It describes the stages of learning for a student.
The first stage, or the Shu, is when the student diligently follows the teachings of one master.
Ha, is when the student branches out and takes into account teachings from other masters.
Ri is when the student no longer needs to learn from a mentor but is doing so through his own practice and experience.
Shu Ha Rai means: "when the student is ready, the teacher will appear. When the student is really ready, the teacher will disappear".