad decision is equal to or greater than the reward of a good decision, so knowing what you don't know is at least as valuable as knowing. b. Recognize opportunities where there isn't much to lose and a lot to gain, even if the probability of the gain happening is low. c. Understand how valuable it is to raise the probability that your decision will be right by accurately assessing the probability of your being right. d. Don't bet too much on anything. Make 15 or more good, uncorrelated bets.",
  "198. Remember the 80/20 Rule, and Know What the Key 20% Is",
  "199. Distinguish the important things from the unimportant things and deal with the important things first. a. Don't be a perfectionist. b. Since 80% of the juice can be gotten with the first 20% of the squeezing, there are relatively few (typically less than five. important things to consider in making a decision. c. Watch out for 'detail anxiety.' d. Don't mistake small things for unimportant things, because some small things can be very important.",
  "200. Think about the appropriate time to make a decision in light of the marginal gains made by acquiring additional information versus the marginal costs of postponing the decision.",
  "201. Make sure all the 'must-do's' are above the bar before you do anything else.",
  "202. Remember that the best choices are the ones with more pros than cons, not those that don't have any cons. Watch out for people who tend to argue against something because they can find something wrong with it without properly weighing all the pros against the cons.",
  "203. Watch out for unproductively identifying possibilities without assigning them probabilities, because it screws up prioritization.",
  "204. Understand the concept and use the phrase 'by and large.' a. When you ask someone whether something is true and they tell you that 'It's not totally true,' it's probably true enough.",
  "205. Synthesize",
  "206. Understand and connect the dots.",
  "207. Understand what an acceptable rate of improvement is, and that it is the level and not the rate of change that matters most.",
  "208. If your best solution isn't good enough, think harder or escalate that you can't produce a solution that is good enough.",
  "209. Avoid the temptation to compromise on that which is uncompromisable.",
  "210. Don't try to please everyone.What Follows is the Meat'To Get the Culture Right'1. Trust in TruthSo'",
  "2. Realize that you have nothing to fear from truth. Understanding, accepting, and knowing how to effectively deal with reality are crucial for achieving success. Having truth on your side is extremely powerful. While the truth itself may be scary'you have a weakness, you have a deadly disease, etc.'knowing the truth will allow you to deal with your situation better. Being truthful, and letting others be truthful with you, allows you to explore your own thoughts and exposes you to the feedback that is essential for your learning. Being truthful is an extension of your freedom to be you; people who are one way on the inside and another on the outside become conflicted and often lose touch with their own values. It's difficult for them to be happy, and almost impossible for them to be at their best. While the first-order effects of being radically truthful might not be desirable, the second- and third-order effects are great. Do you agree with this?",
  "3. 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.",
  "4. Be extremely open. 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. Discuss your issues until you are in synch or until you understand each other's positions and can determine what should be done. As someone I worked with once explained, 'It's simple'just don't filter.' 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. Through that extreme openness and a meritocracy of thought, we identify and solve problems better. Since we know we can rely on honesty, we succeed more and we ultimately become closer, and since we succeed and are close, we are more committed to this mission and to each other. It is a self-reinforcing, virtuous cycle.Do you agree with this?",
  "5. Have integrity and demand it from others. Integrity comes from the Latin word integer, meaning 'one.' People who are one way on the inside and another way outside lack integrity; they have duality.The second- and third-order effects of having integrity and avoiding duality are great. Thinking solely about what's accurate instead of how it is perceived helps you to be more focused on important things. It helps you sort the people you are around and the environments you are in. It improves the organization's efficiency and camaraderie because the secret things that people think and don't say to each other drive resentment and key issues underground and don't lead to improvement. (please look to book for further explanation.",
  "6. Be radically transparent. Provide people with as much exposure as possible to what's going on around them. Allowing people direct access lets them form their own views and greatly enhances accuracy and the pursuit of truth. Winston Churchill said, 'There is no worse course in leadership than to hold out false hopes soon to be swept away.' The candid question-and-answer process allows people to probe your thinking. You can then modify your thinking to get at the best possible answer, reinforcing your confidence that you're on the best possible path.6a. Record almost all meetings and share them with all relevant people. Provide tapes of all meetings that don't contain confidential information to enhance transparency. Of course, there are some times when privacy is required. If someone gives you confidential information, keep it confidential until you have permission to disclose it.",
  "7. Don't tolerate dishonesty. People typically aren't totally honest, which stands in the way of progress, so don't tolerate this. There's an adjustment process at Bridgewater in which one learns to be completely honest and expect the same from others. Increasingly you engage in logical, unemotional discussions in pursuit of truth in which criticisms are not viewed as attacks, but as explorations of possible sources of problems.7a. Don't believe it when someone caught being dishonest says they have seen the light and will never do that sort of thing again. Chances are they will. The cost of keeping someone around who has been dishonest is likely to be higher than any benefits.8. Create a Culture in Which It Is OK to Make Mistakes but Unacceptable Not to Identify, Analyze, and Learn From ThemSo'",
  "9. Recognize that effective, innovative thinkers are going to make mistakes49 and learn from them because it is a natural part of the innovation process. For every mistake that you learn from you will save thousands of similar mistakes in the future, so, if you treat mistakes as learning opportunities that yield rapid improvements, you should be excited by them. But if you treat them as bad things, you will make yourself and others miserable, and you won't grow. Your work environment will be marked by petty back-biting and malevolent barbs rather than by a healthy, honest search for truth that leads to evolution and improvement. Because of this, the more mistakes you make and the more quality, honest diagnoses you have, the more rapid your progress will be. That's not B.S. or just talk. That's the reality of learning.50 ",
  "10. Do not feel bad about your mistakes or those of others. Love them! Remember that 1. they are to be expected, 2. they're the first and most essential part of the learning process, and 3. feeling bad about them will prevent you from getting better. People typically feel bad about mistakes because they think in a short-sighted way that mistakes reflect their badness or because they're worried about being punished (or not being rewarded.. 49 Thomas Edison said about failure: 'I have not failed. I've just found 10,000 ways that don't work.'",
  "11. Observe the patterns of mistakes to see if they are a product of weaknesses. Connect the dots without ego barriers. If there is a pattern of mistakes, it probably signifies a weakness. Everyone has weaknesses. The fastest path to success is to know what they are and how to deal with them so that they don't stand in your way. Weaknesses are due to deficiencies in learning or deficiencies in abilities. Deficiencies in learning can be rectified over time, though usually not quickly, while deficiencies in abilities are virtually impossible to change. Neither is a meaningful impediment to getting what you want if you accept it as a problem that can be designed around.",
  "12. Do not feel bad about your weaknesses or those of others. They are opportunities to improve. If you can solve the puzzle of what is causing them, you will get a gem'i.e., the ability to stop making them in the future. Everyone has weaknesses and can benefit from knowing about them. Don't view explorations of weaknesses as attacks. A person who receives criticism'particularly if he tries to objectively consider if it's true'is someone to be admired.",
  "13. Don't worry about looking good'worry about achieving your goals. Put your insecurities away and get on with achieving your goals. To test if you are worrying too much about looking good, observe how you feel when you find out you've made a mistake or don't know something. If you find yourself feeling bad, reflect'remind yourself that the most valuable comments are accurate criticisms. Imagine how silly and unproductive it would be if you thought your ski instructor was blaming you when he told you that you fell because you didn't shift your weight properly. If a criticism is accurate, it is a good thing. You should appreciate it and try to learn from it.",
  "14. Get over 'blame' and 'credit' and get on with 'accurate' and 'inaccurate.' When people hear, 'You did XYZ wrong,' they have an instinctual reaction to figure out possible consequences or punishments rather than to try to understand how to improve. Remember that what has happened lies in the past and no longer matters, except as a method for learning how to be better in the future. Create an environment in which people understand that remarks such as 'You handled that badly' are meant to be helpful (for the future. rather than punitive (for the past.. While people typically feel unhappy about blame and good about credit, that attitude gets everything backwards and can cause major problems. Worrying about 'blame' and 'credit' or 'positive' and 'negative' feedback impedes the iterative process essential to learning.",
  "15. Don't depersonalize mistakes. Identifying who made mistakes is essential to learning. It is also a test of whether a person will put improvement ahead of ego and whether he will fit into the Bridgewater culture. A common error is to say, 'We didn't handle this well,' rather than, 'Harry didn't handle this well.' This occurs when people are uncomfortable connecting specific mistakes to specific people because of ego sensitivities. This creates dysfunctional and dishonest organizations. Since individuals are the most important building blocks of any organization and since individuals are responsible for the ways things are done, the diagnosis must connect the mistake to the specific individual by name. Someone created the procedure that went wrong, or decided we should act according to that procedure, and ignoring that fact will slow our progress toward successfully dealing with the problem.",
  "16. Write down your weaknesses and the weaknesses of others to help remember and acknowledge them. It's unhealthy to hide them because if you hide them, it will slow your progress toward successfully dealing with them. Conversely, if you confront and don't tolerate them, you will inevitably evolve past them.",
  "17. When you experience pain, remember to reflect. You can convert the 'pain' of seeing your mistakes and weaknesses into pleasure. If there is only one piece of advice I can get you to remember it is this one. Calm yourself down and think about what is causing your psychological pain. Ask other objective, believable parties for their help to figure it out. Find out what is true. Don't let ego barriers stand in your way. Remember that pains that come from seeing mistakes and weaknesses are 'growing pains' that you learn from.51 Don't rush through them. Stay in them and explore them because that will help build the foundation for improvement. It is widely recognized that 1. changing your deep-seated, harmful behavior is very difficult yet necessary for improvement and 2. doing this generally requires a deeply felt recognition of the connection between your harmful behavior and the pain it causes. Psychologists call this 'hitting bottom.",
  "18. Be self-reflective and make sure your people are self-reflective. This quality differentiates those who evolve fast from those who don't. When there is pain, the animal instinct is 'fight or flight' (i.e., to either strike back or run away. 'reflect instead. When you can calm yourself down, thinking about the dilemma that is causing you pain will bring you to a higher level and enlighten you, leading to progress. That is because the pain you are feeling is due to something being at odds'maybe it's you encountering reality, such as the death of a friend, and not being able to accept it. (please look to book for further explanation.",
