The Culture Principle

thank you so much so before um before we start with Ray doio I want to ask everyone to stand up we've been sitting for a little while feel free to stand up um we'll have a break after this panel and if I can ask you you know I um I wrote a book about the science of habit formation and one of the things that came up was physical habits um try and go up on your toes like this what you're actually trying to do is you're trying to activate this muscle right here there's been all these studies that show that um if you activate essentially these large muscles right here that and the blood moving that for the next 30 minutes your memory you'll basically remember everything I say over the next half hour now this session is about 40 minutes long so you'll forget the last 10 minutes but it it will at least keep you a little bit uh aware for the beginning of it and then you can just tune out you you did one you can all stand up wonderfully thank you so much feel free to have a seat and please join me in I'm welcoming Ray doio to the stage thank you so much R I really appreciate it treat so um now halfway through this conversation I'm going to ask you to tell me how I'm doing um in in having the conversation and I know that you are going to be completely honest with me and your appraisal because your hedge fund one of the largest most successful hedge funds in history that you founded that you're the chairman of Bridgewater has a very unique culture every single meeting every single conversation inside the office is videotaped anyone inside the office can go review those videotapes that any any time if if someone is talking about me I can go and I can see what they said about me after each meeting and tell me if I'm getting this wrong after each meeting everyone analyzes each other in the meeting and gives them immediate feedback to say you did a good job you did a bad job I I have a baseball card that I carry around that tells everyone in that room if I'm if I'm good at creativity and I'm bad at organization everyone knows what my score is this is a unique culture it tell me how did you get to this what what happened to make you say this radical transparent honesty is the right way to manage um well I'm going to tweak what you said just slightly okay so uh not 100% but let's say 99% of the meetings are taped for everybody to see okay and um in terms of that uh feedback yes we have um iPads and everybody's typing in what they think particularly of others as well as what's happening and the reason is um I want an IDE meritocracy so um I want independent thinkers who are going to disagree I want the most important thing I want is Meaningful work and meaningful relationships and I believe that the way to get those is through radical truth and radical transparency so what do I mean by meaningful work I mean being in a mission that you're excited about um and you know that you can get your head in and then meaningful relationships relationships means that you can be totally transparent with each other to letting each other know what your weaknesses are what I think like to me it wouldn't be honest if I didn't tell you what I thought or that you would feel inhibited and it's very productive because when you bring those things to the together what happens is you try to see what's true so how do you get independent thinkers to then put on the table what they really think yeah and then move beyond that to find out what to be done what should be done it's a very very terrific powerful force so uh it's an idea meritocracy so wouldn't you rather have an IDE of meritocracy the emotional barrier is the problem that a lot of people have it takes getting used to so uh when we look at it we think uh well I'll you know ask the people in the audience um would you like to know what people really think about you honestly raise your hands who would find that un comfortable raise your hands okay there's your barrier right now you have to make a choice so to me if I don't let everybody see everything with the tapes and everything it's the equivalent of um creating spin see uh in other words why wouldn't you let them see if you're going to have an idea of meritocracy they should be able to see everything and ask questions it raises interesting questions it gets them a sense of real reality that also causes them to be bought in like there's no spin there's no talking behind anybody's back when you put things out in the open and everybody looks at it uh you know bad things happen in the dark so let me ask you because intellectually I think that makes total sense right we all want to be in a place where we're hearing about our weaknesses where we hav an idea meritocracy but emotionally that's really challenging right I optimally I want um to be honest with my wife I have learned through trial and error there are certain things to be honest about and certain things not to be so honest about and that I need to be honest in certain ways when you say radical transparency if I if I'm giving someone feedback and I think that they're going to be hurt by hearing it do I soft pedal it for them or do I be as bluntly honest as I can how do I learn to be honest uh you want to be effective okay so you um you don't want them a lot of people just want sugar coating yeah so you know that you have to be as accurate as possible and they have to be as accurate with you as possible and that you have to create a system that is not just an exchange of mutual feedback but also data collection we collect a lot of data for example um um if people are doing certain things we can correlate it with whether it's done well or not so if people believe that there's a fair system an idea meritocracy they personality tests there are all sorts of ways where the evidence becomes clear that you are that kind of a person okay as long as you have a system that people believe is fair and that is being accurate with as being that kind of a person that's the best you can do okay that's not true that everybody wants that not everybody wants to stand naked in front of everybody it's a little bit like going into a nudus camp at the first time I don't know if you've ever gone into a nudus camp but in other words you first walk into a nudus camp and it's very awkward right everybody's looking around and okay before you know it you're talking about interesting subjects and you don't pay attention so you can if you can stand naked in front of other people and have them stand naked in front of you and so on you can have actually better relationships and be more productive so there has to be it's the get has to be