The world’s largest hedge fund is developing an automated ‘coach’ that acts like a personal GPS for decision-making

Bridgewater founder Ray Dalio believes that automated management systems are the future of workplace interactions.

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Bridgewater founder Ray Dalio believes that automated management systems are the future of workplace interactions.
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Hollis Johnson

    Bridgewater Associates founder Ray Dalio believes that all organizations can benefit from automated management systems. Bridgewater is developing a “coach” that acts like a personal GPS for decision-making. The automated management processes parallel the automated investment systems the fund already uses.

“Whether you like it or not, radical transparency and algorithmic decision-making is coming at you fast, and it’s going to change your life.”

That’s how Bridgewater Associates founder Ray Dalio opened his TED Talk in April, and the belief has guided his hedge fund for the past few decades. It’s why Bridgewater’s 1,500 employees are working with an artificial-intelligence management “coach” that is scheduled to reach a new level of capability and integration within the company in the next two or three years, according to Dalio.

Dalio explained to Business Insider in general terms how this will work:

“Let’s say you’re dealing with somebody who isn’t doing a good job or is somebody who has a personal problem, maybe an illness, or whatever the person’s circumstances are. What it does now is if you type into a ‘coach’ … it then gathers information about the person and the circumstances, so they’re there. It analyzes what they’re like and provides guidance for what to do.”

Employees can give daily updates about how they’re feeling, and if, for example, one is feeling a 5 on a 1-5 scale of being overworked, the coach will notify that employee’s supervisor and recommend that they reach out for a discussion.

Dalio said it’s a direct parallel to the investment system that long been in place, which he likens to driving with a GPS. Since the 1980s, Dalio and his team have been creating investing algorithms based on tested theories. As Dalio explains in his book, human investors work alongside the automated investor, considering its suggestions and either acting on them or determining what the algorithms are missing. New algorithms can be adjusted when flaws are revealed.

While he chose to remain co-CIO, Dalio completed a seven-year transition phase away from management this year, and marked the occasion with a book tour around “Principles: Life and Work,” the first of two he will write. In “Principles,” Dalio shares the collection of insights that every Bridgewater employee reads, and explains that before he left the role of co-CEO, he ensured that the management principles would be automated as much as possible, in the same way that his investment principles already had been.

Bridgewater is already relying on automated management systems, as Dalio demonstrated in his TED Talk this April.

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Bridgewater is already relying on automated management systems, as Dalio demonstrated in his TED Talk this April.
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Bridgewater Associates via TED

The management coach is in beta testing and is “providing a lot of help now” but “is not nearly there” in terms of reaching its potential, according to Dalio. He said that, like the automated investment system, it will always be evolving, but a “thorough version” should be available to Bridgewater employees within three years.

The idea is that it will have access to more information than any one person could have about the employees within the company.

This coach is linked to the existing management software at Bridgewater, including the “Dots” iPad app that Dalio publicly demonstrated for the first time in his TED Talk. In Dots, employees rate each others’ performance in real time during meetings according to traits like assertiveness and open-mindedness, leaving contextual comments as necessary.

Dots ratings come into play with “believability-weighted decision making” process at Bridgewater. When a question is posed to a group, the averages of each employee’s Dots ratings are considered.

For example, an investment decision may receive 13 “yes” votes and four “no” votes and still be denied because the four people who voted in the negative significantly outweighed those for the decision in relevant areas, like their experience level and capability for high-level strategy.

Dalio’s ideal version of Bridgewater, then, takes its existing automated management programs and gives each employee a fully functioning coach that will help them interact with each other.

And, as he said in his TED talk, he thinks that Bridgewater is ahead of the curve on a global trend, and it’s why he plans on making Bridgewater’s proprietary management software available to the public in the near future.

“It’s a little bit like playing chess and then also being able to have, when you’re playing the chess, a computer chess system next to you making the moves,” Dalio told us.

“So you make the move, it makes the move,” he said. “You compare your moves and you think about them and then you refine them. Well, that’s what we’re doing in management.”