  "19. Teach and reinforce the merits of mistake-based learning. We must bring mistakes into the open and analyze them objectively, so managers need to foster a culture that makes this normal and penalizes suppressing or covering up mistakes. Probably the worst mistake anyone can make at Bridgewater is not facing up to mistakes'i.e., hiding rather than highlighting them. Highlighting them, diagnosing them, thinking about what should be done differently in the future, and then adding that new knowledge to the procedures manual are all essential to our improvement.19a. The most valuable tool we have for this is the issues log (explained fully later., which is aimed at identifying and learning from mistakes. Using this tool is mandatory because we believe that enforcing this behavior is far better than leaving it optional. 20. Constantly Get in SynchSo'",
  "21. Constantly get in synch about what is true and what to do about it. Getting in synch helps you achieve better answers through considering alternative viewpoints. It can take the forms of asking, debating, discussing, and teaching how things should be done. Sometimes it is to make our views on our strengths, weaknesses, and values transparent in order to reach the understanding that helps us move forward. Sometimes it is to be clear about who will do what and the game plan for handling responsibilities. So this process can be both a means of finding the best answers and pushing them ahead. (please check the book for further explanation.",
  "22. Talk about 'Is it true?' and 'Does it make sense?' In a culture that values both independent thinking and innovation, each individual has both the right and the obligation to ensure that what they do, and what we collectively do, in pursuit of excellence, makes sense to them. So, get in synch about these things.",
  "23. Fight for right. Discuss or debate important issues with the right relevant parties in an open-minded way until the best answers are determined. This process will maximize learning and mutual understanding. Thrash it out to get to the best answer.",
  "24. Be assertive and open-minded at the same time. Just try to find out what is true. Don't try to 'win' the argument. Finding out that you are wrong is even more valuable than being right, because you are learning.24a. Ask yourself whether you have earned the right to have an opinion. Opinions are easy to produce, so bad ones abound. Knowing that you don't know something is nearly as valuable as knowing it. The worst situation is thinking you know something when you don't. 24b. Recognize that you always have the right to have and ask questions. 24c. Distinguish open-minded people from closed-minded people. Open-minded people seek to learn by asking questions; they realize that what they know is little in relation to what there is to know and recognize that they might be wrong. Closed-minded people always tell you what they know, even if they know hardly anything about the subject being discussed.",
  "25. Make sure responsible parties are open-minded about the questions and comments of others. They are required to explain the thinking behind a decision openly and transparently so that all can understand and assess it. Further, in the event of disagreement, an appeal should be made to either the manager's boss or an agreed-upon, knowledgeable group of others, generally including people more believable than and senior to the decision-maker. The person(s. resolving the dispute must do this objectively and fairly; otherwise our system will fail at maintaining its meritocracy of ideas.",
  "26. Recognize that conflicts are essential for great relationships because they are the means by which people determine whether their principles are aligned and resolve their differences. I believe that in all relationships, including the most treasured ones, 1. there are principles and values each person has that must be in synch for the relationship to be successful and 2. there must be give and take. I believe there is always a kind of negotiation or debate between people based on principles and mutual consideration. What you learn about each other via that 'negotiation' either draws you together or drives you apart. If your principles are aligned and you can work out your differences via a process of give and take, you will draw closer together. If not, you will move apart.",
  "27. Know when to stop debating and move on to agreeing about what should be done. I have seen people who agree on the major issues waste hours arguing over details. It's more important to do big things well than to do small things perfectly. Be wary of bogging down amid minor issues at the expense of time devoted to solidifying important agreements.27a. However, when people disagree on the importance of debating something, it should be debated. Operating otherwise would essentially give someone (typically the boss. a de facto veto right.",
  "28. Appreciate that open debate is not meant to create rule by referendum. It is meant to provide the decision-maker with alternative perspectives in anticipation of a better answer. It can also be used to enhance understanding of others' views and abilities and, over time, assess whether someone should be assigned a responsibility. It doesn't mean there can't be some designs in which a group oversees a person. But that's designed and embedded in the organizational structure, specifying the people responsible for oversight who are chosen because of their knowledge and judgment.",
  "29. Evaluate whether an issue calls for debate, discussion, or teaching. Debate, discussion, and teaching are all ways of getting in synch, but they work differently and the approach you choose should reflect your goal and the relative believability of the people involved. Debate is generally among approximate equals; discussion is open-minded exploration among people of various levels of understanding; and teaching is between people of different levels of understanding.",
  "30. Don't treat all opinions as equally valuable. Almost everyone has an opinion, but many are worthless or harmful. The views of people without track records are not equal to the views of people with strong track records. Treating all people equally is more likely to lead away from truth than toward it. People without records of success who are nonetheless confident about how things should be done are either na've or arrogant. In either case, they're potentially dangerous to themselves and others. However, all views should be considered in an open-minded way, albeit placed in the proper context of experience and track record.",
  "31. Consider your own and others' 'believabilities.' By believability, I mean the probability that a person's view will be right. While we can never know this precisely, we can roughly assess it according to the quality of a person's reasoning and their track record. Of course, different people will have different views of their own and other's believability, which is fine. Just recognize that this is a reality that is relevant in a number of ways. Ask, 'Why should I believe you?' and 'Why should I believe myself?'31a. Ask yourself whether you have earned the right to have an opinion.",
  "32. Spend lavishly on the time and energy you devote to 'getting in synch' because it's the best investment you can make. You will inevitably need to prioritize because of time constraints, but beware of the tremendous price of skimping on quality communication.",
  "33. If it is your meeting to run, manage the conversation. There are many reasons why meetings go poorly, but frequently it is because of a lack of clarity about the topic or the level at which things are being discussed (e.g., the principle/machine level, the case-at-hand level, or the specific-fact level.. To manage the meetings well:33a. Make it clear who the meeting is meant to serve and who is directing the meeting. Every meeting is for the purpose of meeting someone's goals; that person is the responsible party for the meeting and decides what s/he wants to get out of it and how s/he will do so. Meetings without a clear responsible party run a high risk of being directionless and unproductive.",
  "34. Make sure people don't confuse their right to complain, give advice, and debate with the right to make decisions. Discussion does not mean rule by referendum. While our culture is marked by extreme openness, some people mistakenly assume we have group decision-making in which all views are treated equally and consensus rules. Since not all views are equally valuable, I don't believe in consensus decision-making or referendums. We operate not only by open debate but also by clearly assigning personal responsibility to specific people. While these two values might seem at odds, personal responsibility and open debate work together to synthesize effective decision-making at Bridgewater. Everyone does not report to everyone here. Instead,responsibility and authority are assigned to individuals based on our assessment of their ability to handle them. I want the most capable individuals assigned to each job.",
  "35. Recognize that getting in synch is a two-way responsibility. In any conversation there is a responsibility to transmit and a responsibility to receive. Misinterpretations are going to take place. Often, difficulty in communication is due to people having different ways of thinking (e.g., left-brained thinkers talking to right-brained thinkers.. The parties involved should 1. realize that what they might be transmitting or receiving might not be what was meant, 2. consider multiple possibilities, and 3. do a back and forth so that they can get in synch. People do the opposite'confidently thinking that they've communicated their intent clearly, not considering multiple possibilities and then blaming the other parties for the misunderstanding. Learn lessons from your problems in communications to improve.",
  "36. Escalate if you can't get in synch. If you can't understand or reconcile points of view with someone else, agree on a third party to provide guidance. This person could be your manager or another agreed-upon, believable person or group who can resolve the conflict objectively, fairly, and sensibly. This mechanism is a key element of our culture and crucial for maintaining a meritocracy of ideas.",
  "54 In fact, I once toyed with the possibility of developing a voting system based on a believability matrix. Though that might not be possible for practical reasons, it suggests the merit-based decision-making we aspire toward with our current process. The challenging and probing we encourage are not meant to second-guess every decision but to help us assess the quality of our work over time.To Get the People Right'37. The Most Important Decision You Can Make is Who You Choose as Your Responsible PartySo'",
  "38. Remember that almost everything good comes from having great people operating in a great culture. I cannot emphasize strongly enough how important the selection, training, testing, evaluation, and sorting out of people is. If you put the goals and the tasks in the hands of people who can do them well, and if you make crystal clear that they are personally responsible for achieving the goals and doing the tasks, they should produce excellent results. This section is about the people part of the feedback loop process, diagramed below.",
  "39. First, match the person to the design. Understand what attributes matter most for a job, and then ascertain whether an individual has them. This matching process requires 1. visualizing the job and the qualities needed to do it well, and then 2. ascertaining if the individual has those qualities.Look for believable responsible parties who love producing great results.55 Remember that values are most important'e.g., if 'work' is what people have to do to make money, I don't want people to 'work' here. I only want people at Bridgewater who are joining us on an important, shared mission to do great things. 39a. Most importantly, find people who share your values. At Bridgewater, those key values are a drive for excellence, truth at all costs, a high sense of ownership, and strong character (by character, I mean the willingness to do the good but difficult things..",
  "40. Recognize that the inevitable responsible party (RP. is the person who bears the consequences of what is done. Because of this, the RP must choose wisely when delegating responsibilities to others, and he must incentivize and manage them appropriately. There is no escaping that. For example, you are the inevitable RP for taking care of your health because you're the one who inevitably bears the consequences. If you're sick, you might choose to delegate the responsibility of figuring out what do to about it to a doctor. However, it is your 55 The thing that I like least (or dislike most. about my job is fighting to maintain standards, but it must be done. I know that the only way for me to succeed and to be happy is to have good people do it for me, which means that I have to hire, train, and sort out people. (please look to book for further explanation.",
