Ray Dalio might bristle at the notion that he has built a bureaucracy at his hedge fund Bridgewater Associates LP, but he exemplifies the phrase "the routinization of charisma," a term coined by Max Weber. The German sociologist, one of the great theorists of bureaucracy, hypothesized that charisma is the basis for all social authority but nonetheless must be legitimized by routine.
Dalio in his new book "Principles" gives us hundreds of pages of routine. Since founding Bridgewater in 1975, and especially as the organization has grown and prospered, he has tried to systematize his distinctive, often confrontational approach to running the entity so that it could become a great institution and outlive its founder. Hence, the principles, which he posted on the firm's website in 2010 and explicates in a heavy, beautifully designed book. He tried, as he puts it in one principle, to "manage as someone operating a machine to achieve a goal," and advises that the reader "think of yourself as a machine operating within a machine."
"A great manager is an organizational engineer," he writes, and business school professors have written books about Bridgewater as a model company. More sensationally, members of the media have produced long articles about a corporate culture designed to make staggering amounts of money and to help employees achieve personal fulfilment through what Dalio calls "radical honesty," a process involving brutally honest criticism that is not for the faint of heart.
Little of that color makes it into the book, which too often reads like a bloodless management text. That's a shame, because Dalio must be a man of enormous charisma. He started playing the financial markets at age 12, and he constantly learned from his mistakes and adjusted his approach, ultimately creating the investing algorithms that allow for the triumph of reason over emotion. Even when confronting his son's bipolar disorder and a 2013 cancer scare, he doesn't lose his intellectual curiosity or his composure.
He comes up with a hedging strategy for corn and soybeans and thus for the chickens fed on those foods that reduces the volatility of the cost of chickens and affords McDonald's the security to introduce Chicken McNuggets. He makes money with Bunker Hunt as he starts buying silver in 1979, sells at $10 an ounce, watches the metal climb to $50 and then sees it fall back to $11, ruining Hunt, "whom I empathized with," Dalio writes. He meets everyone from the Dalai Lama to Lawrence Summers and reads widely, especially in evolution and cognitive science.
Yet there are massive gaps in the book, notably a failure to engage with management theorists like Weber and Frederick Taylor and a lack of irony. "I would love to know what principles guided Albert Einstein, Steve Jobs, Winston Churchill, Leonardo da Vinci and others so I could clearly understand what they were going after and how they achieved it and could compare their different approaches," he writes on the second page of the introduction. Perhaps Dalio might have gleaned Churchill's principles from his History of the English-Speaking Peoples and da Vinci's from his copious writings, drawings and paintings.
Einstein crops up a few times. "While he was shaped by inventing," Dalio writes, "he didn't have to manage, and while Jack Welch and Lou Gerstner were great leaders and managers of people, they didn't have to be as inventive." Well, no.
Dalio plans to write a companion book on his "economic and investment principles," and then, he writes, "there will be no advice I can give that will not be available in these two books, and I will be done with this phase of mylife."
That's not the book I want from Ray Dalio, and not the book he's capable of delivering. I want an autobiography, personal, intense, unfiltered - the only way he would write it. I want the charisma, not the routine.
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Editors' pick: Originally published Sept. 22.