Two Criteria for Believability

Back in 2017, I read Principles by Ray Dalio. It has since become one of my favorite professional books of all time and one I’d certainly recommend to anyone.

Dalio ran Bridgewater Associates, the world’s largest hedge fund, for many years and created a unique culture that he describes in the book. A key concept of Principles is the idea of believability and making decisions within a group.

The problem with a democracy is that it assumes that everyone’s views are equally valuable.

Ray Dalio

(I took “Democracy” in the above quote to mean “consensus-driven decisions,” not “democracy” as a political construct.)

This idea resurfaced in my mind after listening to a recent podcast from Pat Sherwood where he discusses this idea in-depth.

Bridgewater has built a culture Dalio calls an idea meritocracy. Everyone is free to have an opinion in any decision, and the overwhelming majority of conversations and meetings are made public within the company through recordings. This isn’t inherently unique as many companies are moving towards a more transparent model. The unique part is how Bridgewater comes to a decision.

They practice believability-weighted decisions where everyone’s opinion is not counted equally. Individuals with unique expertise, a track record of success, and/or a special investment of time, energy, or resources in a given area are weighted higher than others.

I’ll share a large chunk from the book that summarizes this approach well:

In typical organizations, most decisions are made either autocratically, by a top down leader, or democractically, where everyone shares their opinions and those opinions that have the most support are implemented. Both systems produce inferior decision-making.

That’s because the best decisions are made by an idea meritocracy with believability-weighted decision making in which the most capable people work through their disagreements with other capable people who have thought independently about what is true and what to do about it. It is far better to weigh the opinions of more capable decision makers more heavily than those of less capable decision makers.

…How do you determine who is capable at what? The most believable opinions are those of people who:

1. Have repeatedly and successfully accomplished the thing in question.

2. Have demonstrated they can logically explain their cause and effect relationships behind their conclusions.

Principles, page 370

I find myself coming back to those two criteria quite often when I’m weighing in on a conversation. It’s easy to weigh in and express ideas, but it’s often not clear that those ideas are backed up by experience and logic.

In his podcast, Sherwood mentioned a CrossFit article titled “Conjecture, Hypothesis, Theory, Law: The Basis of Rational Argument.” This goes hand in hand with the concept of believability.

I’d highly encourage everyone to read Principles if you’re interested in running a high-performing team or just making better personal decisions. For a teaser, you can listen to Pat’s podcast or the Recode Decode interview with Dalio. Also, read the interesting story about how Principles came into being as an actual book.