  "41. By and large, you will get what you deserve over time. The results that you end up with will reflect how you and your people learn to handle things. So take control of your situation and hold yourself and others accountable for producing great results. People who wish for a great result but are unwilling to do what it takes to get there will fail.",
  "42. The most important responsible parties are those who are most responsible for the goals, outcomes, and machines (they are those higher in the pyramid.. Give me someone who can effectively be responsible for an area'i.e., who can design, hire, and sort to achieve the goal'and I can be comfortable about all that is in that area. Therefore, they are the most important people to choose and manage well.",
  "43. Choose those who understand the difference between goals and tasks to run things. Otherwise you will have to do their jobs for them. The ability to see and value goals is largely innate, though it improves with experience. It can be tested for, though no tests are perfect.  44. Recognize that People Are Built Very DifferentlySo'",
  "45. Think about their very different values, abilities, and skills. Values are the deep-seated beliefs that motivate behaviors; people will fight for their values, and values determine people's compatibility with others. Abilities are ways of thinking and behaving. Some people are great learners and fast processors; others possess common sense; still others think creatively or logically or with supreme organization, etc. Skills are learned tools, such as being able to speak a foreign language or write computer code.While values and abilities are unlikely to change much, most skills can be acquired in a limited amount of time (e.g., most master's degrees can be acquired in two years. and often change in worth (e.g., today's best programming language can be obsolete in a few years.. It is important for you to know what mix of qualities is important to fit each role and, more broadly, with whom you can have successful relationships.",
  "46. Understand what each person who works for you is like so that you know what to expect from them.",
  "47. Recognize that the type of person you fit in the job must match the requirements for that job.How People's Thinking Abilities DifferIn my many years of running Bridgewater, I have learned that people's thinking abilities differ and that it is important to understand these differences so that they are appropriately considered when assigning people to roles. I have tried to find experts who understand these differences to help me better understand and test for them. I have found a few truly insightful people amid a mass of mediocrity.",
  "48. Use personality assessment tests and quality reflections on experiences to help you identify these differences. These should be done openly so that these important differences are embraced and considered in our interactions.",
  "49. Understand that different ways of seeing and thinking make people suitable for different jobs. Since nature created different ways of thinking and since nature never creates anything without a purpose,61 each way of thinking has purposes. Often, thinking well for some purposes necessitates thinking poorly for others. It is highly desirable to understand one's own ways, and others' ways, of thinking, and their best applications. While there is no best quality, there are certainly some qualities that are more suitable for some jobs (e.g., being a math wiz is important for a job that requires a math wiz.. So don't treat everyone the same.Sometimes I see people dealing with each other, especially in groups, without regard for these differences. This is nonsensical. Both people expressing their own views and those considering others' views need to take into account their differences. These differences are real, so it's dumb to pretend they don't exist.",
  "51. Remember that people who see things and think one way often have difficulty communicating and relating to people who see things and think another way. Keep in mind how difficult it is to convey what it means to think in an alternative way for the same reason it would be difficult to convey what the sense of smell is to someone who doesn't have the ability to smell.  52. Hire Right, Because the Penalties of Hiring Wrong Are HugeSo'",
  "53. Think through what values, abilities, and skills you are looking for. A lot of time and effort is put into hiring a person, and substantial time and resources are invested in new employees' development before finding out whether they are succeeding. Getting rid of employees who aren't succeeding is also difficult, so it pays to be as sure as possible in hiring. Refer to our diagram that shows how to achieve your goals by comparing them with the outcomes you're getting, and think of the people part as shown below. By constantly comparing the picture of what the people are like with the qualities needed, you will hire better and evolve faster.61 Even the 'mistakes' that nature makes have a purpose; they are essential for the evolutionary process.",
  "54. Weigh values and abilities more heavily than skills in deciding whom to hire. Avoid the temptation to think narrowly about filling a job with a specific skill.62 While having that skill might be important, what's most important is determining whether you and they are working toward the same goals and can work in the same ways and share the same values.",
  "55. Write the profile of the person you are looking for into the job description.",
  "56. Select the appropriate people and tests for assessing each of these qualities and compare the results of those assessments to what you've decided is needed for the job. Synthesize the results of those tests to see if there is a 'click.'56a. Remember that people tend to pick people like themselves, so pick interviewers who can identify what you are looking for. For example, if you're looking for a visionary, pick a visionary to do the interview where you test for vision. If there is a mix of qualities you're looking for, put together a group of interviewers who embody all of these qualities collectively. Don't choose interviewers whose judgment you don't trust (in other words, choose believable interviewers.. (please look to book for further explanation.",
  "57. Look for people who have lots of great questions. These are even more important than great answers.",
  "58. Make sure candidates interview you and Bridgewater. Show them the real picture. For example, share these principles with them to show how we operate and why. Have them listen to the tapes to see the reality.",
  "59. Don't hire people just to fit the first job they will do at Bridgewater; hire people you want to share your life with. The best relationships are long-term and based on shared missions and values.",
  "60. Look for people who sparkle, not just 'another one of those.' I have too often seen people hired who don't sparkle, just because they have clearly demonstrated they were 'one of those.' If you're looking for a plumber, you might be inclined to fill the job with someone who has years of experience, without confirming whether he has demonstrated the qualities of an outstanding plumber. Yet the difference between hiring an ordinary versus an extraordinary plumber (or any other expert. is huge. So when reviewing a candidate's background, you must identify how this person has demonstrated himself to be outstanding. The most obvious demonstration is outstanding performance within an outstanding peer group. If you're less than excited to hire someone for a particular job, don't do it. The two of you will probably make each other miserable.",
  "61. Hear the click: Find the right fit between the role and the person. Remember that your goal is to put the right people in the right design. First understand the responsibilities of the role, then what qualities are needed to fulfill them excellently, and then ascertain whether an individual has them. This matching process requires 1. visualizing the job and the qualities needed to do it well and 2. ascertaining if the individual has those qualities. I describe this process as 'hearing the click,' because that's the sound of finding the right fit between the role and the individual.",
  "62. Pay for the person, not for the job. Look at what they were paid before and what people with comparable credentials get paid and pay some premium to that, but don't pay based on the job title. ",
  "63. Recognize that no matter how good you are at hiring, there is a high probability that the person you hire will not be the great person you need for the job. Continue the 'interviewing' process as intensely after they are on the job as before, and don't settle. 64. Manage as Someone Who Is Designing and Operating a Machine to Achieve the GoalSo'",
  "65. Understand the differences between managing, micromanaging, and not managing. Micromanaging is telling the people who work for you exactly what tasks to do and/or doing their tasks for them. Not managing is having them do their jobs without your oversight and involvement. Managing means: 1. understanding how well your people and designs are operating to achieve your goals and 2. constantly improving them. To be successful, you need to manage.65a. Managing the people who report to you should feel like 'skiing together.' Like a ski instructor, you need to have close contact with your people on the slopes so that you can assess their strengths and weaknesses as they are doing their jobs. There should be a good back and forth with trial and error. With time, you will be able to decide what they can and can't effectively handle on their own.",
  "66. Constantly compare your outcomes to your goals. Identify problems and diagnose whether the problems are with the way the organization is designed or with the way the people are handling their responsibilities. So remember how the following feedback loop to rapid improvement works.And remember to do this constantly so you have a large sample size. You want to have a large sample size because 1. any one problem can either be a one-off imperfection or symptomatic of root causes that will show up as problems repeatedly; and 2. looking at a large sample size of problems will make clear which it is. Also, the larger your sample size, the clearer the root causes of your problems and the more obvious your solutions will be.If you do this constantly in this way, your evolutionary process should look like this: ",
  "67. Look down on your machine and yourself within it from the higher level. Higher-level thinking doesn't mean the thinking done by higher-level beings. It means seeing things from a top-down perspective'like looking at a photo of Earth from outer space, which shows you the relationships between the continents, countries, and seas, and then going down to a photo of your country, then down to your neighborhood, then down to your family. If you just saw your family without the perspective of seeing that there are millions of other families, and there have been many millions of other families over thousands of years, and observing how your family compares and how families evolve, you would just be dealing with the items that are coming at you as they transpire without the perspective.",
  "68. Connect the case at hand to your principles for handling cases of that type. Remember that every problem and task is just another 'one of those''i.e., another one of a certain type. Figuring out what type it is and reflecting on principles for handling that type of issue will help you do a better job. Whether or not you use the principles written here, you still must decide on a course of action and what guiding principles will be effective. Through this process, you will improve your principles as well as handle your issues better.",
  "69. Conduct the discussion at two levels when a problem occurs: 1. the 'machine' level discussion of why the machine produced that outcome and 2. the 'case at hand' discussion of what to do now about the problem. Don't make the mistake of just having the task-level discussion, because then you are micromanaging'i.e., you are doing your managee's thinking for him and your managee will mistake your doing this as being OK, when that's not OK (because you will be micromanaging.. When having the machine-level discussion, think clearly how things should have gone and explore why they didn't go that way. If you are in a rush to determine what to do and you have to tell the person who works for you what to do, point out that you are having to do this, make clear that you are having to do this and that is what you are doing, and make it a training experience'i.e., explain what you are doing and why.",
