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March 16, 2015

What I Learned From Losing a Million Dollars

Rachel Salaman

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ElizabethThornton3It's not often I find myself unable to put down a business book. But this was recently the case with "The Objective Leader," by Elizabeth Thornton, which starts with the gripping story of how the author raised and then lost a million dollars on a fruit-juice importing venture.

That was 20 years ago, when Thornton was a young entrepreneur. She's now a professor of management practice at Babson Executive Education, where she teaches people how to be more objective. She blames a lack of objectivity for her early business disaster, so there's no doubt in her mind what's at stake when people don't see things as they actually are.

In her classes and her corporate workshops, she begins by asking participants to think of a situation where they were "less than objective" and then report what it cost them. Some say they lost a relationship with a colleague or a customer. Others say they lost their reputation, a promotion, or a market opportunity. It can even affect your health.

"So many people say they lost peace of mind, thinking and stressing over [the situation], so their health and wellbeing suffered," Thornton says in our Expert Interview podcast.

That was certainly the case for her, as she came to terms with losing not just her investors' money but her dream of empowering women in South Africa too. I won't tell you the whole "how I lost a million dollars" story – it's worth getting the book to read it in Thornton's own words – but I will say it involved a lot of guts, drive and passion, as well as its fair share of deception, backstabbing and, ultimately, despair.

"I'd been a very successful person in my life before then, and so crashing and burning to this degree was really a problem for me. It took me a long time to get off the couch, quite frankly," Thornton recalls.

"But then I started studying and reading about psychology, the law of science and philosophy, and all these different principles, and I quickly realized that it wasn't just the business decisions I was making. It was how I framed my world."

Thornton talks a lot in her work about "mental models," which she defines as "deep-rooted beliefs about the way things are and the way things ought to be." The framework for our subjectivity, if you like.

"For every role that we play, whether that's mother, father, sister, co-worker, or boss, we have a mental model or a belief about how we should be in those roles, and that informs our decisions about everything that we experience. It even drives our perception of everything we experience," she elaborates. "That’s how powerful mental models are."

The good news is that mental models are not always a bad thing. In fact, Thornton believes that 95 percent of them don't cause any problems at all.

"If you’re functioning relatively well in the world, your mental models are serving you just fine," she says. "But if you find that you're often over-reacting to a situation, the same kind of situation causes the same kind of over-reaction, or you jump to a conclusion, or you take something personally that really isn't personal – and if you're doing this repeatedly – that's a sign that there might be a mental model operating that is not serving you well."

In her book, Thornton lays out four "principles of objectivity" designed to counteract some common unhelpful mental models, like the "perfectionist" and the "I’m not good enough" mental models.

The principles of objectivity are: there will always be situations that we don't like; people are fundamentally the same, but each is unique; we cannot always control the results of our actions; and everything is connected and interrelated.

It was this last principle that finally got Thornton off the couch after her major loss. She explains how in this clip from our Expert Interview podcast.

 Listen to the full Book Insight in the Mind Tools Club ¦ Install Flash Player.

Few of us will ever raise a million dollars, let alone lose it, but we can all benefit from hearing how someone else did both. In "The Objective Leader," Elizabeth Thornton skillfully weaves practical tips and methodical research with her own personal reality checks, so that we can learn the lessons she did without losing so much as a dollar.

Can you think of a time when you lost objectivity – and more besides? Join the discussion below!

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