Learn the principles for building a successful business.

Somebody as wealthy as Ray Dalio surely holds a huge secret on how to become successful—a common thinking about one of the world’s wealthiest people. But the truth is, running a successful operation does not require radical science. And this article will help you realize just that.

Pursuing success does need a set of core principles to keep you on track, though. And there are values that ring true when it comes to running a thriving business.

So, what is Ray Dalio’s secrets to success? Let us find out.

In this article, you’ll learn:

  • How running a business is like being a mechanic;
  • Why kindness is not always the best approach; and
  • How to build your business from the top down.

Look to nature and evolution in order to keep your eye on the big picture.

Confusion and overwhelming business situations can arise at any given time. And often, it would make you feel like you are lost in a huge storm without any promise of a blue sky. And this explains the very reason why you ought to establish a concrete set of guiding principles in your business life. These principles will act as your compass, showing the right path towards the safe haven, towards your goals.

In figuring out which principles to choose, make sure to keep a realistic outlook. Do not establish these principles from happy and convenient notions. Keep in mind that reality involves ugly situations that require rational thinking.

Consider the example that nature suggests. Imagine seeing a pack of hyenas devouring a beautiful gazelle. It is a natural fact of existence; a part of our balance ecosystem that though tragic to some, beneficial to the whole balance. Thus, intervening to such equilibrium can cause repercussions.

So, learn as much as you can from failures, and bounce back higher. Take advantage of such times to improve your strategy.

It’s important to choose the right goal and to keep learning and improving.

One trick you can learn from athletes; think of life as a game. Such mentality can help your focus on getting positive results.

Remember, even the hardest working athletes could have dry spells, too. In every game, triumph is not always what is waiting at the finish line. Losing times occur, and there is no exception.

So, learn to narrow things down before you go back to the game. Prioritize what you should, and set an ultimate goal in your mind to ensure victory.

What most people thrive to do but fail often is trying to attain far too many goals at the same time. Keep in mind that you cannot have it all. And this is where you prioritize. Choose one goal that you can work on whole-heartedly and other related goals shall follow through.

Say, you have a pending goal you feel passionate about, work on it. Whether it is about pursuing further education, improving skills you already have, or acquiring new ones, now is the high time to start exerting effort on it.

The next thing to do is evaluate your situation. What are the possible roadblocks? Ask yourself the most realistic questions you can think of, then work on them with enough optimism. Never underestimate your obstacles as this a common mistake that costs success.

For example, if you have the tendency to be distracted easily, make sure to deal with it. Do not deny your weaknesses to avoid giving them a foothold on you. Admission will somehow make your road to success less bumpy.

Radical truth and transparency are key to meaningful and long-lasting relationships at work.

Bridgewater Associates’ author, Ray Dalio, observes a principle of doing business that revolves around transparency and extreme truth.

Extreme truth does not have anything to do with hiding important issues. There should be a freedom to raise concerns and being transparent. This way, less mistakes could be done since criticism would be a healthy addition to the working environment cultivated. And this applies to the higher operations as well.

A perfect scenario would be about a division closure or sell out. Most of the time, the employees involved would only be made aware at the last minute. But not at Bridgewater Associates. During the pre-selling process, all the employees were sat down in a meeting where they were informed about the sale.

As a result, distrust and animosity were avoided. No resentment was developed against the managers by the employees. Fake news were avoided.

Extreme transparency resonates extreme truth.

A long-lasting partnership must be formed between the managers and employees. There must be respect, genuine interest in each other’s skills, and good sense of responsibility. Consideration must be an addition to the healthy ingredients for success. Self-centered behavior must be avoided in order to create a productive working relationship.

Radical truth extends to performance evaluations as well.

But sometimes, people can be dishonest in the name of being kind.

The author once considered promoting an employee to Department Head but after looking into the performance tracking system, he found that the employee was not qualified despite the good words put on him by the other employees at the company.

Radical kindness would mean still rewarding the promotion to the said employee, but radical truth says otherwise. And radical truth weighs more than kindness when it comes to business. Or else you would be doing your business a disservice.

Accurate evaluations are important in preventing errors in the future. In fact, the author even surveyed his employees regarding the percentage of their accountability in the company’s overall achievement. The result amounted to 301 percent, which meant the managers have an accurate knowledge of how much work each employee put in.

At the end of the day, honesty together with accuracy benefit each employee.

In fact, Psychologists have believed that the pain caused by committing mistakes could be the biggest motivator when improving. “Hitting bottom” could be the push someone needs to finally decide to change.

In business, an employee’s shortcomings should be prioritized over rejoicing success. Same thing with strengths. Encouragement is necessary to ensure good work coming from your employees. And focusing on both weaknesses and strengths can be very time-consuming.

Flowcharts and metrics are great tools for enhanced performance.

Remember this, your employees are like parts of the engine that empowers your company to get to its goal. For Dalio, his aim was to make sure their clients have the return of investment expected. And this makes him feel like a mechanic with a solid job in improving the engine of his company. And if anything needs to be repaired, it is his responsibility to guarantee the machine receives the proper fixing and tuning it requires.

In any business, no one enjoys firing an employee. But being realistic in what the company needs is what matters. You should never fool yourself into a notion that doing business could be all about rainbows and cotton candies. The occasional need to be unpleasant will always be there.

Another tool you should consider knowing by heart is performance measurement. After having a system in place, measuring performance is like having a dashboard for your machine. This can boost your productivity level due to its unbiased and accurate results, which promotes radical truth and transparency.

Now that you know how to make your engine run thoroughly, let us learn how to build a strong machine.

Build organizations from the top down and keep an eye on manager-to-employee ratios.

It is only a matter of time before conflicts start waltzing in. Now, all the time you should be calmed and focus when problems arise. Do not panic when you encounter such smoke in your eyes and instead, develop your solutions and turn these problems into your machine fuel. The key is early detection.

Build your business from top down.

Come up with a good business structure minding your higher operations being the strongest point. This means your managers must be great enough to be able to support the company’s lower structure. They must have high standards and are trustworthy, or lese your company could be facing a dark future. But if these managers know how to appreciate great work, possess strong viewpoint for business, and commit to strict quality, then they will be able to lead their teams to a much higher level of performance.

By doing so, control could be awarded to each department. Having self-sufficiency can improve your employees’ performance. Bureaucracy could promote the opposite.

Another thing to consider is the right ratio of managers to staff. A ratio of ten to one should suffice. But the ideal ratio is five to one, which can give your managers the best opportunity to build a good relationship and understanding with their team members.

These are the basic principles the author uses to build his own empire. You can definitely follow these in order to unleash your company’s potential.

Final Summary

Even when you are faced with adversities that could break your company, when you have a collection of firm principles, you can definitely make the right decisions to surpass such hard times.

As a manager, you serve as the mechanic to make your machine or the company thrive. Use flowcharts and metrics to guide you into running the business properly. Build your structures from the top towards the bottom, and make sure you have enough managers to supervise team members in a relative ratio.

Actionable advice:

Answer this question—what are your blind spots?

Your blind spot is the area where you are closed-minded. Though hard to identify, these blind spots can still be pointed out to help you bounce back higher from your previous mistakes.

Create a list of your bad decisions in the past and check for any possible trend or behavior that you could change. Pin this list on the wall or anywhere you can easily see it. And lastly, never be scared to ask for help in identifying them. You can outsource help, which usually enlightens the topic regarding personal blind spots.