  "70. Don't try to be followed; try to be understood and to understand others. Your goal is to understand what is true and improve together. If you want to be followed, either for an egotistical reason or because you believe it more expedient to operate that way, you will pay a heavy price in the long run. If you are the only one thinking, the results will suffer. 70a. Don't try to control people by giving them orders. They will likely resent the orders, and when you aren't looking, defy them. An authoritarian approach also means you aren't developing your employees, and over time they will become increasingly dependent on you, which damages all parties. Instead, the greatest power you have over intelligent people'and the greatest influence they will have on you'comes from constantly getting in synch about what is true and what is best so that they and you want the same things. People must desire to do the right things, and this desire must come from them.",
  "71. Clearly assign responsibilities. Eliminate any confusion about expectations and ensure that people view the failure to achieve their goals and do their tasks as personal failures.64 The most important person is the one who is given the overall responsibility for accomplishing the mission and has both the vision to see what should be done and the discipline to make sure it's accomplished by the people who do the tasks.",
  "72. Hold people accountable and appreciate them holding you accountable. It's better for them, for you, and for the community. Slacker standards don't do anyone any good. People can resent being held accountable, however, and you don't want to have to tell them what to do all the time. Instead, reason with them, so that they understand the value and importance of being held accountable. Hold them accountable on a daily basis. Constant examination of problems builds a sample size that helps point the way to a resolution and is a good way to detect problems early on before they become critical. Avoiding these daily conflicts produces huge costs in the end. 64 You learn principles by experiencing the rewards and punishments of your actions interacting with reality. The clearer the relationship is between cause and effect, the better it is for learning and evolving.",
  "73. Avoid the 'sucked down' phenomenon. This occurs when a manager is pulled down to do the tasks of a subordinate without acknowledging the problem. The sucked down phenomenon bears some resemblance to job slip, since it involves the manager's responsibilities slipping into areas that should be left to others. Both situations represent the reality of a job diverging from the ideal of that job. However, the sucked down phenomenon is typically the manager's response to subordinates' inabilities to do certain tasks or the manager's failure to properly redesign how the responsibilities should be handled in light of changed circumstances. You can tell this problem exists when the manager focuses more on getting tasks done than on operating his machine.73a. Watch out for people who confuse goals and tasks, because you can't trust people with responsibilities if they don't understand the goals. (please look to book for further explanation.",
  "74. Think like an owner, and expect the people you work with to do the same. You must act in the interest of our community and recognize that your well-being is directly connected to the well-being of Bridgewater. For example, spend money like it's your own.",
  "75. Force yourself and the people who work for you to do difficult things. It's usually easy to make things go well if you're willing to do difficult things. We must act as trainers in gyms act in order to keep each other fit. That's what's required to produce the excellence that benefits everyone. It is a law of nature that you must do difficult things to gain strength and power. As with working out, after a while you make the connection between doing difficult things and the benefits you get from doing them, and you come to look forward to doing these difficult things. (please look to book for further explanation.",
  "76. Don't worry if your people like you; worry about whether you are helping your people and Bridgewater to be great. One of the most essential and difficult things you have to do is make sure the people who work for you do their jobs excellently. That requires constantly challenging them and doing things they don't like you to do, such as probing them. Even your best people, whom you regularly praise and reward, must be challenged and probed. You shouldn't be a manager if you have problems confronting people or if you put being liked above ensuring your people succeed. ",
  "77. Know what you want and stick to it if you believe it's right, even if others want to take you in another direction.",
  "78. Communicate the plan clearly. People should know the plans and designs within their departments. When you decide to divert from an agreed-upon path, be sure to communicate your thoughts to the relevant parties and get their views so that you are all clear about taking the new path.78a. Have agreed-upon goals and tasks that everyone knows (from the people in the departments to the people outside the departments who oversee them.. This is important to ensure clarity on what the goals are, what the plan is, and who is responsible to do what in order to achieve the goals. It allows people to buy into the plan or to express their lack of confidence and suggest changes. It also makes clear who is keeping up his end of the bargain and who is falling short. These stated goals, tasks, and assigned responsibilities should be shown at department meetings at least once a quarter, perhaps as often as once a month.",
  "79. Constantly get in synch with your people. Being out of synch leads to confused and inefficient decision-making. It can also lead you in conflicting directions either because 1. you are not clear with each other, which often generates wildly differing assumptions, or 2. you have unresolved differences in your views of how things should proceed and why. Getting in synch by discussing who will do what and why is essential for mutual progress. It doesn't necessarily entail reaching a consensus. Often there will be irreconcilable differences about what should be done, but a decision still needs to be made, which is fine. The process of getting in synch will make it clear what is to be done and why, even if it cannot eliminate difference. One of the most difficult and most important things you must do, and have others do, is bring forth disagreement and work through it together to achieve a resolution. Recognize that this process takes time.",
  "80. Get a 'threshold level of understanding''i.e., a rich enough understanding of the people, processes, and problems around you to make well-informed decisions. ",
  "81. Avoid staying too distant. You need to know your people extremely well, provide and receive regular feedback, and have quality discussions. Your job design needs to build in the time to do these things.81a. Tool: Use daily updates as a tool for staying on top of what your people are doing and thinking. Daily updates are brief descriptions of what the person did that day, what they are planning to do the next day, their problems, their questions, and their observations. They typically take about five minutes to write and do wonders for staying in touch.",
  "82. Learn confidence in your people'don't presume it. It takes time to learn about people and what confidences can be placed in them. Sometimes new people are offended we don't yet have confidence in how they are handling their responsibilities. They think it's a criticism of their abilities when, in fact, it's a realistic recognition that we simply haven't had enough time or direct experience with them to form a point of view. No manager (including myself. should delegate responsibilities to people we don't yet know well enough to have confidence in. And new people shouldn't be offended if we haven't yet formed that confidence.",
  "83. Vary your involvement based on your confidence. Management largely consists of scanning and probing everything for which you are responsible to identify suspicious signs. Based on what you see, you should vary your degree of digging, doing more of it for people and areas that look more suspicious, and less of it where probing instills you with confidence. With the right tools in place and performing well, your scanning will include both reviewing the output of these tools (e.g., 'issues log,' 'metrics,' 'daily updates,' and 'checklists'. and spot-checking.",
  "84. Avoid the 'theoretical should.' The theoretical should occurs when a manager theorizes that people should be able to do something when they can't or without actually knowing whether they can do it.",
  "85. Care about the people who work for you. If you are not working with people you care about and respect, this whole thing ain't worth it. If you don't believe that, you probably shouldn't work at Bridgewater. While it's desirable to convey these feelings, having them is more important. It is good to share your lives together, but not required. Be there for weddings, births, and funerals. This is something that I try to do but fail to do enough because of the numbers, so I convey that I will be there for anyone who really needs me. Personal contact at the time of personal difficulty is a must.",
  "86. Logic, reason, and common sense must trump everything else in decision-making.",
  "87. While logic drives our decisions, feelings are very relevant. A feeling is a reality'and a good reality'and it's up to management to deal with all realities sensibly. Good emotions are important. In fact, they are probably most important since they are the reasons behind the good things we do, e.g., satisfaction with a job wonderfully done and love of others. Emotions are bad only if they cloud judgment and take us away from what we want.",
  "88. Escalate when you can't adequately handle your responsibilities, and make sure that the people who work for you do the same. Escalating means saying that you don't believe that you can successfully handle a situation and that you are passing the 'responsible party' (RP. job to someone else. The person you are escalating to'the person to whom you report'can then decide whether to coach you through it, take control, have someone else handle it, or do something else. However, the boss should avoid being drawn into doing the job of the person who is failing without exploring why the job has not been done successfully without help. It's very important to get an accurate assessment of what each person can and can't do and why. (please look to book for further explanation.",
  "89. Involve the person who is the point of the pyramid when encountering material cross-departmental or cross sub-departmental issues. Imagine an organizational chart as a pyramid that consists of numerous pyramids, so:When issues involve parties that are not in the same part of the pyramid, it is generally desirable to involve the person who is at the point of the pyramid. The individual at the point has the perspective and knowledge to weigh the trade-offs properly and make an informed decision. Not involving the person at the point of the pyramid will likely cause problems. In the diagram above, if persons G and H are having an issue, who is the point of the pyramid? If persons F and I are having an issue, who is the point of the pyramid?65 90. Probe Deep and Hard to Learn What to Expect from Your 'Machine'So'",
  "91. Know what your people are like, and make sure they do their jobs excellently. This requires constantly challenging them and probing them. That's true even if your people are doing their jobs well, even though those people can be given more leeway.",
  "92. Constantly probe the people who report to you, and encourage them to probe you. Managers are much less able to discover the right things to do than most people assume. I know that's true for me. The people who work for you should constantly challenge you, in order for you to become as good as you can be. Also, inviting criticism brings to the surface any subterranean discontent and makes the people working for you responsible for helping to find solutions. It's much easier for people to remain spectators offering unchallenged comments from the stands than to become players on the field. Forcing people onto the field strengthens the whole team. Communication is a two-way responsibility. (please look to book for further explanation.",
  "93. Probe to the level below the people who work for you. You can't understand how the person who reports to you manages others unless you know their direct reports and can observe how they behave with them. Also encourage the people who work two levels below you to bring their disagreements with their bosses to you.",
  "94. Remember that few people see themselves objectively, so it's important to welcome probing and to probe others.",
  "95. Probe so that you have a good enough understanding of whether problems are likely to occur before they actually do. If problems take you by surprise, it is probably because you are either too far removed from your people and processes or you haven't adequately thought through how the people and processes might lead to various outcomes.65 If you answered C and A, you understand the concept. If you didn't, think again.95a. When a crisis appears to be brewing, contact should be so close that it's extremely unlikely that there will be any surprises. 95b. Investigate and let people know you are going to investigate so there are no surprises and they don't take it personally.",
