Self-Made Billionaire Ray Dalio Says This 1 Rare Approach Made Him Rich
He says if you do this, it’s like thinking in multiple dimensions.
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You believe you're open to processing new information, and that's natural. Most people do. Fact is--and you know this from experience, too--lots of people are not that open to new information. They say they are, but they shut down when you go against their opinions. So how do know the truth about yourself: are you truly open-minded? Should you be?
Open-minded or closed-minded?
These kinds of questions haunted self-made billionaire entrepreneur Ray Dalio as he made his fortune. His pursuit of personal confidence launched him from a modest upbringing, through being fired from one of his first jobs, to becoming so broke that he couldn't afford a plane ticket to visit a potential customer in Texas. Ray is smart, tough, motivated, entrepreneurial--but, like all of us, sometimes wrong. Failing got him thinking about when to trust himself on a critical financial decision. Today, Ray is one of the 100 richest people in the world. So how did he figure it out?
Ray Dalio on finding right instead of 'being right'
By learning to not care so much about being wrong or right, or even failure, but caring more about the truth. It's a lesson he's had to learn and relearn as he built Bridgewater, his firm. It's currently the world's largest hedge fund. It manages over $160 billion dollars and has made more money for investors than any other hedge fund to date. He says in his book Principles that his hard-won secret to getting ahead in relationships and in business is radical transparency and honesty. These are the gateways to discovering the truth of a situation rather than pro-forma defending your opinion about it.
Dalio on the secret to balancing confidence with humility.
"That shift in perspective is like going from seeing in one dimension to seeing in multiple dimensions," he shared in a recent TEDtalk. "Collective decision making is so much better than individual decision making if it's done well. It's been the secret sauce behind our success. It's why we've made more money for our clients than any other hedge fund in existence and made money 23 out of the last 26 years." Now, Dalio is not talking about democracy--his system rates people based on their historical "believability," not just simple consensus. But still, at Bridgewater, that believability is based more on factual outcomes than personal tastes and inclinations.
Do you have the intellectual rigor to be critically open-minded or are you just polite?
Here's how you know. Dalio wrote in Principles,
Closed-minded people say things like "I could be wrong ... but here's my opinion." This is a classic cue I hear all the time. It's often a perfunctory gesture that allows people to hold their own opinion while convincing themselves that they are being open-minded. If your statement starts with "I could be wrong"..., you should probably follow it with a question and not an assertion.
When you're talking with someone--an employee, a teammate, a partner--and you disagree with them, it's natural to say something like, "I might be wrong" and then continue the conversation. But when you do that, do you then find a question that helps clarify the situation--or do you drive home your opinion by mustering all the facts on your side? (Thanks to Shane Parrish at the Farnam Street blog for first encapsulating this elegant way to test yourself.) Hear Ray talking about his approach in more detail in his TEDTalk or by reading his book Principles. By learning how to separate himself from his own opinions as a process, Ray has become one of the richest people on the planet.