“In the investment world, you can only make money if you think different from everyone else. Bridgewater has prevented groupthink by inviting dissenting opinions from every employee in the company. When employees share independent viewpoints instead of conforming to the majority, there’s a much higher chance that Bridgewater will make investment decisions no one else has considered and recognize financial trends no one else has discerned. That makes it possible to be right when the rest of the market is wrong. . . . Strong cultures exist when employees are intensely committed to a shared set of values and norms, but the effects depend on what those values and norms are. If you’re going to build a strong culture, it’s paramount to make diversity one of your core values. This is what separates Bridgewater’s strong culture from a cult; The commitment is to promoting dissent. In hiring, instead of using similarity to gauge cultural fit, Bridgewater assesses cultural contribution. Dalio wants people who will think independently and enrich the culture. By holding them accountable for dissenting, Dalio has fundamentally altered the way people make decisions.” – “Think Different” Culture, Chapter 7. Rethinking Groupthink – The Myths of Strong Cultures, Cults, and Devils Advocates, p189-190, excerpt from 「Originals: How Non-Conformists Move the World」 by Adam Grant
If you are a leader talking to your employees, how would you fill in the blanks in this sentence?
Don’t bring me _____________;
bring me _____________.
Out of eight chapters through which the author, Adam Grant, discusses on originality and how non-conformists move the world in his book, 「Originals」, one chapter especially captivated me. And it was this question the author posed on CEOs, that also caught me by surprise and ultimately made me reflect for some time.
Come on, Jay, what’s so special about it? Everybody knows the answer!, you might say! Yes, I assume you know the answer. Just like the multiple CEOs there who, without fail, chimed in unison, as if they’d rehearsed the chorus many times before, as the author states, I also am a person who feels extremely comfortable to hear “Don’t bring me problems; bring me solutions.” I become anxious if I get to hear complaints rather than solutions. My system just functions that way. And I have a strong belief that this is THE constructive way to deal with any issue. And I assume that most of you are the same. No?
Until I read Originals in 2016, I hadn’t had much insight on Bridgewater, the largest and best performing hedge fund let alone the founder of the firm, Ray Dalio. And thanks to the author who brought insight on both of them, I was able to pick up 「Principles」 without even looking inside the book – not even one page – when it was published in 2017.
So let’s get back to the question. “Don’t bring me problems; bring me solutions.” is a sort of truth for me. And if I were a leader who runs an organization with autonomy to hire people, I would prefer choosing people who shares the same philosophy.
Now, here comes a potential problem. If nobody is to raise problems, which means to challenge the status quo, but to bring solutions, the organization I run might be paradoxically prone to groupthink that may blind us from truth when it is critically required.
This is the core message the author wants to elaborate. He brings in a few corporate cases, such as the space shuttle Columbia’s explosion in 2003 and Polaroid, to illustrate how groupthink can lead to a fall from the height of success and even to disappearance.
But when it comes to groupthink, there’s a dark side to encouraging solutions. Hofmann is one of the world’s preeminent authorities on creating organizational structures that detect, correct, and prevent errors. After the space shuttle Columbia exploded upon reentry into the atmosphere in 2003, … Hofmann found that a culture that focuses too heavily on solutions becomes a culture of advocacy, dampening inquiry. If you’re always expected to have an answer ready, you’ll arrive at meetings with your diagnosis complete, missing out on the chance to learn from a broad range of perspectives. … Advocacy is fine if you’re on the jury at a courtroom trial. Since all twelve members get to hear the entire case, when it’s time to deliberate, they can start debating about whether the defendant is innocent or guilty. But organizational life doesn’t work like a courtroom, Hofmann admonishes. It’s more like sitting through a twelve-hour trial where each juror hears only one hour of testimony, and no two jurors listen to the same hour. When every member of a group has different information, inquiry needs to precede advocacy -which means you have to raise the problems before pursuing solutions. To make sure that problems get raised, leaders need mechanisms for unearthing dissenters. (p198)
In an ironic twist, Polaroid was one of the companies that pioneered the digital camera, yet ultimately went bankrupt because of it. … Polaroid fell due to a faulty assumption. It was a classic case of groupthink – the tendency to seek consensus instead of fostering dissent. Groupthink is the enemy of originality; people feel pressured to conform to the dominant, default views instead of championing diversity of thought. (p176) … Polaroid came close to being a pioneer in digital photography, and could have easily been a fast settler. Instead, leaders fiddled while the company burned. Had they embraced original ideas instead of adhering rigidly to Edwin Land’s beliefs in hard-copy chemical imaging, the company might have survived. How can you build a strong culture that welcomes dissent? (p187)
If only they were able to welcome dissent, and by doing so, if only truth was able to be heard via right mechanisms! Here, we observe that the need to eliminate groupthink becomes paramount in a firm’s survival.
Can you build a strong culture that welcomes dissent to find the truth? Yes, you can even if it’s challenging. It’s actually not only Bridgewater that built the strong culture that encourages systematic dissent by everyone, I found this to be true in other great companies, too.
In his great book 「Good to Great」, based on years of research on a set of elite companies that made the leap to become a long term superiority from long term mediocrity, Jim Collins elaborates six key characteristics of great companies.