  "96. Don't 'pick your battles.' Fight them all. If you see something wrong, even something small, deal with it. Because 1. small badnesses can be symptomatic of serious underlying problems; 2. resolving small differences of perception may prevent more serious divergences of views; and 3. in trying to help to train people, constant reinforcement of desired behavior is helpful. The more battles you fight, the more opportunities you will have to get to know each other and the faster the evolutionary process will occur.",
  "97. Don't let people off the hook. Ask the important, difficult questions, and independently audit.",
  "98. Don't assume that people's answers are correct. They could be erroneous theories or 'spin,' so you need to occasionally double-check them, especially when they sound questionable. Some managers are reluctant to do this, feeling as though it is the equivalent of saying they don't trust them. These managers need to understand and convey that trust in the accuracy of people's statements is gained or lost through this process. People will learn to be much more accurate in what they say to you if they understand this'and, increasingly, you will learn who and what you can rely on.",
  "99. Make the probing transparent rather than private. That will help to assure the quality of the probing (because others can make their own assessments., and it will reinforce the culture of transparency and freedom to find truth. 100. Evaluate People Accurately, Not 'Kindly'So'",
  "101. Make accurate assessments. Since truth is the foundation of excellence and people are your most important resource, make the most precise personnel evaluations possible. This accuracy takes time and considerable back-and-forth. Your assessment of how responsible parties are performing should be based not on whether they're doing it your way but on whether they're doing it in a good way. Speak frankly, listen with an open mind, consider the views of other believable and honest people, and try to get in synch about what's going on with the person and why. Remember not to be overconfident in your assessments as it's possible you are wrong. (please look to book for further explanation.",
  "102. Evaluate employees with the same rigor as you evaluate job candidates. Ask yourself: 'Would I hire this person knowing what I now know about them?' I find it odd and silly that interviewers often freely and confidently criticize job candidates despite not knowing them well, yet they won't criticize employees for similar weaknesses even though they have more evidence. That is because some people view criticism as harmful and feel less protective of an outsider than they do of a fellow employee. If you believe accuracy is best for everyone, then you should see why this is a mistake and why frank evaluations must be ongoing.",
  "103. Know what makes your people tick, because people are your most important resource. Develop a full profile of each person's values, abilities, and skills. These qualities are the real drivers of behavior, and knowing them in detail will tell you which jobs a person can and cannot do well, which ones they should avoid, and how the person should be trained. I have often seen people struggling in a job and their manager trying for months to find the right response because the manager overlooked the person's 'package.' These profiles should change as the people change.",
  "104. Recognize that while most people prefer compliments over criticisms, there is nothing more valuable than accurate criticisms. While it is important to be clear about what people are doing well, there should not be a reluctance to profile people in a way that describes their weaknesses. It is vital that you be accurate. ",
  "105. Make this discovery process open, evolutionary, and iterative. Articulate your theory of a person's values, abilities, and skills upfront and share this with him; listen to his and others' response to your description; organize a plan for training and testing; and reassess your theory based on the performance you observe. Do this on an ongoing basis. After several months of discussions and real-world tests, you and he should have a pretty good idea of what he is like. Over time, this exercise will crystallize suitable roles and appropriate training, or it will reveal that it's time for the person to leave Bridgewater.",
  "106. Provide constant, clear, and honest feedback, and encourage discussion of this feedback. Don't hesitate to be both critical and complimentary'and be sure to be open-minded. Training and assessing will be better if you frequently explain your observations. Providing this feedback constantly is the most effective way to train.66 106a. Put your compliments and criticisms into perspective. I find that many people tend to blow evaluations out of proportion, so it helps to clarify that the weakness or mistake under discussion is not indicative of your total evaluation. (please look to book for further explanation.",
  "107. Understand that you and the people you manage will go through a process of personal evolution. Personal evolution occurs first by identifying your strengths and weaknesses, and then by changing your weaknesses (e.g., through training. or changing jobs to play to strengths and preferences. This process, while generally difficult for both managers and their subordinates, has made people happier and Bridgewater more successful. Remember that most people are happiest when they are improving and doing things that help them advance most rapidly, so learning your people's weaknesses is just as valuable for them and for you as learning their strengths.",
  "108. Recognize that your evolution at Bridgewater should be relatively rapid and a natural consequence of discovering your strengths and weaknesses; as a result, your career path is not planned at the outset. Your career path isn't planned because the evolutionary process is about discovering your likes and dislikes as well as your strengths and weaknesses. The best career path for anyone is based on this information. In other words, each person's career direction will evolve differently based on what we all learn. This process occurs by putting people into jobs that they are likely to succeed at, but that they have to stretch themselves to do well. They should be given enough freedom to learn and think for themselves while being coached so they can be taught and prevented from making unacceptable mistakes. During this process they should receive constant feedback.",
  "109. Remember that the only purpose of looking at what people did is to learn what they are like. Knowing what they are like will tell you how you can expect them to handle their responsibilities in the future. Intent matters, and the same actions can stem from different causes. 109a. Look at patterns of behaviors and don't read too much into any one event. Since there is no such thing as perfection, even excellent managers, companies, and decisions will have problems. It's easy, though often not worth much, to identify and dwell on tiny mistakes. In fact, this can be a problem if you get bogged down pinpointing and analyzing an infinite number of imperfections. At the same time, minor mistakes can sometimes be manifestations of serious root causes that could cause major mistakes down the road, so they can be quite valuable to diagnose. (to find the process for assessing mistakes, look it up in the book.",
  "110. If someone is doing their job poorly, consider whether this is due to inadequate learning (i.e., training/experience. or inadequate ability. A weakness due to a lack of experience or training or due to inadequate time can be fixed. A lack of inherent ability cannot. Failing to distinguish between these causes is a common mistake among managers, because managers are often reluctant to appear unkind or judgmental by saying someone lacks ability. They also know people assessed this way tend to push back hard against accepting a permanent weakness. Managers need to get beyond this reluctance. In our diagram of thinking through the machine that will produce outcomes, think about'",
  "111. Remember that when it comes to assessing people, the two biggest mistakes are being overconfident in your assessment and failing to get in synch on that assessment. Don't make those mistakes.111a. Get in synch in a non-hierarchical way regarding assessments. The greatest single discrepancy between a manager and a managee is how well each performs his job. In most organizations, evaluations run in only one direction, with the manager assessing the managee. The managee typically disagrees with the assessment, especially if it is worse than the employee's self-assessment, because most people believe themselves to be better than they really are. Managees also have opinions of managers that in most companies they wouldn't dare bring up, so misunderstandings and resentments fester. This perverse behavior undermines the effectiveness of the environment and the relationships between people.",
  "112. Help people through the pain that comes with exploring their weaknesses. Emotions tend to heat up during most disagreements, especially about someone's possible weaknesses. Speak in a calm, slow, and analytical manner to facilitate communication. If you are calm and open to others' views, they are less likely to shut down logical exchanges than if you behave emotionally. Put things in perspective by reminding them that their pain is the pain that comes with learning and personal evolution'they're going to be in a much better place by getting to truth. Consider asking them to go away and reflect when they are calm, and have a follow-up conversation in a few days.",
  "113. Recognize that when you are really in synch with people about weaknesses, whether yours or theirs, they are probably true. Getting to this point is a great achievement. When you reach an agreement, it's a good sign you're there. This is one of the main reasons why the person being evaluated needs to be an equal participant in the process of finding truth. So when you do agree, write it down on the relevant baseball card. This information will be a critical building block for future success.",
  "114. Remember that you don't need to get to the point of 'beyond a shadow of a doubt' when judging people. Instead, work toward developing a mutually agreed 'by-and-large' understanding of someone that has a high level of confidence behind it. When necessary, take the time to enrich this understanding. That said, you should not aim for perfect understanding. Perfect understanding isn't possible, and trying to get it will waste time and stall progress.",
  "115. Understand that you should be able to learn the most about what a person is like and whether they are a 'click' for the job in their first year. You should be able to roughly assess someone's abilities after six to 12 months of close contact and numerous tests and getting in synch about them. A more confident assessment so that you can make a more confident role assignment will probably take about 18 months. This timeline will, of course, depend on the job, the person, the amount of contact with that person, and how well you do it. As I will explain in the section on design, the ratio of senior managers to junior managers, as well as the ratio of managers to the number of people who work two levels below them, should be small enough to ensure quality communication and mutual understanding. Generally, that ratio should not be more than 1:10, preferably more like 1:5.",
  "116. Continue assessing people throughout their time at Bridgewater. You will get to know them better, it will help you train and direct them, and you won't be stuck with an obsolete picture. Most importantly, assess what your people's core values and abilities are and make sure they complement Bridgewater's. Since core values and abilities are more permanent than skills, they are more important to ascertain, especially at Bridgewater. As mentioned, you should be able to roughly assess people's abilities after six to 12 months of close contact and confidently assess them after 18 months. Don't rest with that evaluation, however. Always ask yourself if you would have hired them for that job knowing what you now know. If not, get them out of the job.117. Train and Test People Through ExperiencesSo'",
  "118. Understand that training is really guiding the process of personal evolution. It requires the trainee to be open-minded, to suspend ego in order to find out what he is doing well and poorly, and to decide what to do about it. It also requires the trainer to be open-minded (and to do the other things previously mentioned.. It would be best if at least two believable trainers work with each trainee in order to triangulate views about what the trainee is like. As previously explained, the training should be through shared experiences like that of a ski instructor skiing with his student'i.e., it should be an apprentice relationship.",
