Although I have no experience running junior mining companies, I wanted to share some ideas from Ray Dalio's Principles that I think are relevant to the industry as we head into "Minerals Exploration week" in Vancouver.

"Bridgewater has successfully evolved from a one-cell organization, in which most people were involved in everything, to the current multi-cell organization because we retained our ability to efficiently focus as the organization grew." -- Ray Dalio

Dalio likes to use words in very particular ways and "machine" is one of those words. It sounds a bit strange, but a schematic diagram can help you understand what he's getting at.

A machine is simply the thing that does the work to produce outcomes. It's simple enough, but it's also a general concept for Dalio. He uses it to explain his life philosophy in Principles, but he also refers to the "economic machine" in his writing on macroeconomics.

Ray Dalio's rallying cry is: "Design Your Machine to Achieve Your Goals."

The key thing for executives is that they are designing a machine that will produce outcomes. He emphasizes the need for planning and the idea that your design should reflect your understanding of the problems and opportunities facing your business. A successful design is one that minimizes problems and maximize capitalization on opportunities. That all sounds good, but what does it mean for junior miners?

... 172) Visualize alternative machines and their outcomes, and then choose.

Dalio suggests an iterative approach to simulations that John Kaiser would surely love.

Imagine different people doing different things within the organization. It doesn’t have to be as silly as it sounds. "At the end of this process, your plan should look like a realistic movie script," writes Dalio. He's not just talking about stories where the stock price goes up, but different plans of attack for exploration programs or corporate strategy. This kind of strategic planning is important and I'm sure most executives already do it to some degree, but I wonder if they often get boxed-in by inertia of all the things their company is already working on?

This whole "outcome visualization" thing is a bit strange and some people are better at it than others. In classic Dalio fashion, he encourages you to identify those differences so that you can use the most capable people in the right activity.

... 173) Think about second- and third-order consequences as well as first-order consequences.

Again, this one sounds a bit far out there but I think it's important. Dalio writes that "first-order consequence might be desirable (or undesirable), while the second- or third-order consequences could be the opposite". When a stock promoter causes a big boost in trading volume for some stock, that is a good thing. But it's just a first-order consequence. What happens if the people who bought don't understand the story and aren't committed to ride the volatility? If they end up selling indiscriminately because the price is down, then that's a negative second-order consequence. Was it worth it?

... 174) Most importantly, build the organization around goals rather than tasks.

This is a great one-liner from Dalio. His relentless focus on transparency is controversial and the corporate culture at Bridgewater is arguably unhealthy, but the long-term results reflect a focus on goals set at the top.

And this isn't just a one-liner, either. Dalio presents a surprising example where two parts of a company are doing similar things (marketing and customer service) and the company could achieve cost savings by combining them. Fair enough, but they have different goals. If you combine them, then neither will achieve their goal as well. It may be a strawman argument, but it sounds pretty real to me!

Dalio loves to debate. He would have been a great lawyer but, somehow, markets captured his imagination. He is the kind of guy who says "When people disagree on the importance of debating something, it should be debated." Really?

Yes, really.

He goes on to say, "I have seen people who agree on the major issues waste hours arguing over details. It’s more important to do big things well than to do small things perfectly. Be wary of bogging down amid minor issues at the expense of time devoted to solidifying important agreements." I agree with that and believe it is particularly important for junior mining companies, which often require detail-oriented, technical people and big-picture, non-technical people to work closely together.

... 27) Know when to stop debating and move on to agreeing about what should be done.

Dalio may have a relentless focus on debate and dialogue, but he is realistic. He recognizes that there are many good ways to skin a cat. I would add that it's important to give people enough room to be successful, but you need to give people space to make mistakes so that you can learn what they are like. That relentless focus on honesty in self- and peer-assessment is classic Dalio. It can be a bit much for a business with a lot of big personalities like ours, but he's made it work in the hedge fund business!

Read Dalio's comments about how disagreements can have positive or negative effects.