the getting over that emotional reaction and so it drew me to neuro uh studying Neuroscience that's one of the reasons I love your book habit fantastic by the way I got his book and I gave it to everybody in the company habit my children very much appreciate it because but that process of developing a a a good habit and wrestling with what I call you know your logical self and your emotional self like you said your logical self wants it and your emotional self doesn't and through exercise through practice you can bring those things into alignment and then you can get a truth and then you can have an idea of meritocracy so tell me about how this actually plays out it let's take um a p a piece of hard feedback you've gotten sometime in the last couple years is there it how did that happen what happened I I'd like to I'd like to talk about the ridiculous New York Times article good let's talk about that let's talk about the ridiculous New York Times article and use that as a particular example I think that's a great ex and there's a there's a a I I can't remember the woman's name E Murray Eileen Murray there's a there's a there's a no no she's not the reporter but there's a in the article this is a a piece about the ran earlier this week about Bridgewater there's a case study called Eileen Murray lies so so tell me tell me a little bit about what happened there and then how you think we Mis covered it because you think we got it wrong in covering it worse than that it was intentionally Mis done and we'll get into why it was intentionally uh done incorrectly okay but um I'll go beyond that uh let me describe the situation okay so everybody gets to watch everything right so a situation comes up and um and and uh and we do an investigation of whether something went wrong and ien um and then everybody gets to watch this tape and they're asking her well it turned out through the whole examination that um what happened was uh she had a woman who was under stress and who was her assistant type an email message for her e did E had this e did and E's a fairly high ranking official yeah she uh she's co- CEO and this happened 5 years ago okay um so she had her assistant typed this assistant's under a lot of stress and Eileen said that she typed it okay that was in the internal investigation that was the LIE okay okay so now you see this okay it shows are all lies the same what is the motivation the motivation was to protect that person it was under stress so everyone in the first everyone in the firm is looking at the tape and they all say Eileen Murray lied like they all say well that's that's what we should call the the tape because there was a lie okay and the issue is are all lies the same what what do you want to do do you want to fire her because of that minor tiny thing I mean I'm not I'm saying that she shouldn't have done that we discussed it she shouldn't have done that and we got past that particular point but the point of the thing is when you don't see it and you create this false reality okay so um how many people would have fired Eileen for lying that way not many people okay when you hear the the rule generally speaking lies are intolerable well it's not all lies are intolerable exactly the same way right so you're getting an exposure to reality that is a good thing so what should we do we should not show it or or should I lean and and everybody be crucified for that lie what's fascinating is I think in most companies it wouldn't even like most companies would just say it wouldn't even come up like this wouldn't be I mean the fact that in Bridgewater this became a conversation is really interesting because your commitment to this transparency says this small insignificant lie we all need to have a conversation about whether it's a big deal or a small deal right and when you when you then start to realize that that's what reality looks like you know if you're running a company and you encounter things the rest of the world doesn't see how you're encountering it right they have these overly simplistic views of how things are and so you're not communicating that way also if you don't have radical transparency you're going to have a lot more problems so by making everything transparent you're going to have less lie you're going to have less problems right and everybody's going to understand better isn't it better to be that way now let's talk about the New York Times well let me ask one more question before we get into Times because what it occurs to me is what one of the things you're saying is every company except except Bridgewater in and companies like it there is an element of hypocrisy right that we say we are a company that is honest I mean the New York Times and our code of conduct says we are a company that is honest but if somebody lies about something insignificant we just paper I mean it's not a big deal it's not even something we talk about that is is that hypocrisy is is your thesis that that hypocrisy is infectious that if you you have hypocrisy on these small little things that it it somehow undermines my ability to say look on the big things I'm going to call you out because I think you're being wrong or I'm being wrong oh there's there's huge hypocrisy I mean I think you know it depends how much I want to tell you about the New York Times hypocrisy um it's there was a case um tell you another one uh there were uh there was a case in which um um we somebody gets sued for we get sued and rather than settle suits that are frivolous suits we make a point of going to arbitration and getting them resolved okay and we go through that we make um and this then uh gets examined by the National Labor Relations Board and we have it and it gets dropped okay if I gave you the list of New York Times suits that okay so there's a hpoc Ry right there's a what is reality so put this New York Times aside can we basically talk about things can we put them on the table to have an IDE meritocracy you have to do three things you first have to put what you think on the table can you do that can we do that the second thing is you have to be able to have a civil conversation about it right you have to be able to have thoughtful disagreement I see this way you see see it this way how do you take in how do you become evidence-based and then you have to go beyond that to be able to take a vote or make a decision and move on and if you can have that idea meritocracy then you can have the meaningful work and meaningful relationships so do you trust me do you trust the organization if there's transparency and there's not spin and everybody's walking around that way