  "119. Know that experience creates internalization. A huge difference exists between memory-based 'book' learning and hands-on, internalized learning. A medical student who has 'learned' to perform an operation in his medical school class has not learned it in the same way as a doctor who has already conducted several operations. In the first case, the learning is stored in the conscious mind, and the medical student draws on his memory bank to remember what he has learned. In the second case, what the doctor has learned through hands-on experience is stored in the subconscious mind and pops up without his consciously recalling it from the memory bank. People who excel at book learning tend to call up from memory what they have learned in order to follow stored instructions.",
  "120. Provide constant feedback to put the learning in perspective. Most training comes from doing and getting in synch about performance. Feedback should include reviews of what is succeeding and what is not in proportion to the actual situation rather than in an attempt to balance compliments and criticisms. You are a manager, and you want your machine to function as intended. For it to do so, employees must meet expectations, and only you can help them to understand where they are in relation to expectations. As strengths and weaknesses become clearer, responsibilities can be more appropriately tailored to make the machine work better and to facilitate personal evolution. The more intensely this is done, the more rapid the evolutionary process will be. So you must constantly get in synch about employee performance.",
  "121. Remember that everything is a case study. Think about what it is a case of and what principles apply.",
  "122. Teach your people to fish rather than give them fish. It is a bad sign when you tell people what they should do because that behavior typically reflects micromanagement or inability on the part of the person being managed. Instead, you should be training and testing. So give people your thoughts on how they might approach their decisions or how and why you would operate in their shoes, but don't dictate to them. Almost all that you will be doing is constantly getting in synch about how they are doing things and exploring why. I believe that school overrates the importance of intellectualized learning. People who were terrific in school and very good at this type of learning tend to overvalue it, or at least fail to distinguish it from the experiential/internalized kind of learning.",
  "123. Recognize that sometimes it is better to let people make mistakes so that they can learn from them rather than tell them the better decision. However, since the connections between cause and effect can be misunderstood, providing feedback for these people is essential to the learning process.123a. When criticizing, try to make helpful suggestions. Your goal is to help your people understand and improve, so your suggestions are important. Offering suggestions also helps those being criticized to understand that your goal is to help them and Bridgewater, not to hurt them. 123b. Learn from success as well as from failure. Point out examples of jobs that are well done and the causes of success. This reinforces good behavior and creates role models for those who are learning.",
  "124. Know what types of mistakes are acceptable and unacceptable, and don't allow the people who work for you to make the unacceptable ones. When considering what failures you are willing to allow in order to promote learning through trial and error, weigh the potential damage of a mistake against the benefit of incremental learning. In defining what latitude I'm willing to give people, I say, 'I'm willing to let you scratch or dent the car, but I won't put you in a position where I think there's a significant risk you could total it.'",
  "125. Recognize that behavior modification typically takes about 18 months of constant reinforcement. The first step is intellectualizing the best way of doing things. If you're out of shape you must understand that you are out of shape, you must want to get in shape, and you must understand the way to get in shape: 'I want to be fit by eating well and exercising.' Then the intellect will fight with desires and emotions. With determination, the intellect will overcome the impediments to doing what's necessary to achieve the goal, and the desired behavior will occur. After doing that consistently for 18 months, the new behavior will be internalized.",
  "126. Train people; don't rehabilitate them. Training is part of the plan to develop people's skills and to help them evolve. Rehabilitation is the process of trying to create significant change in people's values and/or abilities. Since values and abilities are difficult to change, rehabilitation typically takes too long and is too improbable to do at Bridgewater. If attempted, it is generally best directed by professionals over extended periods of time. People with inappropriate values and inadequate abilities to meet their job requirements have devastating impacts on the organization. They should be properly sorted (see the principles section on sorting..",
  "127. After you decide 'what's true' (i.e., after you figure out what your people are like., think carefully about 'what to do about it.' As mentioned before, it's important to separate thinking about 'what's true' and thinking about 'what to do about it.' Figuring out what's true takes time'often several months filled with a large sample size. Figuring out what to do about it (i.e., designing. is much faster'typically hours or days'but it isn't instantaneous. Too often people either jump to decisions or don't make them. 128. Sort People into Other Jobs at Bridgewater, or Remove Them from BridgewaterSo'",
  "129. When you find that someone is not a good 'click' for a job, get them out of it ASAP. If you are expecting/wishing people to be much better in the near future than they have been in the past, you are making a serious mistake'instead, sort the people. People who repeatedly operated in a certain way probably will continue to operate that way because that behavior reflects what they're like. Since people generally change slowly (at best., you should expect slow improvement (at best., so instead of hoping for improvement, you need to sort the people or change the design to supplement them. Since changing the design to accommodate people's weaknesses is generally a bad idea, it is generally better to sort the people.",
  "130. Know that it is much worse to keep someone in a job who is not suited for it than it is to fire someone. Don't collect people. Firing people is not a big deal'certainly nowhere near as big a deal as keeping badly performing people, because keeping a person in a job they are not suited for is terrible both for the person (because it prevents personal evolution. and our community (because we all bear the consequences and it erodes meritocracy.. Consider the enormous costs of not firing someone unsuited for a job: the costs of bad performance over a long time; the negative effect on the environment; the time and effort wasted trying to train the person; and the greater pain of separation involved with someone who's been here awhile (say, five years or more. compared with someone let go after just a year.",
  "131. When people are 'without a box,' consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them. Remember that we hire people not to fill their first job at Bridgewater nor primarily for their skills. We are trying to select people with whom we'd like to share our lives. We expect everyone to evolve here. Because managers have a better idea of people's strengths and weaknesses and their fit within our culture than what emerges from the interview process, you have invaluable information for assessing them for another role at Bridgewater.",
  "132. Do not lower the bar. If a person can't operate consistently with our requirements of excellence and radical truth and can't get to the bar in an acceptable time frame, they have to leave. We want to neither lower the bar nor enter into a long-term rehabilitation program.To Perceive, Diagnose, and Solve Problems'133. Know How to Perceive Problems EffectivelySo'",
  "134. Keep in mind the 5-Step Process explained in Part 2.",
  "135. Recognize that perceiving problems is the first essential step toward great management. As in nature, if you can't see what's happening around you, you will deteriorate and eventually die off. People who can 1. perceive problems, 2. decide what to do about them, and 3. get these things done can be great managers. ",
  "136. Understand that problems are the fuel for improvement. Problems are like wood thrown into a locomotive engine, because burning them up'i.e., inventing and implementing solutions'propels us forward. Problems are typically manifestations of root causes, so they provide clues for getting better. Most of the movement toward excellence comes from eliminating problems by getting at their root causes and making the changes that pay off repeatedly in the future. So finding problems should get you excited because you have found an opportunity to get better.",
  "137. You need to be able to perceive if things are above the bar (i.e., good enough. or below the bar (i.e., not good enough., and you need to make sure your people can as well. That requires the ability to synthesize.",
  "138. Don't tolerate badness. Too often I observe people who observe badness and tolerate it. Sometimes it is because they don't have the courage to make the needed changes, and sometimes it is because they don't know how to fix it. Both are very bad. If they're stuck, they need to seek the advice of believable people to make the needed changes, and if that doesn't work, they need to escalate.",
  "139. 'Taste the soup.' A good restaurateur constantly tastes the food that is coming out of his kitchen and judges it against his vision of what is excellent. A good manager needs to do the same.",
  "140. Have as many eyes looking for problems as possible. Encourage people to bring problems to you and look into them carefully. If everyone in your area feels responsible for the well-being of that area and feels comfortable speaking up about problems, your risks of overlooking them will be much less than if you are the only one doing this. This will help you perceive problems, gain the best ideas, and keep you and your people in synch.140a. 'Pop the cork.' It's your responsibility to make sure that communications from your people are flowing freely.",
  "143. Be very specific about problems; don't start with generalizations. For example, don't say, 'Client advisors aren't communicating well with the analysts.' Be specific: name which client advisors aren't doing this well and in which ways. Start with the specifics and then observe patterns.",
  "144. Tool: Use the following tools to catch problems: issues logs, metrics, surveys, checklists, outside consultants, and internal auditors. 1. Issues log: A problem or 'issue' that should be logged is easy to identify: anything that went wrong. The issues log acts like a water filter that catches garbage. By examining the garbage and determining where it came from, you can determine how to eliminate it at the source. You diagnose root causes for the issues log the same way as for a drilldown (explained below. in that the log must include a frank assessment of individual contributions to the problems alongside their strengths and weaknesses. As you come up with the changes that will reduce or eliminate the garbage, the water will become cleaner.",
  "145. The most common reason problems aren't perceived is what I call the 'frog in the boiling water' problem. Supposedly, if you throw a frog in a pot of boiling water it will immediately jump out. But if you put a frog in room-temperature water and gradually bring the water to a boil, the frog will stay in place and boil to death. There is a strong tendency to get used to and accept very bad things that would be shocking if seen with fresh eyes.",
  "146. In some cases, people accept unacceptable problems because they are perceived as being too difficult to fix. Yet fixing unacceptable problems is actually a lot easier than not fixing them, because not fixing them will make you miserable. They will lead to chronic unacceptable results, stress, more work, and possibly get you fired. So remember one of the first principles of management: you either have to fix problems or escalate them (if need be, over and over again. if you can't fix them. There is no other, or easier, alternative.146a. Problems that have good, planned solutions are completely different from those that don't.",
  "148. Recognize that all problems are just manifestations of their root causes, so diagnose to understand what the problems are symptomatic of. Don't deal with your problems as one-offs. They are outcomes produced by your machine, which consists of design and people. If the design is excellent and the people are excellent, the outcomes will be excellent (though not perfect.. So when you have problems, your diagnosis should look at the design and the people to determine what failed you and why.",
