nderstanding, accepting, and working with reality is both practical and beautiful. I have become so much of a hyperrealist that I’ve hearned to appreciate the beauty of all realities, even harsh ones, and have come to despise impractical idealism.
Don’t get me wrong: I believe in making dreams happen. To me, there’s nothing better in life than doing that. The pursuit of dreams is what gives life its flavor. My point is that people who create great things aren’t idle dreamers: They are totally grounded in reality. Being hyperrealistic will help you choose your dreams wisely and then achieve them. I have found the following to be almost always true:
a. Dreams + Reality + Determination = A Successful Life.
People who achieve success and drive progress deeply understand the cause-effect relationships that govern reality and have principles for using them to get what they want. The converse is also true: Idealists who are not well grounded in reality create problems, not progress.
16.3 No governance system of principles, rules, and checks and balances can substitute for a great partnership.
All these principles, rules, and checks and balances won’t be worth much if you don’t have capable people in positions of power who instinctually want to operate for the good of the community based on the agreed-upon principles. A company’s leaders must have wisdom, competence, and the ability to have close, cooperative, and effective working relationships characterized by both thoughtful disagreement and commitment to following through with whatever the idea-meritocratic process decides.
16.2 Remember that in an idea meritocracy a single CEO is not as good as a great group of leaders.
Dependence on one person produces too much key-man risk, limits the range of expertise (because nobody is good at everything), and fails to establish adequate checks and balances. It also creates a burden because there’s generally too much to do. That’s way we have a co-CEO model at Bridgewater that is essentially a partnership of two or three people who lead the firm.
At Bridgewater the CEOs are overseen by a board largely via the executive chairman or chairmen. In our idea meritocracy, the CEOs are also held accountable by the employees of the company, even though these employees are subordinate to the CEOs. The challenge of having two or three people is for them to dance well together. If they can’t do that, and coordinate well with the chairmen, they have to notify the executive chairman or chairmen so changes can be made.
16.1 To be successful, all organizations must have checks and balances.
By checks, I mean people who check on other people to make sure they’re performing well, and by balances, I mean balances of power. Even the most benevolent leaders are prone to becoming more autocratic, if for no other reason than because managing a lot of people and having limited time to do it requires them to make numberous difficult choices quickly, and they sometimes lose patience with arguments and issue commands instead. And most leaders are not so benevolent that they can be trusted to put the organization’s interests ahead of their own.
a. Even in an idea meritocracy, merit cannot be the only determining factor in assigning responsibility and authority.
Appropriate vested interests also need to be taken into consideration. For example, the owners of a company might have vested interests that they are perfectly entitled to that might be at odds with the vested interests of the people in the company who, based on the idea meritocracy, are most believable. That should not lead the owners to simply turn over the keys to those leaders. That conflict has to be worked out. Since the purpose of the idea meritocracy is to produce the best results, and the owners have the rights and powers to assess that, of course they will make the determination—though I recommend they choose wisely.
15.1 Having systemized principles embedded in tools is especially valuable for an idea meritocracy.
That is because an idea meritocracy needs to operate in accordance with agreed-upon principles and to be evidence-based and fair instead of following the more autocratic and arbitrary decisions of the CEO and his or her lieutenants. Rather than be above the principles, the people responsible for running the organization must be evaluated, chosen, and—if needed—replaced in an evidence-based way according to rules, just like everyone else in the organization. Their strengths and weaknesses, like everyone’s, must be taken into consideration. Collecting objective data about all people is essential for this. And you need good tools to convert data into decisions in agreed-upon ways. Moreover, the tools allow the people and the system to work together in a symbiotic way to improve each other.
a. To produce real behavioral change, understand that there must be internalized or habituated learning.
Thankfully, technoloy has made internalized learning much easier today than it was when books were the primary way of conveying knowledge. Don’t get me wrong, the book was a powerful invention. Johannes Gutenberg‘s printing press allowed easy dissemination of knowledge that helped people build on each other’s learnings. But experiential learning is so much more powerful. Now that technology makes it so easy to create experiential/virtual learning, I believe that we are on the brink of another step-change improvement in the quality of learning that will be as great as or even greater than Gutenberg’s.
If you just keep doing, you will burn out and grind to a halt. Build downtime into your schedule just as you would make time for all the other stuff that needs to get done.
When people are assigned tasks, it is generally desirable to have them captured on check lists. Crossing items off a checklist will serve as both a task reminder and a confirmation of what has been done.
a. Don’t confuse checklists with personal responsibility.
People should be expected to do their whole job well, not just the tasks on their checklist.
