Ray Dalio is the founder of Bridgewater Associates, currently the largest hedge fund in the world. When asked how he accomplished this amazing he feat, he replied that he did it by creating a culture of “radical truth and radical transparency.”

Ray Dalio Bridgewater

Ray Dalio is one of the world’s most enthusiastic adherents of the idea that everything is ultimately systematic and can be rationally analyzed. In a recent interview with the Wall Street Journal, Ray Dalio has been quoted as saying he believes “everything is a machine”, even organizations and the individual people working for them.

Bridgewater is a unique employment environment – Ray Dalio

According to Ray Dalio, all Bridgewater employees, including management, must to accept unvarnished criticism as a valuable opportunity to learn and to solve problems. The idea is to constantly refine business processes (also known as machines at Bridgewater) ranging from purchasing policies to improving methods for forecasting global commodity demand.

The WSJ article points out that employees at Bridgewater have to get used to internal software that conducts a constant evaluation of their performance based on daily entries from colleagues. The software goes so far as to rate individual’s credibility on specific issues.

However, this doesn’t mean that all decisions are made based on collected data. A human element is always given final say. For example, the employee evaluation software recently  indicated the company’s head receptionist was not meeting performance metrics, upper management reviewed things and said the software not being calibrated to effectively measure the employee’s work.

For employees willing to accept this kind of constant evaluation, the company promises a “rigorous search for the truth” with very little politics and subjective decision-making.

“It’s a little bit like entering the Navy SEALs,” says Dalio of joining Bridgewater as a new employee. “There’s a period—usually about 18 months—of sort of adaptation to this. And some make it and some don’t make it. And so we call it ‘getting to the other side.'”

Upper level you and lower level you

Ray Dalio breaks down the human psyche into his version of the ego and id. “We describe it as: there’s the upper-level you and the lower-level you. The human brain is part thoughtful man,” he explains, “and part animal. And you have to drag yourself. And we see the struggle as between the upper-level them and the lower-level them.”

He continues to describe the battle between upper level you and the lower level you as about controlling your emotions. “It’s a struggle between what do they want” and “what happens in their emotional reactions to that.”

Ray Dalio concludes by saying he’s convinced the Bridgewater culture of “radical truth and radical transparency” is a huge part of the firm’s success. He argues that “if you can’t have independent thinking” and “you can’t know what your weaknesses are, and sort those things out, you’re not going to be successful.”