you build higher levels of trust you build higher levels of commitment to the organ organization it's magical I'll I'll say something else radical transparency is coming at you you can't avoid it in other words right here today almost every it's it's easy pretty much to find out from publicly available data and from various types of data what you're doing and what you're like so we're going to move forward into an era of of more radical transparency knowing how to benefit from that knowing how to manage it is something I think that is a tremendous benefit that's really so okay so before we get off this because I want to give you a chance to to be radically transparent about the New York Times what's your take on the article that we ran earlier this week there are there are journalists um writers who are intended to be um let's I call them investigative report reporting and they're supposed to come out with things that they think are scandalous and as a result of doing that they kind of weave together things in a way that's meant to be you know like they say good news doesn't sell so it's meant to be that way so in the interactions that I've had with them um it there has not been a desire to get a truth um so that's the you know that's the challenge of radical transparency we're we're a very easy organization to look at because we have everything radically transparent so if you get a whole you get the and you see it you can have a lot of material right and a big part of this is that is is one of the the core and you've written a book called principles that where you've outlined many of the principles that Bridgewater and you live by one of the is not to be defensive right to listen to this to listen to this criticism and and and try and say is that accurate whether I like it or not is that an accurate are you seeing something about myself or my publication that I don't see myself right am I doing it right yes well I think I think the question of whether we can know what's true through the media is a very important question our time de man well the media is the most powerful force there is and the question is whether you can get accuracy through the media right I hope so we try you know the the um the credibility and the rating of the media is at the lowest level that it has ever been in in many many many decades um it's a challenge I'm not saying what to do about it I'm not smart enough to to know what to do about it but I think you as a journalist know that you're in an environment where the the story is more important than the reality sometimes it's a very challenging yeah it's a challenging time let let me ask something that's that's on this I'm just curious in the audience do you believe that I want to ask my last statement uh do you believe that it's uh raise your hand please if you believe that there's a real problem with the accuracy in the media that's interesting with the accuracy with the accuracy yeah and is that this doesn't have to be a referendum on media but I'm curious is is that because you believe that we're sensationalizing the story so as to entice you in or because we're having trouble getting the right Story how many how many raise your hand if you think it's sensationalizing and many think that we're having trouble getting the right story media Anonymous sources which media and and and I want to ask more about Bridgewater because I think it's a fascinating I didn't mean to get on the York Times but but but but a a a challenge of radical transparency is the Distortion it gives you lots of material and it can create distortions and it it really depends who's in the hands information's in the hands of and how it's used that's interesting that's very right that having information gives you a perspective so let me so let me ask one of the things that this conference is about is about building teams and building building a culture that helps people be their best selves because you have so much data because everything is transparent how does that shape how you put teams together or how you decide who who is in charge of whom because you mentioned only 99% of Med are public there's a there's there's a 1% where you feel like these are conversations that shouldn't happen well those are really about personal illnesses okay okay so sometimes there's a proprietary trade or something that we're doing those are the ones that get up but virtually all the other ones are are shown so um but uh to answer your question um it was enlightening to see how people see things differently you have no idea how you all see things differently ly that there's a thinking spe Spectrum um some people are creative and not reliable some people are reliable and not creative and as you start to give people uh personality tests like Myers Briggs or uh the big five or different personality tests you start to learn how people see things differently and then when you see them differently and you and that screen pops up where every rather than just seeing how you see it you go above that and you're seeing that everybody seeing things differently it changes how you see things because it starts to make you think um how do I know I'm not the wrong one in other words as you go above it and you look down on all those different ways of seeing you start to think how do I know I'm not the wrong one and how do I collectively see and you see in a color range it's like seeing in a different color range or going from two Dimensions to three dimensions all of a sudden you see the full spectrum of s seeing things and then you go to the higher level and we have systems that go through the computers that go the higher level that say then how do we weigh all those ways of seeing to make the best decisions so not so you don't get so attached to your opinions I think the greatest tragedy of mankind is people holding on to wrong opinions that could so easily be rectified and that's doing them hard because they're making wrong decisions so how do you collectively do that well the answer is by everybody see everything and seeing how others see they begin to gain those perspectives they also get to get an appreciation for the other way of seeing it used to be that everybody would drive each other crazy you you your brain works in one way my brain works in another maybe I see big picture you see detail maybe I'm creative maybe you're reliable we drive each other crazy when you start to realize that people are actually seeing in those ways and that's a valid way of seeing and that I need you and you need me and how to put together the team as you're asking about it gives you the evidence base