For most of those great firms studied in the book, the good-to-great leaders who led the leap-up during and after transition period built a strong culture where they led with questions, not answers. What for? To gain understanding. To find the truth. For the truth to be heard.
Yes, leadership is about vision. But leadership is equally about creating a climate where the truth is heard and the brutal facts confronted. There’s a huge difference between the opportunity to “have your say” and the opportunity to be heard. The good-to-great leaders understood this distinction, creating a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard. – A Climate Where The Truth Is Heard, Chapter 4. Confront the Brutal Facts (Yet Never Lose Faith), 「Good to Great」, p74
Based on numerous observations from the good-to-great companies, Collins offers four basic practices for creating a climate where the truth is heard.
- Lead with questions, not answers.
- Engage in dialogue and debate, not coercion.
- Conduct autopsies, without blame.
- Build red-flag mechanisms.
From these practices exercised by the good-to-great companies, it was naturally and frequently seen executive team members constantly pushing and probing and prodding with questions. The leader would keep asking questions until he had a clear picture of reality and its implications. (p75) There’s also a scene repeated over the years, wherein colleagues would march into CEO’s office and yell and scream at each other, but then merge with a conclusion. Argue and debate, then sell the nuclear business; argue and debate, then focus on steel joists; argue and debate, … again and again. It is said one company’s executives later described a climate of debate as catalyst wherein the company’s strategy “evolved through many agonizing arguments and fights.” (p76)
Collins states that the good-to-great companies didn’t use discussion as a sham process to let people “have their say” so that they could “buy in” to a predetermined decision. The process was more like a heated scientific debate, with people engaged in a search for the best answers. (p77)
Also, by having the right people on board, good-to-great companies conduct autopsies without blame which leads to creating a climate where the truth is heard. (p78)
In Collins’s terms, let alone in Grant’s insights, I found Bridgewater’s fierce ambition and efforts to eradicate groupthink and thereby to reach the truth marvelous and smart. How did Ray Dalio achieve it? Below are Grant’s observations and contemplation.
Ray Dalio doesn’t want employees to bring him solutions; he expects them to bring him problems. One of his first inventions was the issue log, an open-access database for employees to flag any problem they identify and to rate its severity. Getting problems noted is half the battle against groupthink; the other is listening to the right opinions about how to solve them. The Bridgewater procedure for the latter is to gather a group of credible people to diagnose the problems, share their reasoning, and explore the causes and possible solutions. Although everyone’s opinions are welcome, they’re not all valued equally. Bridgewater is not a democracy. Voting privileges the majority, when the minority might have a better opinion. “Democratic decision making-one person, one vote-is dumb,” Dalio explains, because not everybody has the same believability.” (p199)
I can’t help but wonder: If Polaroid leaders had called people slimy weasels for talking behind Edwin Land’s back about the problems with his instant movie camera, would the company still be thriving today? Had NASA’s culture allowed for this kind of open disagreement, would the seven Columbia astronauts still be alive? (p203)
It’s not just Dalio’s openness that makes people comfortable challenging senior leaders. It’s the fact that early in the training, employees are encouraged to question the principles. Rather than waiting for employees to become experienced, Bridgewater reveals that we can start encouraging originality on day one. … The early period is the perfect time for employees to pay attention to opportunities to improve the culture. (p204)
Does something sound familiar? While reading Principles, I was astounded to find how many key traits Bridgewater possesses to fit into a good-to-great company as per Collins’s criteria. Probably Ray read the book when it was published in 2001? But you know, it’s not really important. I just couldn’t help but asking this question. I simply got curious all along while reading down Ray’s Principles. But as we know, reading is one thing and building in physical form is another.
Being an investor, especially a hedge fund, is a risky business. Ray in his own book asked, “If you are right, how do you know you are right?” This simply represents how challenging it is to face and read the markets and to find the truth. Conformity in one direction can be a toxic pill.
Mervyn King said in The End of Alchemy that the essence of a capitalist economy is that we cannot imagine today all the new ideas and products that will be discovered in future. If the future is unknowable, then we simply do not know and it is pointless to pretend otherwise. Investment is driven by the imagination of individuals who can see opportunities invisible to the rest of us. Their risks are largely uninsurable. What King suggests is how challenging and risky it is to make judgment facing the unknown. Finding the truth is an extremely difficult job.
To mitigate uninsurable risk with the highest possible probability, and to see opportunities invisible to the rest of us, Bridgewater has planted and grown a challenging and non-conforming system to have become the formidable heavy player in the investment industry as a result. I admire Ray’s vision and fierce determination in this sense. Just like those CEOs of the good-to-great companies, he is a leader who pushes limits relentlessly.
By this writing, I feel grateful for Adam Grant’s take on appreciating originality and also Jim Collins’s take on appreciating great qualities of good-to-great companies that never change through time. I owe this writing to their great writings and insights.
Below four books were used for references.
- Chapter 7. Rethinking Groupthink – The Myths of Strong Cultures, Cults, and Devils Advocates, Originals (Adam Grant, 2016)
- Good to Great (Jim Collins, 2001)
- Principles (Ray Dalio, 2017)
- The End of Alchemy (Mervyn King, 2016)