  "149. Understand that diagnosis is foundational both to progress and quality relationships. An honest and collaborative exploration of problems with the people around you will give you a better understanding of why these problems occur so that they can be fixed. You will also get to know each other better, be yourself, and see whether the people around you are reasonable and/or enforce their reasonableness. Further, you will help your people grow and vice versa. So, this process is not only what good management is; it is also the basis for personal and organizational evolution, and the way to establish deep and meaningful relationships. Because it starts and ends with how you approach mistakes, I hope that I have conveyed why I believe this attitude about and approach to dealing with mistakes is so important.",
  "150. Ask the following questions when diagnosing. These questions are intended to look at the problem (i.e., the outcome that was inconsistent with the goal. as a manifestation of your 'machine.' It does this first by examining how the responsible parties imagined that the machine would have worked, then examining how it did work, and then examining the inconsistencies. If you get adept at the process, it should take 10 to 20 minutes. As previously mentioned, it should be done constantly so that you have a large sample size and no one case is a big deal.",
  "151. Remember that a root cause is not an action but a reason. It is described by using adjectives rather than verbs. Keep asking 'why' to get at root causes, and don't forget to examine problems with people. In fact, since most things are done or not done because someone decided to do them or not do them a certain way, most root causes can be traced to specific people, especially 'the responsible party.' When the problem is attributable to a person, you have to ask why the person made the mistake to get at the real root cause, and you need to be as accurate in diagnosing a fault in a person as you are in diagnosing a fault in a piece of equipment.",
  "152. Identify at which step failure occurred in the 5-Step Process. If a person is chronically failing, it is due to either lack of training or lack of ability. Which was it? At which of the five steps did the person fail? Different steps require different abilities. 1. Setting goals: This requires big-picture thinking, vision, and values that are consistent with those of our community.",
  "153. Remember that a proper diagnosis requires a quality, collaborative, and honest discussion to get at the truth. Don't just give your verdict without exploring the mistake, because there's a reasonably high probability that you don't know the answer. Do not be arrogant. You might have a theory about what happened, and that theory should be explored with relevant others. If you and others are open-minded, you will almost certainly have a quality analysis that will give everyone working theories to explore or you will reach conclusions that can be used for the design phase. And if you do this whenever problems recur, you and others involved will eventually uncover the root causes.",
  "154. Keep in mind that diagnoses should produce outcomes. Otherwise there's no purpose in them. The outcome might not take the form of an agreement, but at a minimum it should take the form of theories about root causes (which should be written down so you have a collection of synthesized dots to use for identifying patterns. and clarity about what should be done in the future to protect against them, or to gather information to find out.",
  "155. Don't make too much out of one 'dot''synthesize a richer picture by squeezing lots of 'dots' quickly and triangulating with others. A dot is a particular outcome. When you diagnose to understand the reason it occurred, you are 'squeezing' the dot. Don't try to squeeze too much out of a single dot'it can only tell you so much. Rather, try to collect and squeeze a bunch of dots in an 80/20 way, triangulating with the dots of others, so that you can synthesize a pointillist painting of what the person is like.",
  "156. Maintain an emerging synthesis by diagnosing continuously'You must be able to categorize, understand, and observe the evolution of the different parts of your machine/system through time, and synthesize this understanding into a picture of how your machine is working and how it should be modified to improve. But if you don't look into the significant bad outcomes as they occur, you won't really understand what they are symptomatic of, nor will you be able to understand how things are changing through time (e.g., if they are improving or worsening..",
  "157. To distinguish between a capacity issue and a capability issue, imagine how the person would perform at that particular function if they had ample capacity. Think back on how they performed in similar functions when they had ample capacity.",
  "158. The most common reasons managers fail to produce excellent results or escalate are: a. They are too removed. b. They have problems discerning quality differences.  c. They have lost sight of how bad things have become because they have gradually gotten used to their badness (the 'frog in the boiling water' problem.. d. They have such high pride in their work that they can't bear to admit they are unable to solve their own problems. e. They fear adverse consequences from admitting failure.",
  "159. Avoid 'Monday morning quarterbacking.' That is, evaluate the merits of a past decision based on what you know now versus what you could have reasonably known at the time of the decision. Do this by asking yourself, 'What should a quality person have known and done in that situation?' Also, have a deep understanding of the person who made the decision (how do they think, what type of person are they, did they learn from the situation, etc...",
  "160. Identify the principles that were violated. Identify which of these principles apply to the case at hand, review them, and see if they would have helped. Think for yourself what principles are best for handling cases like this. This will help solve not only this problem, but it will also help you solve other problems like it.",
  "161. Remember that if you have the same people doing the same things, you should expect the same results.",
  "162. Use the following 'drilldown' technique to gain an 80/20 understanding of a department or sub-department that is having problems. A drilldown is the process by which someone who wants to do so can gain a deep enough understanding of the problems in an area as well as the root causes, so that they can then go on to design a plan to make the department or sub-department excellent. It is not a 'diagnosis,' which is done for each problem. A manager doing ongoing diagnosis will naturally understand his areas well and won't have to do a drilldown.",
  "164. Go back before going forward. Before moving forward, take the time to reflect on how the machine worked. By diagnosing what went right and what went wrong (especially what went wrong., you can see how the machine is operating and how it should be improved. People who are just focused on what they should do next are overly focused on the tasks at hand and not on how the machine is working; so they don't make sustainable progress.Go back by 'telling the story' to help put things in perspective. Sometimes people have problems putting current conditions into perspective or projecting into the future. Sometimes they disagree on cause-effect relationships, or focus on details rather than addressing the big picture. Sometimes they forget who or what caused things to go well or poorly. By asking them to 'tell the story' of how we got here, or by 'telling the story' yourself, you put where you are in perspective.",
  "165. Understand 'above the line' and 'below the line' thinking and how to navigate between the two. There are different levels and themes going on in any one conversation. It is important to know how to navigate them. If you imagine main points and subordinate points organized in outline form, an above-the-line discussion addresses the main points. That doesn't mean you shouldn't reference details, because some details might be necessary to the discussion. But reference details solely for the purpose of understanding major points rather than dissecting minor points.",
  "167. Remember: You are designing a 'machine' or system that will produce outcomes. This machine will consist of distinct parts (i.e., people and other resources as well as the way they interact with each other..167a. A short-term goal probably won't require you to build a machine. But for an ongoing mission, you will need a well-designed and efficient machine. 167b. Beware of paying too much attention to what is coming at you and not enough attention to what your responsibilities are or how your machine should work to achieve your goals. Constantly compare your machine's outcomes to your goals in order to reflect on how well the machine is operating. Examine both the design and how the individual parts are functioning.",
  "168. Don't act before thinking. Take the time to come up with a game plan. Take at least a few hours to think through your plan. Those hours will be virtually nothing in relation to the amount of time that will be spent doing, and they will make the doing radically more effective.",
  "169. The organizational design you draw up should minimize problems and maximize capitalization on opportunities. Make the design an extension of your understanding of your problems and opportunities.",
  "170. Put yourself in the 'position of pain' for a while so that you gain a richer understanding of what you're designing for. Temporarily insert yourself into the flow to gain a real understanding of what you are dealing with (the process flow, the type of people needed, the potential problems, etc.. and to visualize a clear picture of what will work. You can accomplish this in a number of ways (reviewing work, doing work at different stages in the process, etc...",
  "171. Recognize that design is an iterative process; between a bad 'now' and a good 'then' is a 'working through it' period. That 'working through it' period involves trying processes and people out, seeing what goes well or poorly, learning from the iterations, and moving toward having the right people in the ideal systematic design. Even with a good future design picture in mind, it will naturally take time, testing, mistakes, and learning to get to a good 'then' state.",
  "172. Visualize alternative machines and their outcomes, and then choose. A good designer is able to visualize the machine and its outcomes accurately, though imperfectly. First visualize the parts and their interactions, and then find the parts to fit the design. Look at all the system's pieces and their interactions. Imagine how goals 1, 2, and 3 can be achieved. Imagine how Harry, Larry, and Sally can operate in various ways with various tools and different incentives and penalties in place to achieve those goals. Then imagine how the system would work differently if you replaced Harry with George, or if it was configured in an entirely different way. Do this iteratively. Think through what the products and people and finances will look like month by month (or quarter by quarter. over the next year given one system; then change the system and visualize the outcomes again. At the end of this process, your plan should look like a realistic movie script",
  "173. Think about second- and third-order consequences as well as first-order consequences. The outcome you get as a first-order consequence might be desirable (or undesirable., while the second- or third-order consequences could be the opposite, so focusing solely on first-order consequences, which people tend to do, could lead to bad decision-making. Though I might not like the first-order consequences of a rainy day, I might love the second-order consequences. So if I were in a position to choose whether or not there should be rainy days, I would need to look at the second- and third-order consequences to make the right decision. For example, for every person you plan to hire, you will have to hire more to support them. I call this 'The 1.6 Effect' as you'll have to bring on another 0.6 of a person to help manage each additional person you bring on. ",
  "174. Most importantly, build the organization around goals rather than tasks. As an example of building the organization around goals rather than tasks, we have traditionally had a marketing department (goal: to market. that is separate from our client service department (goal: to service clients., even though they do similar things and there would be advantages to having them work together. But because marketing and servicing clients are two distinct goals, we have a separate department for each. If they were merged, the department head, salespeople, client advisors, analysts, and others would be giving and receiving conflicting feedback. If askedwhy clients were receiving relatively poor attention, the answer might be: 'We have incentives to raise sales.' Asked why they weren't making sales, the merged department might explain that they need to take care of their clients. Keeping the two areas separate gives each department a clear focus...",
