October 27, 2020

Intellectual Honesty—Reflect on Mistakes & Learn from Mentors

“Pain plus reflection equals progress.” Ray Dalio, hedge fund manager and philanthropist, started Bridgewater Associates in 1975 and has grown it to one of the most successful U.S. investment companies. His famous prescription for progress is important for us to remember in every aspect of our lives—work, family, business, investing and relationships.

We can learn far more from our failures than our successes. This is why I’m willing to share my mistakes, and I’ll admit to making many of them throughout my life. The key is to avoid repeating your own mistakes, and to learn from the setbacks of others. Also, there is great value in sharing lessons learned with others so they can take away gems of experience to apply to their own lives.

I spend a great deal of time reflecting on circumstances and their outcomes, and extracting lessons from them. We must be intellectually honest with ourselves, and that is not easy. We have to see things for the way they are rather than how we think they are. When we identify our mistakes, reflect on them and extract lessons, we can grow as individuals.

Most of the time, when we are intellectually honest about what went wrong, the answers can be evident. Why did we lose a client? Maybe we didn’t meet their expectations. Perhaps we didn’t do ordinary things in extraordinary ways, as Mother Teresa taught. It’s possible that we dropped the ball. We neglected to do the basic blocking and tackling. The key is to ask: What did we do wrong? And what can we do differently next time to get better results? How do we improve?

For example, with investing, we looked at 12 years and more than 400 stock picks and discovered a pattern. My mistake, over and over again, was buying stocks that were inexpensive—but they weren’t necessarily high-quality companies. They were value traps. My other error was buying high-quality companies that weren’t growing very much. Learning from these mistakes and others and relying on the expertise of internal and external advisers, has paid off in dividends.

In business, I’ve learned that we need high-performers in the right roles—talented people who are a cultural fit and focus on the 8 E’s: Encounter. Embrace. Engage. Encourage. Empathize. Energize. Empower. Execute! I reflect on decisions and ask myself, “What went wrong?” When intellectually honest, the answers are more evident. It all goes back to The Who. Our lives are only as great as the people we involve in them. If the who isn’t right, then the what doesn’t matter. In some cases, the issue is not having the right people in the right spots. Our organizations are only as strong as the team members we recruit, retain and develop. Other times, a plan failed—but more often, the problem is because of poor execution.

Figure out who you want to be, what you want to do and where you want to go. Then, align yourself with people of integrity, knowledge and experience. Learn from them and look for opportunities to give back as a mentor to others.

In life, it’s important to seek out individuals who set a positive example. These should be people who embrace the three I’s: Integrity, Intelligence and Intensity. Mentors and advisers can fill the gaps of knowledge where we fall short. I don’t necessarily know the answers, but perhaps I know those who do have the expertise. We can help each other by sharing knowledge and experience.

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