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Unlocking the secrets of your personal mastery begins with a simple, yet profound question: how to create your circle of competence? This journey, far more than just a quest for skill, is a roadmap to discovering your unique strengths and aligning them with your deepest passions. Building on our initial exploration of what is a circle of competence, we now delve into the nuances of finding, maintaining, and expanding your own circle so that it aligns with your passion, hobbies, and personality.
Embarking on the Quest: Creating Your Circle of Competence
When you start this quest to discover your circle of competence, let’s borrow a leaf from Charlie Munger’s book of wisdom:
We have three boxes: ‘In,’ ‘Out,’ and ‘Too hard.’ You don’t have to be a jack-of-all-trades. At the Olympics, if you ace the 100 meters, you’re not expected to throw the shot put…
Identifying what falls into your ‘In’, ‘Out’, and ‘Too Hard’ boxes is the essence of creating your Circle of Competence.
How do you create your Circle of Competence? You need to do 4 things:
- Embrace brutal honesty about your strengths and weaknesses.
- Dive into the Competence Venn: passions, talents, and profitable skills.
- Sort these into ‘What You Know’ and ‘What You Don’t Know’ zones.
- Don’t forget #1.
This process not only chalks out the boundaries of your Circle of Competence but also marries it to your interests and personality. Let’s break it down:
🪞 The Mirror of Honesty: Reflecting on Strengths and Limitations
Embarking on the journey to define your Circle of Competence starts with a step that’s often harder than it sounds – brutal honesty with yourself. Warren Buffett, the oracle of Omaha, hits the nail on the head:
The size of that circle is not very important; knowing its boundaries, however, is vital.
In reality, this isn’t just about acknowledging what you know; it’s about having the courage to confront what you don’t. It’s a dance with humility, where ego takes a back seat.
Picture this: venturing into the tech or Chinese markets without any real knowledge is akin to attempting to swim across the English Channel without ever having taken a swimming lesson. It’s not just about the strokes you know; it’s about being acutely aware of the waters you’ve never navigated. It’s about acknowledging your blind spots.
Keeping your ego in check is essential. It’s easy to overestimate our abilities, to let pride colour our judgment. But in the realm of competence, ego is the enemy.
Significantly, as you embark on this journey of self-discovery, remember: the first step to truly understanding your Circle of Competence is a deep, unflinching dive into the waters of self-awareness, where honesty is your compass and humility, is your guide.
🧐 The Competence Venn: Unifying Passion, Talent, and Profit
Now with ego and dishonesty out of the way, let’s get to actual work. Enter the Competence Venn, a simple yet profound tool to find your Circle of Competence. (Hat tip to Phil Town’s book Rule #1 for this gem).
The Competence Venn will help you find and align your Circle of Competence with your hobbies, passion, and personality. It’s one of the best ways to find your Circle of Competence. Draw three overlapping circles labelled “Passion”, “Talent”, and “Money”.
🔥 Passion: Jot down what ignites your fire, what you’d immerse in if time and money were no object.
🌟 Talent: List what you excel at, be it in your professional life or as a hobbyist.
💰 Money: Note down what fills your coffers or where your spending gravitates.
The intersection here is your Circle of Competence, your gold mine of expertise. The more a theme recurs, the more it speaks to your innate understanding.
This exercise is your compass to navigate what’s ‘out’ in the Munger universe. You should never make decisions on things that don’t show up in your circles. For example, if someone asks me to share my opinion on politics in Latin America, I will keep quiet.
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🔍 Skill Sorting: The Knows and the Unknowns
With your Competence Venn now vividly mapped out, the next step is a bit like organizing a closet – it’s time to sort your skills. This phase echoes the Three Zones of Circle of Competence we touched upon in my previous article.
Let’s face it, no one has eaten their way into becoming a Michelin Star chef. It’s one thing to savour the flavours; it’s another to be behind the stove. Similarly, just because you’re passionate about something or you’ve invested money in it, doesn’t crown you an expert.
Now comes the task of categorizing your skills into two distinct zones: ‘What You Know’ and ‘What You Don’t Know’.
Think of it this way: if you can confidently tackle a curveball question in your area of expertise, then it belongs in your ‘What You Know’ zone. It’s about having a firm grip on your skills, not just a fleeting acquaintance. Everything else should be in the ‘What You Don’t Know’ zone.
| What You Know | What You Don’t Know |
| London PHV Compliance | Cocktails, Old-Fashioned (Liquor Businesses) |
| Risk & Controls in Tech and Finance | Index funds |
| Writing and reading on mental models | Marketing a blog or a newsletter |
| How to plan a travel abroad? | Indian politics |
And remember, this isn’t the time for ego-boosting exercises. Overestimating your abilities by crowding your ‘What You Know’ zone with wishful thinking won’t do you any favours. It’s about striking that fine balance between confidence and realism in your skillset.
Consider the ‘What You Don’t Know’ zone as fertile ground for expanding your Circle of Competence. These areas, already brushing against your passion, talent, and money circles, are prime candidates for expanding your Circle of Competence. Consequently, they’re not completely foreign territories but domains where your initial understanding can blossom into expertise.
There you have it, you’ve created your Circle of Competence. That was the easy part. Now, let’s understand how to maintain and expand this circle.
Maintaining Your Circle of Competence: A Continuous Journey
Charlie Munger said:
If you want to be the best tennis player in the world, you may start out trying and soon find out that it’s hopeless ‑ that other people blow right by you. However, if you want to become the best plumbing contractor in Bemidji, that is probably doable by two-thirds of you. It takes a will.