it's okay to be different and people actually have like they're called baseball cards right like if I'm in a meeting I'm going to know that I'm a seven on reliability and an eight on creativity and you're a nine on reliability and a six on creativity and I can actually say in that meeting by the way I think I should carry the day because I'm more creative than you are well right is the way we literally do it is we have believability weighted decision making so think about it this way should I make the decision because I'm the boss what happens if the others out there disagree with me particularly if they have a higher level of believability so we have a device that has your believability on each of our believability there and then we ask ourselves what should we do and we have believability waited answers that's fascinating so that for me I'm thinking as the boss I look at that and and I say well if the other people who are more believable than me are thinking that I definitely should do what they're thinking or at least I should try to work through why does it make sense because I might be wrong in other words if you I think the markets teach you they teach you humility and they te they and they teach you uh they you know what works and um you know you have to be an independent thinker in the markets to be successful because um the the consensus is built into the Christ right so you have to have a view that's different from the consensus and when you have a view so I need independent thinkers when you have a view that's different from the consensus you're you're going to be wrong a certain number of times it teaches you humility the most important thing is to have humility and to think about how do I get the best decision it doesn't have to come from me right I just want to be right right if it comes from other people that's good right so before we go to questions I I want to ask you so we've been talking for about um 22 minutes so so give me the radical transparency feedback am I doing good job bad job what could I do better in this conversation tell me how you disagree oh interesting I didn't tell you how enough how I I am not disagreeing enough with you do you disagree with anything I'm saying I think that it's a little I'll so I'll try this out I I think it's I think everything you're saying makes sense I think it's really hard to do right and and and let me take the times as an example that that that I think you're right criticisms of the times are fair but that but that at the same time finding a story that is illustrative of this world is actually harder than it seems and so and so in many ways there's a maybe we don't have enough humility as reporters when we go in and evaluate a situation but readers sometimes don't have enough humility to analyze how difficult it is to capture a story that tells every perspective because at the end of the day you want one story you want one perspective so that it's a clean takeaway you learn I what you want or what they want is one simple sensationalistic tention story I got it and the world is more complicated than that and I I would agree and well so let me let me let me push back a little bit on this utopian the the my criticism might be utopian which is for for for your firm where you make a handful of decisions and those decisions have to be exactly right because you're talking about billions of dollars in a Marketplace that has no tolerance for mistakes but if I'm working at AT&T I don't if I'm if I'm working at AT&T I'm almost kind of a politician more than I am an executive so then and a lot of that is making people happy right we've heard we've heard folks on the stage saying part of my job is to make my employees happy so they can bring their best selves to work and if I hire right even if there's something that's a little screwy about them I don't have to tell them that that's screwy as long as they are happy and they're doing their best work for the job I need them to do why would that be wrong well first of all um this decision making process has nothing to do with the business we're in in that regard in other words um I've taken through through my life and other people taken through the lives and and it works at all different kinds of because it and you referred to what the barrier is okay the barrier is that kind of emotional barrier right so the real question is uh can you have meaningful work and meaningful relationships through radical truth and radical transparency or are you going to let that emotional barriers stand in your way so I don't know is that can you have thoughtful disagreement to try to find what's true and what to do about it is that a good thing um whether it's um your your any group of people so I mean I think it's true for everybody working here can you have thoughtful disagreement can you put your thoughts on the table can you have that back and forth your honest thoughts the challenge is only one challenge it's that emotional Challenge and yes it's hard but success is hard at being successful is hard and you know what's harder operating that other way because when you're in a political environment where there's everybody's talking behind their backs nobody knows what's true and everybody says this is true but they're just gossiping with each other and that's erosive and it's not productive so you know you have to tell me why it's logical to be that other way I the I'm telling you there's only one barrier and that I'd say it's much better to deal with that barrier because the cost of failure that's painful right that's a lot more painful and I will say my my closest relationships are ones where I feel like people say hard honest truths to me and I say them to them right there's something that feels Redemptive almost religious about saying to someone I think you're wrong this way and they say I think you're wrong and and you learn something and we can have a quality back and forth about it as you know there's decision making should be two steps the first step is um taking in information particularly if there's disagreement to understand that disagreement and then to make a decision so you have your right to make a decision nobody should take a your particular right to make your decision but it's so stupid not to take the time to take in and explore disagreement that might help you prevent yourself from being wrong true that's true let's go to qu because I want to leave enough time um qu yes right here hi so I have a question you talked a lot about meritocracy but there's research showing that in companies that value meritocracy people actually make more biased decisions