Dalio’s Mind Encoded into Algorithms

December 26, 2016 James Heinsman Company Spotlight

The world’s largest, and most successful, hedge fund, Bridgewater Associates, is encoding its master’s methods into an algorithm designed to bypass the need for anyone to actually have to think. The fund is worth $160 billion, and presumably got there based on the management philosophy of its founder Ray Dalio. The goal of the project is to take the detailed book of principles which guide employees at Bridgewater, a famously high-pressure firm, and translate them into instructions, or algorithms, that will tell a computer how to act.

Known by several names, such as “The Book of the Future,” “The One Thing,” and the Principles Operating System, it will be much more than just a way to invest and manage money. Managing people is also part of “The Book of the Future.” The system will be loaded with all kinds of information, such as peer reviews and employee testing to decide on specific tasks for employees, handing them specific instructions for styles for management and time control. The system will also guide hiring, firing and promotions. The head of the project is David Ferrucci, famous for his involvement with the development of IBM’s Watson.

The guiding principle behind the project is Dalio’s world view and his understanding of human behavior and the world at large, as working as a kind of complex machine. In his view human emotion only harms the ability of the “machine” to function at its optimum level. Due to his worldview Dalio carefully tracks the performance of his staff, and is a vociferous adherent to his ethic known as “Radical Truth and Transparency.” Employees at Bridgewater are encouraged to share their opinions about each other without restraint.

Bridgewater’s policy was, until recently, to share even the debates among upper-management staff with the entire company. That ended when a dispute between Dalio and his possible successor, Greg Jensen, was aired in public.

Who will take over the company was a major motivating factor in developing the Principles Operating System. The belief is that if Dalio’s worldview can be embedded in computer code Bridgewater will be able to continue its incredible performance, which has made its investors richer than any others in history.

Bridgewater Associates, David Ferrucci, Principles Operating System, Ray Dalio, Watson,

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