His comments on when disagreements are positive reminds me of his other comments that everyone has a right to an opinion but not everyone has a right to a decision. As a best case, he writes that "challenging someone’s decision will help people understand all the considerations behind it." Again, it's all about transparency for him. This is not something that junior miners should provide to the public, but to thine own self be true.

And note what he has to say about disagreement with people outside company, which is particularly relevant to junior mining with our many activist investors. There are trolls out there, but there are also concerned investors who can help a company. Distinguish between idle complaints and complaints that are meant to lead to improvement.

... 28) Appreciate that open debate is not meant to create rule by referendum.

I don’t imagine there is a lot of "rule by referendum" in the junior mining business, but I wonder just how much open debate there is. Consider this in relation to where you get your ideas from. Does a part of your machine source ideas from people on the ground at site who may help you see something new?

... 29) Evaluate whether an issue calls for debate, discussion, or teaching.

There are a bunch of points here that are particularly relevant for juniors that are trying to hire new generations of young professionals. A key idea for Dalio is the need to get in synch and he describes different ways to do that in general and specific ways that I believe is worth considering.

... 30) Don’t treat all opinions as equally valuable.

Right? Said it before, but it bears repeating.

... 31) Consider your own and others’ “believabilities.”

This is another Dalio-ism. He means "the probability that a person’s view will be right", which is critical in the hedge fund business. It's also really important in geological exploration. We face uncertainty, but experience matters. Read about Dalio's idea for a "meritocracy of ideas" for more on all this.

This principle also illustrates a subtle point. It's not just about how to design your machine, but also how to reflect on your role within it. Dalio encourages us to "Ask yourself whether you have earned the right to have an opinion." And that is a good thing for everyone in our industry to consider once in a while.

... 131) When people are “without a box,” consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them.

Dalio makes some important points about hiring and firing in Principles.

He says, "Remember that we hire people not to fill their first job at Bridgewater nor primarily for their skills. We are trying to select people with whom we’d like to share our lives." That sounds kind of heavy, but I'm pretty sure most field teams would agree it's an important consideration. Desk jockeys working in close quarters in office likely feel the same way. Junior miners typically have small core groups and lots of other people loosely affiliated with the company, and it's important to reconsider their involvement periodically.

... 155) Don’t make too much out of one “dot”—synthesize a richer picture by squeezing lots of “dots” quickly and triangulating with others.

I laugh when Dalio refers to a "pointillist painting of what a person is like", but he makes real points about cognitive biases around causality. Sports commentary is often criticized for twisting the story to fit the facts and daily stock market commentary often suffers from that, too. It's easy to say that we should gather multiple pieces of information to help guide decisions, but what happens when the information is costly or unreliable? There are many parts of Dalio's Principles that raise more questions than they answer.

When it comes to actually making risky decisions, Dalio makes hay out of checklists.

... 184) Use “double-do” rather than “double-check” to make sure mission-critical tasks are done correctly.

This one seems all the more important with a highly technical profession like geology. It may be asking a lot for geologists to agree, but it's worthwhile to double-do where possible to compare methodology and avoid groupthink.

Dalio likes checklists, but don’t confuse them with personal responsibility. He writes that "People should be expected to do their job well, not just what is on their checklists." If your team is thinking of the business as an owner, then that should be clear.

Near the end of Principles, the rallying cry for Dalio is "Do What You Set Out to Do" and "Push through!"

"You can make great things happen, but you must MAKE great things happen. Times will come when the choice will be to plod along normally or to push through to achieve the goal. The choice should be obvious." -- Ray Dalio

With all the various juniors that I interact with, a key to success seems to be that executives can be assertive and open-minded at the same time. That comes from a certain confidence that you know what you're doing, or at least focusing on what you know well and building a team to help with the rest. As we move forward in the mining cycle, building and maintaining a good team will be essential. And don't underestimate the potential of hiring someone off Craigslist!