In 1982, hedge-fund founder Ray Dalio predicted a banking crisis among emerging Latin American countries. Sure enough 16 of them defaulted that August, turning the 33-year-old Dalio into a star overnight. Testifying before Congress, he doubled down, predicting that the global economy and stock market would soon suffer the same fate. But this time, he could not have been more wrong. He had focused so intensely on Latin America that he neglected data from the rest of the globe—the economy and stock market soared. His hedge fund, Bridgewater Associates, took a massive hit.
A humbled Dalio then sought out smart people who disagreed with him to open his mind to other points of view, double check his assumptions, diversify his bets, and ultimately raise his probabilities of being right. Bridgewater rebounded and today, with more than $160 billion under management, is the largest hedge fund the world. Now a billionaire, Dalio credits transparency as key to both his and the company’s rise. “It is why we made money for our clients during the financial crisis when most others went over the cliff,” Dalio told The New Yorker in 2011. “Our greatest power is that we know that we don’t know, and we are open to being wrong and learning.”
What is radical transparency?
Dalio cares about finding meaning through work and relationships—a theme underlying many of the most successful corporations in history. As we learned through the story of Google’s Kim Scott, the internet search giant built an emotionally positive and productive work environment by replacing BS (i.e. being overly polite or overly rude) with honesty. For both Scott and Dalio, radical transparency provides the foundation for this emotionally open work culture.
In a 2016 article published in the Harvard Business Review, management professors Sigal Barsade and Olivia A. O’Neill reinforced the need to build not only a cognitive work culture, but also an emotional work culture. Emotional work culture consists of “the shared affective values, norms, artifacts, and assumptions that govern which emotions people have and express at work and which ones they are better off suppressing.”
While cognitive culture is mainly expressed verbally, emotional culture mostly spreads through non-verbal cues like body language and facial expression. Unlike cognitive culture, companies rarely cultivate emotional culture. Research from the past decade reveals that emotional culture impacts employee satisfaction, burnout, teamwork, financial performance, and absenteeism. Numerous empirical studies illuminate the formative effect emotions have on how people perform tasks, engagement, creativity, commitment to their companies, and decision making.
Positive emotions consistently correlate with better performance, quality, and customer service. These findings remain across industries and organizational levels. Conversely, negative emotions like anger, sadness, and fear generate negative outcomes, such as poor performance and high turnover.
Credited as the father of radical transparency, Dalio defines the culture as one in which people say what they believe. Bridgewater is now an idea meritocracy. The best ideas win. “In order to be successful, we have to have independent thinkers—so independent that they’ll bet against the consensus,” he said during his Ted Talk. “You have to put your honest thoughts on the table.” In other words, transparency liberates employees to be themselves, sparks ideas, and allows the best ideas to shine.
Dalio chronicled his confrontational approach in 200 principles, which he published in his 2017 book Principles. These principles include subjecting senior executives to a public airing of grievances—to “deter bad behavior.” While extreme, Dalio’s belief that people should be able to exchange ideas openly has broad applications. Be honest, open, and straightforward, this ethos projects. Don’t hide anything. And make employees feel comfortable to share their opinions and thoughts.
“If spontaneous, radical transparency can generate responses of surprise, discomfort, and anger,” Dr. James Giordano, Professor of Neurology at Georgetown University Medical Center, Washington, DC, told RingCentral. “However, if being candid is first discussed and agreed upon, and certain parameters and proscriptions are established, then such candor may be useful in generating more reflective and interactive discourse.”
Radical transparency in a work-from-home culture
The working world has changed from that of Dalio’s awakening in 1982. As society has increasingly digitized and globalized, today’s world of work includes far more employees working remotely. A survey by Global Workplace Analytics and Flexjobs found that remote work has increased 159 percent over the past 12 years. In fact, entire companies operate from virtual offices. Demand for more flexible work environments dominates: 80 to 90 percent of employees would like to work remotely at least part time, a RingCentral survey indicates.
As remote work rises, along with shifting business values to save time, finances, and environmental tolls traveling, virtual meetings—and video meetings specifically—have grown ubiquitous. More than half of all employees have at least one virtual meeting each week, a RingCentral survey showed.
But if in-person meetings are already problematic, how can virtual meetings—which connect people in different rooms all over the world, many of whom have never met in real life—improve on the original?
The power of video meetings
By allowing participants to see and be seen, video conferencing platforms have begun to transform the very nature of meetings and can help cultivate open, emotionally positive cultures. Making virtual eye-contact helps groups build stronger relationships and keeps participants engaged for longer. Video improves comprehension by enabling participants to pick up on both verbal and non-verbal cues. And unlike email, team messaging, or voice—other keys to a functioning virtual workplace—video supports a holistic conversation that delivers greater clarity and, ultimately, understanding.
Research supports this notion, showing significant differences in how participants process visual information. Researchers from Brigham and Women’s Hospital and Harvard Medical School have shown that people recall information far better when they engage with it visually. Seeing, being seen, and understanding help build trust, the foundation for honesty.
In addition to its benefits for building emotional cultures and cultivating transparency over emails and phone calls, video even confers some benefits over in-person meetings. Uniting people outside of a conference room can increase diversity and innovation, Dr. Giordano told RingCentral. He noted that virtual meetings may also afford benefit to those individuals who are uncomfortable with “in person” discussions.The physical distance of virtual meetings provide users with the space to collect themselves, think about how they want to respond, and also to hold their ground.
Hosting meetings virtually easily enables them to be recorded, which also improves transparency and cuts back on rude behavior. As Sean Weisbrot, CEO/Founder of Sidekick, told RingCentral, “We believe people are more focused and amicable when they know they are being recorded. This allows us to conduct meetings efficiently and ensure they end as quickly as possible. Recording your meetings is an important step in becoming more professional as an organization, especially if you are fully remote as we are.”
As the nature of our digital, globalized world continues to evolve, virtual meetings will continue to become the norm. As Jeff Skipper, a consultant for Fortune 500 companies like IBM, BP, and Goldman Sachs told RingCentral, “To perform at our best, we must collaborate, coordinate, and leverage the diversity of team members. Meetings aren’t going away. However, the growth of remote work and technical capability will see the rapid increase of virtual meetings.”
Creating an emotionally positive, transparent culture sounds daunting, especially through something as disparate as a virtual platform. But the simultaneously insular and connected nature of virtual meetings are actually a prime platform for setting this precedent. Dalio has capitalized on emerging technologies to constantly improve transparency at Bridgewater. Nearly all meetings are taped, providing an objective record of what transpired and facilitating introspection and learning—even when Dalio is the target.
“They get to see all of my mistakes,” Dalio told The New Yorker. “They get to see all of my humanity.”
Looking to master the modern workplace by building a stronger transparent, emotional culture? RingCentral Video can help.
Originally published Apr 03, 2020, updated Aug 31, 2020