  "175. Build your organization from the top down. An organization is the opposite of a building'the foundation is at the top. The head of the organization is responsible for designing the organization and for choosing people to fill its boxes. Therefore, make sure you hire managers before their direct reports. Managers can then help design the machine and choose people who complement the machine.",
  "176. Have the clearest possible delineation of responsibilities and reporting lines. It's required both within and between departments. Make sure reporting lines and designated responsibilities are clear. To avoid confusion, people should not report to two different departments. Dual reporting (reporting across department lines. causes confusion, complicates prioritization, diminishes focus on clear goals, and muddies the lines of supervision and accountability, especially when a person reports to two people in two different departments. When situations require dual reporting, managers need to be informed. Asking someone from another department to do a task without consulting with his or her manager is strictly prohibited (unless the request will take less than an hour or so..",
  "177. Constantly think about how to produce leverage. For example, to make training as easy to leverage as possible, document the most common questions and answers through audio, video, or written guidelines and then assign someone to regularly organize them into a manual. Technology can do most tasks, so think creatively about how to design tools that will provide leverage for you and the people who work for you.",
  "178. Understand the clover-leaf design. Find two or three responsible parties who have overlapping believabilities and responsibilities and who are willing to challenge and check each other. If you do this, and those people are willing to fight for what they believe is best by being open-minded and assertive at the same time, and if they escalate their disagreements and failures to you, this process will have a high probability of sorting issues that they can probably handle well from issues that you should examine and resolve with them.",
  "179. Don't do work for people in another department or grab people from another department to do work for you unless you speak to the boss.",
  "180. Watch out for 'department slip.' This happens when a support department, such as HR or facilities, mistakes its responsibilities to provide support with a responsibility to determine how the thing they are supporting should be done. An example of this sort of mistake is if those in the recruiting department think they should determine whom we should hire or if people in HR think they should determine what our employment policies should be. Another example would be if the Facilities group determined what facilities we should have. While support departments should know the goals of the people they're supporting and provide feedback regarding possible choices, they are not the ones to determine the vision.",
  "181. Assign responsibilities based on workflow design and people's abilities, not job titles. What people do should primarily be a function of the job they have, and it should be pretty obvious who should do what (if they're suited for the job.. For example, just because someone is responsible for 'human resources,' 'recruiting,' 'legal,' 'programming,' etc., doesn't necessarily mean they are the appropriate person to do everything associated with those functions. For example, though 'human resources' people help with hiring, firing, and providing benefits, it would be a mistake to give them the responsibility of determining who gets hired and fired and what benefits are provided to employees. When assigning responsibilities, think about both the workflow design and a person's abilities, not the job title.",
  "182. Watch out for consultant addiction. Beware of the chronic use of consultants to do work that should be done by employees.",
  "183. Tool: Maintain a procedures manual. This is the document in which you describe how all of the pieces of your machine work. There needs to be enough specificity so that operators of the different pieces of the machine can refer to the manual to help them do their job. The manual should be a living document that includes output from the issues log so that mistakes already identified and diagnosed aren't repeated. It prevents forgetting previous learning and facilitates communication.",
  "184. Tool: Use checklists. When people are assigned tasks, it is generally desirable to have these captured on checklists so they can check off each item as it is done. If not, there is a risk that people will gradually not do the agreed tasks or there will be lack of clarity. Crossing items off a checklist will serve as a task reminder and confirmation of what has been done.",
  "186. Think clearly how things should go, and when they aren't going that way, acknowledge it and investigate. First, decide which issue to address first: finding the reason the machine isn't working well or executing the tasks required to get past the problem (in which case you need to come back to the reasons later.. Either way, don't pass the problem by without discussing the reasons. Otherwise, you will end up with job slip.",
  "187. Have good controls so that you are not exposed to the dishonesty of others and so that trust is never an issue. A higher percentage of the population than you might imagine will cheat if given an opportunity, and most people who are given the choice of being 'fair' with you and taking more for themselves will choose taking more for themselves. Even a tiny amount of cheating is intolerable, so your happiness and success will depend on your controls.",
  "189. Push through! You can make great things happen, but you must MAKE great things happen. Times will come when the choice will be to plod along normally or to push through to achieve the goal. The choice should be obvious.71  71 As Lee Ann Womack's country and western song says, when you have a choice between sitting it out or dancing, I hope you'll dance.To Make Decisions Effectively'190. Recognize the Power of Knowing How to Deal with Not KnowingSo'",
  "191. Recognize that your goal is to come up with the best answer, that the probability of your having it is small, and that even if you have it, you can't be confident that you do have it unless you have other believable people test you.",
  "192. Understand that the ability to deal with not knowing is far more powerful than knowing. That is because there's way more that we don't know than what we could possibly ever know. 192a. Embrace the power of asking: 'What don't I know, and what should I do about it?' Generally you should find believable people and ask their advice, remembering that you are looking to understand their reasoning rather than get their conclusions. 192b. Finding the path to success is at least as dependent on coming up with the right questions as coming up with answers. Successful people are great at asking the important questions and then finding the answers. When faced with a problem, they first ask themselves if they know all the important questions about it; they are objective in assessing the probability that they have the answers; and they are good at open-mindedly seeking believable people to ask.",
  "193. Remember that your goal is to find the best answer, not to give the best one you have. The answer doesn't have to be in your head; you can look outside of yourself. In life the goal is for you to do the right thing, considering the probability that you might be wrong. So it is invaluable to know what you don't know so that you can figure out a way to find out and/or to get help from others.",
  "194. While everyone has the right to have questions and theories, only believable people have the right to have opinions. If you can't successfully ski down a difficult slope, you shouldn't tell others how to do it, though you can ask questions about it and even express your views about possible ways if you make clear that you are unsure.",
  "195. Constantly worry about what you are missing. Even if you acknowledge you are a 'dumb shit' and are following the principles and are designing around your weaknesses, understand that you still might be missing things. You will get better and be safer this way. 195a. Successful people ask for the criticism of others and consider its merit.  195b. Triangulate your view. Never make any important decisions without asking at least three believable people. Don't ask them for their conclusions or just do what they tell you to do. Understand, visualize, and assess their reasoning to see if it makes sense to you. Ask them to probe your own reasoning. That's critical to your learning as well as to your successful handling of your responsibilities. 196. Make All Decisions Logically, as Expected Value CalculationsSo' ",
  "197. Considering both the probabilities and the payoffs of the consequences, make sure that the probability of the unacceptable (i.e., the risk of ruin. is nil.",
  "199. Distinguish the important things from the unimportant things and deal with the important things first. 199a. Don't be a perfectionist, because perfectionists often spend too much time on little differences at the margins at the expense of other big, important things.",
  "201. Make sure all the 'must-do's' are above the bar before you do anything else. First, distinguish between your 'must-do's' and your 'like-to-do's'. Don't overlook any 'must-do's,' and don't mistakenly slip the 'like-to-do's' onto the list. Then, get all the 'must-do's' above the bar. Then, get all the 'must-do's' excellent. If you have time, turn to the 'like-to-do's' and try to get them above the bar. Only if you have time (though you certainly will not if you are thinking broadly., turn toward making things perfect. Chances are, you won't have to deal with the unimportant things, which is better than not having time to deal with the important things. I often hear people say, 'Wouldn't it be good to do this or that,' referring to nice-to-do's rather than must-do's that have to be above the bar. Chances are, they are being distracted from far more important things that need to be done well.",
  "202. Remember that the best choices are the ones with more pros than cons, not those that don't have any cons. Watch out for people who tend to argue against something because they can find something wrong with it without properly weighing all the pros against the cons. Such people tend to be poor decision-makers.",
  "203. Watch out for unproductively identifying possibilities without assigning them probabilities, because it screws up prioritization. You can recognize this with phrases like 'It's possible that...' then going on to say something that's improbable and/or unimportant, rather than something like, 'I think there's a good chance that'' followed by something that's important or probable. Almost anything is possible. All possibilities must be looked at in terms of their likelihoods and prioritized.",
  "204. Understand the concept and use the phrase 'by and large.' Too often I hear discussions fail to progress when a statement is made and the person to whom it is made replies, 'Not always,' leading to a discussion of the exceptions rather than the rule.",
  "206. Understand and connect the dots. To do this well, you have to synthesize what is going on. Usually it takes diagnosing a few (e.g., five or so. dots of the same type to get at the true root cause so that you can see how the machine should be modified to produce better outcomes.",
  "207. Understand what an acceptable rate of improvement is, and that it is the level and not the rate of change that matters most. I often hear people say, 'It's getting better,' as though that is good enough when 'it' is both below that bar and improving at an inadequate rate. That isn't good enough. For example, if someone who has been getting 30s and 40s on tests raised his grade to the 50s, you could say he's improving, but the level is still woefully inadequate. Everything important you manage has to be on a trajectory to be 'above the bar' and headed for 'excellent' at an acceptable pace. For example, in the chart below, the trajectory of A might be acceptable, but B's trajectory is not. A gets us above the bar in an acceptable amount of time.",
  "208. If your best solution isn't good enough, think harder or escalate that you can't produce a solution that is good enough. A common mistake is accepting your own best solution when it isn't good enough.",
  "209. Avoid the temptation to compromise on that which is uncompromisable. You must have and achieve high standards.",
  "210. Don't try to please everyone. Not everyone is going to be happy about every decision you make, especially the decisions that say they can't do something.72 Everyone is wrestling with some things, but most people don't talk about them'some people don't like to probe you about your weaknesses because they think it's unkind or awkward. And it's often difficult for us to see and accept our own weaknesses. So when you are really in synch with others about what you're wrestling with, that is a great step forward, because this feedback is probably true."
];