so given how much kind of emphasis you place on on this I'm curious what is your take on This research and then how do you manage bias in people decisions in your firm um given this emphasis on meritocracy and do you mean unconscious bias uh yes I do um I can't see how that's almost possible but I don't know the research um in other words if you have a meritocracy then everything you have evidence well you're you're producing evidence evidence means let's say if you're going to be the decision maker what were all the data about whether you should be the decision maker and so the that Authority should follow the evidence so I don't see how a meritocracy with transparency and evidence could produce that but I don't know the particular studies when someone comes in who's uh you you have a number of high ranking women inside Bridgewater when someone comes in who's a woman who is a person of color who comes from a non-traditional background cuz when one of the things we know is that in making evaluations sometimes there is this unconscious influence right do you do you find you need to skew for that or accommodate that or how does that get worked out the well first of all I I I think that the data helps to understand what might biases exist right if somebody's behaving bias and you're radically transparent and you got a lot of evidence it's pretty clear that you're going to have less bias okay if you don't have transparency and you don't have data to look at you're going to have a lot more bias that's interesting right so you have a you have much less of that in terms of the issue of uh you know let's say I don't know uh what you mean by the combination but everybody's different in different ways and so it's important to understand those differences and accommodate them to get to the best result there may be those differences there may be um um psychological difference some of them might be bipolar somebody might be dyslexic okay to bring those differences to the surface and to understand them and to know how to deal with them so that you have a community that makes those differences whatever they are work well is a really terrific thing I think that's interesting let's go to another yeah back here hi Ray uh my name is Marcel I co-found and run a company called Alfred which provides leverage specifically inside your home I also was an SMA at Bridgewater and worked on the magnet I really miss Bridgewater thank you come back I have my own sandbox though so Ray I need your help your what I have my own sandbox you have a Sandbox I have a Sandbox playing in the sandbox and I need your help let me assert a belief which is to live by the principles is really hard I agree with you and I find that there's that's the way I want to be however I don't run a hedge fund and we don't have billions of dollars and it's very difficult to get Buy in without softening some of your principles people say you're not ra Alo so do you believe there the principles can apply to most companies and the way of being can be at once or can we get there incrementally um I think any group of people working together not only a company but even you know how you deal with each other can get there through practice and first you have to make the contract so this is the way it works um you realize that intellectually you might want to be one way and then emotionally it's challenging to be that way so can I be transparent with you can we disagree and do that thoughtfully those are contracts that you have to make with each other once you make that contract and you realize it might be difficult it depends how we do it well that you then are on your journey to do it well any group of people can do that if you realize that there's the emotional component of it so that there's the challenge between your logical self and your emotional self and that you'll go through that together and you kind of monitor it and and usually with the help of a third person it could be just you having a disagreement with somebody and how you'd have that disagreement to help you do better that can all happen uh if you remain calm you realize that you're um no or getting the truth through that exchange is such a wonderful thing you can get there that way but it is like a self-discipline you have to uh recognize the emotional triggers you might feel those emotional triggers you can actually feel it happening that's interesting okay realize that uh when those emotional triggers happen that they'll be usually uh temporary or you might find your way of doing it in other words your way of doing it might be uh exchanging emails in other words because maybe that emotional way in person means that it's all coming too fast and too emotionally so that if you could lay out your thoughts and then you can hear the others thoughts and do it back and forth with the guidance of others you can do that you just have to want to do it so I think you're saying we can change a company One exchange at a time I'm sorry so you're saying we can change a company One exchange at a at a time yes that you make a contract we're going to be that way and you use others as a judge as to whether you are that way when you have the radical transparency the people who are not emotionally tied up in the situation can sort of assess are the participants who are emotionally tied up in that situation behaving that way and they can help you but what and the other thing that's interesting is that what I hear you saying and tell me if I'm this right is that everyone is emotional at work everyone has an emotional response and setting that aside saying don't bring the drama to the office rather instead saying I can recognize my emotional resistances I know how to react to them to set them aside to not let them infect my thinking is a more honest way of being myself at work yes and it happens just as a natural consequence of saying that it happens right in other words ah let's all watch out for it let's let's try to control ourselves and not let that happen how do we do it even maybe take a break yeah come back to it at another time because that barrier is standing in the way of what you want to do it's standing in the way of your well-being that's it well Ray thank you so much I know that there's more questions hopefully folks will get a chance to attack you in the hallway during this break but I can't tell you how much I appreciate it pleas I can honestly say it's a great time thank you thank thank you

Channel: New York Times Events

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Id: h2KHec3KNyQ

Length: 35min 6sec (2106 seconds)

Published: Tue Mar 07 2017