People have blind spots, areas that prevent them from seeing things optimally, says Ray Dalio, founder of Bridgewater Associates. And while that may seem obvious, hearing it from the billionaire who started one of the world’s largest hedge funds, with $150 billion in assets under management, gives the truism some weight.
In his new book Principles: Your Guided Journal, Dalio uses his experience as a leader to unpack the consequences of overconfidence and his learnings from past errors, including a failed investment in 1982 that forced him to lay off his entire staff and fall into debt. The book includes several prompts and exercises that leaders can use to reflect on their own thought patterns.
The essay below is an exclusive excerpt from Dalio’s book to be released Nov. 22. And in light of what we’ve learned about FTX's catastrophic implosion this week, the subject is extra timely.
Your blind-spot barrier
If you’re like most people, you have no clue how other people see things and aren’t good at seeking to understand what they are thinking because you’re too preoccupied with telling them what you think is correct. In other words, you are closed-minded; you presume too much. This closed-mindedness is terribly costly. It causes you to miss out on all sorts of wonderful possibilities and avoid dangerous threats that other people might be able to point out to you—and it blocks criticism that could be constructive and even lifesaving.
As a result of these two barriers, people in disagreements typically remain convinced that they’re right—and often end up angry at each other. This is illogical and leads to suboptimal decision-making.
This failure to benefit from others’ thinking doesn’t just occur when disagreements arise; it occurs when people encounter problems that they are trying to solve. When trying to figure things out, most people spin in their own heads instead of taking in all the wonderful thinking available to them. As a result, they continually run toward what they see and keep crashing into what they are blind to until the crashing leads them to adapt.
Would you like to learn how to get past the blind spot barriers?
You can do it; everybody can. The following principles will help you understand how.
Practice radical open-mindedness
If you know that you are blind, you can figure out a way to see, whereas if you don’t know that you’re blind, you will continue to bump into your problems.
In other words, if you can recognize that you have blind spots and open-mindedly consider the possibility that others might see some things better than you—and that the threats and opportunities they are trying to point out really exist—you are more likely to make good decisions.
Understand your own and others’ mental maps and humility
Some people are good at knowing what to do on their own; they have good mental maps. Maybe they acquired them from being taught; maybe they were blessed with an especially large dose of common sense. Whatever the case, they have more answers inside themselves than others do.
Similarly, some people are more humble and open-minded than others. Humility can be even more valuable than having good mental maps if it leads you to seek out better answers than you could come up with on your own. Having both open-mindedness and good mental maps is most powerful of all.
Excerpted from Principles: Your Guided Journal and lightly edited for length. Reprinted with permission of Avid Reader Press, an imprint of Simon & Schuster, Inc.
Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan
