Learning from mistakes can change your fortune—or earn you one

Ray Dalio is the founder of Bridgewater Associates, one of the largest hedge funds in the world. He has been considered one of the most influential people in the world by various lists, and, with a net worth of $15.2 billion in October 2014, he is the 30th richest person in America. By any standards, Dalio is extraordinarily successful.

The secret to Dalio’s success? The ability to acknowledge and systematically learn from his mistakes.

”I’ve learned that everyone makes mistakes and has weaknesses,” Dalio says in an 123 page document outlining his management and life principles, “and that one of the most important things that differentiates people is their approach to handling them. I learned that there is an incredible beauty to mistakes, because each mistake was probably a reflection of something that I was doing wrong, so if I could figure out what that was, I could learn how to be more successful.”

Learning from mistakes—easier said than done?

In Mistakes Were Made (But Not By Me), social psychologist Elliot Aronson argues that our brains are constantly working hard to maintain a positive self-image, to believe that we’re doing the right thing. These “ego-preserving blind-spots,” Aronson writes, are pervasive: even prosecutors in police investigations with clear DNA evidence have difficulty accepting that “mistakes were made,” for example.

It’s also not always clear exactly what “learning from your mistakes” means in practice. If you don’t have a plan, you can easily end up just dwelling on what went wrong. This might be even worse than simply ignoring mistakes altogether—you don’t learn anything, and you feel bad.

Over the course of his career, Dalio developed a systematic set of principles for analyzing errors within his own firm, and questions to ask when things go wrong. Heavily inspired by Dalio’s principles and questions, ClearerThinking.org—which provides free online courses to help people avoid thinking traps and make better decisions—has devised a short, step-by-step process that anyone can easily use to learn from and analyze their mistakes. The process involves six questions that you should ask yourself whenever you make a mistake and want to unlock something useful from it, and three “tenets”—general principles it’s important to internalize to learn as much as possible from your mistakes.

The six questions

1. What went wrong?

When you make a mistake, it’s often not immediately clear what went wrong. You might have a vague idea of what factors contributed to the problem, but it’s still unclear what the specific chain of events leading to the problem were. Making a specific list of concrete factors or events can help you to think much more clearly about both the immediate and root causes of the problem, and to identify what exactly you did that led to the problem.

2. Have you made a mistake like this before?

If this is the first time in 20 years that you’ve forgotten to send your mother a birthday card, how you respond to this mistake is likely to be different from if you forget almost every year. Asking whether you’ve made a similar mistake before helps to determine the scope of your response—whether you need to deal with this situation only, or whether you need to deal with a deeper underlying problem.

If you’ve never forgotten your mother’s birthday before, you’ll want to ask yourself what it was about this specific situation that led you to forget—maybe you were unusually overwhelmed at work, making you much more forgetful than usual. If this is something that happens repeatedly, you’ll want to go deeper: are you generally a forgetful person, and is there something you can do to change that?

3. What was the immediate cause of the problem?

Next, you’ll want to identify the immediate cause of the problem. Immediate causes tend to be particular to the current situation, and often refer to a specific action you did or didn’t take. If you failed to complete a project on time, the immediate cause might be that you didn’t schedule your time effectively in the weeks leading up to the project, or you took on too many additional responsibilities in that time, for example.

4. What was the root cause of the problem?

Once you’ve identified the immediate cause, move on to asking if there’s a more fundamental root cause of the mistake you made. Root causes tend to be more general, and are often described by pointing to aspects of your personality or certain dispositions.

In the case of failing to complete a project on time, the root cause of the problem might be that you don’t have any effective time-management habits, or that you have a tendency to say yes to more things than you really have time to commit to.

5. What can you do to correct the problem in the short term?

Having identified the immediate cause of the problem, you can try to figure out what you can do to apply a short-term fix. Come up with a specific plan of action that will let you deal with the problem and carry on with your life as best possible. In the case of forgetting your mom’s birthday, you’ll probably want to call her, apologize profusely, send a belated card and extravagant gift, and hope that she’s understanding…

6. What can you do to prevent problems like this in the long term?

Finally, especially if you’ve made similar mistakes in the past, spend some time thinking about how to prevent similar problems from occurring in the future. This may well be the most challenging part of the process, and is worth spending a considerable amount of time and effort on.

Think about the root cause of the problem that you identified: what about your habits and tendencies led you to make this particular mistake? Is there a general pattern of errors you make that this mistake is part of, and what does that pattern look like? Once you’ve reflected on your pattern of error, you can start brainstorming ways to correct it. If your problems come down to certain habits—or lack of habits—what new habits can you start building that would help avoid such issues? If you tend to hand in projects late, for example, you might want to get into the habit of using a calendar to ensure you schedule sufficient time to work on long-term projects.

The three tenets

As well as having a process for dealing with mistakes as and when they arise, it’s also useful to have some key principles to bear in mind on a day-to-day basis.

1. “Remember that most problems are potential improvements screaming at you”

The first step to learning from your mistakes is to remember that you can learn from them. This might sound obvious, but in fact most people don’t actually see their mistakes as learning opportunities. If you can really internalize this, you can turn even the biggest blunder into a positive experience. Research has shown that people who believe they can learn from their mistakes have a different neurological reaction to problems than those who don’t, and bounce back from errors much more quickly.

2. “Be honest with yourself about your flaws”

It’s natural to want to hide your flaws both from other people, and even from yourself. But hiding your flaws doesn’t eliminate them. They sit and fester in the background, affecting how you think and behave, no matter how much you try to ignore them. Being honest with yourself about your flaws means you can actually begin to improve on them.

3. “Identify both the immediate cause and the root cause of your problem”

Every mistake has two types of causes: an immediate cause, specific to the situation, and a root cause, often more general and related to aspects of your personality or habitual behaviors.

Both the immediate cause and the root cause are important to acknowledge—if you only identify one, you’re only seeing half of the issue. Acknowledging the immediate cause helps you to correct the problem in the short term while understanding the root cause will help you to start thinking about how to avoid the same mistakes in future.

You can follow Jess on Twitter at @jesswhittles. We welcome your comments at ideas@qz.com.

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