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A Business is a Machine in Two Parts

January 1st, 2019

I’ve been reading Ray Dalio’s book Principles and thinking about it in the context of creating and developing an adaptive professional services firm. This figure from the book is accompanied by this comment:

“An organization is a machine consisting of two major parts: culture and people. Each influences the other, because the people who make up an organization determine the kind of culture it has, and the culture of the organization determines the kind of people who fit in.”

Dalio is a major philanthropist and the founder of Bridgewater Associates, the world’s largest Hedge Fund. His personal net worth is in the order of $18 billion so my sense is he probably knows something about how to create and sustain a great organization.

Call it confirmation bias if you like, but his observation reminds me of something I passionately believe in and that’s if you want to build a great firm that really makes a difference you must start with the people you hire and grow because they will drive the evolution of your culture.

I would take Dalio’s thought one step further: especially for a professional service firm where relationship is crucial. You also need to focus on customers who fit with your culture because they are an integral part of the success machine you’re building and will play a significant role in shaping your culture and your purpose.

My good friend and mentor, Ron Baker, says “bad clients drive out good ones”, he’s so right but they also drive out good team members and therein starts the erosion of your culture.

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