Bridgewater Associates, the largest hedge fund in the world, has acknowledged what its clients have noticed for quite some time. It is just a tad bloated. Or as the company itself brutally noted, “bloated, inefficient and bureaucratic.” Ordinarily, companies operating within the constraints of our universe would normally conduct layoffs or engage in corporate downsizing when faced with this sort of dilemma, not Bridgewater however. Bridgewater instead chose to conceptualize the term “Renovation.” Also, in order to demonstrate that the company knows all about bureaucracy, the letter announcing the company’s “Renovation” was signed by six company executives, including three co-chief investment officers, two co-chief executive officers and one president.
Bridgewater, a macro investor and a company that prides itself on its slightly off-kilter savant with just a touch of élan investing style and employing a corporate culture based upon the principles of what it calls “radical truth and radical transparency,” is undergoing a “Renovation” designed to improve the organization’s overall efficiency. For approximately the last two years the firm has lost billions of dollars of their investors’ money as a result of mixed performances. However, Bridgewater has been quick to refute that any correlation exists linking their poor financial performance to the company’s corporate culture or its subsequent “Renovation.”
Bridgewater’s performance losses combined with the fact that the company’s succession planning has not gone quite as smoothly as it would have liked and generating its own share of negative publicity, has caused investors to question the benefit of the corporation’s culture of “radical truth” and “radical transparency.” These two terms refer to a corporate program where all employees are encouraged to engage in the personal criticism of each other, including rating each other’s work performance on customized IPads, and their adherence to a corporate success formula of “Pain+Reflection=Progress.”
Under the company’s operating principle of engaging in “radical truth” and “radical transparency,” all Bridgewater employees are encouraged to regularly engage in a form of hyper-realism dialogue, a concept contained in Bridgewater’s 123 page book of Principles, which advances the theory that brutal honesty, no matter how uncomfortable, yields the best results. The company claims that strict adherence to the “Principles” will prevent employees from becoming “emotionally hijacked” by their instincts when criticized or contradicted.
In addition, the company routinely records all meetings including personnel meetings. The video recordings are designed to be used as a future corporate and individual training aide. The company’s surveillance program which is augmented by a team of former FBI agents is designed to protect employees, apparently from themselves. Under the company’s guiding principles, without an active surveillance program in place, individual employees may transform into “slimy weasels”, Bridgewater’s official term for employees who may want to plot in secret.
There was a bit of irony and unintended humor in the wording of the company’s letter to its clients. In effect the letter tells the clients that despite the company’s self-described culture of radical honesty and transparency, it would normally not notify them of such corporate decisions. It was not a sense of altruism that sparked the company’s decision to be this candid with its clients. The company attributed the reason for its uncharacteristic bout of candor and transparency to what it described as “untruthful, inaccurate and prejudicial reporting” on the part of the media specifically citing the New York Times.
Government regulators, good government groups and others have long called for corporations to become more transparent. However, it is difficult to envision how a corporate culture based upon the concept of surveillance and encouraged intense criticism by one’s colleagues enhances a culture of openness and transparency rather than a corporate culture of fear and suppression.
Would a corporate culture of “radical truth” and “radical transparency” work for you or your organization? James Comey the current FBI director and a former Vice President at Bridgewater came to embrace the concept. To decide for yourself you can download Bridgewater’s little white book of Principles HERE.