It takes the intelligence. But after a while, you’d gradually know all about the plumbing business in Bemidji and master the art. That is an attainable objective, given enough discipline. And people who could never win a chess tournament or stand in center court in a respectable tennis tournament can rise quite high in life by slowly developing a circle of competence ‑ which results partly from what they were born with and partly from what they slowly develop through work.
In the quest to maintain your Circle of Competence, it’s like being a captain of a ship; you need to constantly navigate through the ever-changing seas of information. Here’s how to keep your ship sailing smoothly:
📘 Continuous Learning: The Lifelong Student’s Path
In this era, where information flows like a river, staying updated within your area of expertise is not just beneficial; it’s essential. This means building a robust knowledge pipeline.
Immerse yourself in books that challenge your thinking, subscribe to newsletters that offer fresh perspectives, and follow the intellectual masters in your field.
Remember, curiosity didn’t kill the cat; it made it wiser.
🔍 Regular Self-Evaluation: The Mirror of Honesty
The art of honest self-assessment is like having a heart-to-heart with yourself. It’s about recognizing when you’re wearing the overconfidence hat and understanding the true extent of your capabilities.
Conduct an audit of your Circle of Competence to understand if you have still maintained your understanding if new additions are required in your circle, or if certain fields can be dropped.
Reflect on your strengths and weaknesses, and embrace your experiences, especially the missteps. As they say, mistakes are the portals of discovery.
Individuals who engage in frequent self-reflection are better equipped to navigate complex situations and adapt to changing environments. It’s about learning from your mistakes, not just acknowledging them.
After all, what separates the extraordinary from the ordinary is their ability to turn setbacks into comebacks.
📣 Seeking External Feedback: The Outside-In Perspective
Regular feedback is like getting a bird’s eye view of your performance. It’s essential to have people in your corner who can provide honest and constructive feedback. This external perspective is invaluable in helping you stay true to your circle of competence.
It’s about understanding how others perceive your skills and where you can improve.
Expanding Your Horizons: Growing Your Circle of Competence
How to expand your circle of competence? Focus on skill development through iterative learning, engage in diversified reading to gain broad perspectives and build mental models, and step beyond your comfort zone to embrace new challenges. This approach enhances skills, fosters adaptability, and enriches knowledge, preparing you for a rapidly evolving world.
Warren Buffett in an interview said, “I have expanded my Circle of Competence over the year… a little”.
If Buffett, with all his wisdom, has only nudged his circle wider, what does that say for us, mere mortals? But, if you’re set on growth, here are three strategies:
🌱 The Iteration Game: Refining Skills Beyond the Clock
When it comes to developing your skills, think of it as a chef perfecting a signature dish. It’s not about the hours spent in the kitchen; it’s about how many times they’ve honed that recipe. This is where focused effort takes the spotlight – it’s the art of refining your craft through repeated iterations, not just clocking in hours.
Malcolm Gladwell’s 10,000-hour rule has its merits, but let’s twist that lens a bit. It’s not just about the hours; it’s about how many times you’ve tackled a task, each iteration sharpening your skills a bit more. It’s about quality encounters with your craft, each one adding a layer of expertise.
Specifically, take a leaf out of Pablo Picasso’s book – or rather, his sketchpad. His ‘The Bull Series’ is a masterclass in iterative creativity. Each sketch of the bull, simpler than the last, shows Picasso’s journey of stripping the complex to the essential. It’s a powerful reminder that expertise isn’t just born; it’s cultivated through persistent, focused iterations. Each stroke, each line, brought him closer to the essence of his art.
📚 Embracing the World Through Books: The Power of Diversified Reading
Diversified reading isn’t just a hobby; it’s a strategic tool for widening your circle of competence. Imagine each book as a window, offering views into different worlds – from the intricate tapestries of history to the bold frontiers of science. Also, this journey across genres does more than just introduce new ideas; it lets you walk in the shoes of others, learning from their triumphs and tribulations.
Think of your reading list as a mosaic, each book a tile contributing to a grander picture of understanding. It’s about constructing a mental map where ideas from disparate fields converge, offering a richer, more nuanced perspective of the world. In addition, this practice is more than educational; it’s transformative, equipping you with the tools to think critically and adapt to an ever-changing landscape.
If you only read the books that everyone else is reading, you can only think what everyone else is thinking.
Haruki Murakami
Elon Musk’s journey with SpaceX and Tesla stands as a testament to the power of expanding one’s circle of competence through diverse reading. Musk, a polymath who has ventured into realms as varied as space travel, renewable energy, and AI, attributes his groundbreaking innovations to his voracious reading habit.
His story is a vivid illustration of how a wide-ranging knowledge base can fuel extraordinary achievements, even in areas where formal training is absent. Musk’s approach underscores the transformative power of reading broadly, highlighting its role in cultivating a comprehensive and dynamic circle of competence.
🚀 The Leap Beyond: Venturing Outside Your Comfort Zone
Expanding your circle of competence often means stepping into uncharted territory. It’s about embracing the unknown, whether that’s diving into a new field, tackling a daunting project, or immersing yourself in experiences that feel foreign. Remember Julie from The Three Zones of Circle of Competence article? It’s about adopting that spirit of exploration.
These leaps, though they may seem daunting, are fertile grounds for growth. They push you to enhance your skills, and foster resilience, and adaptability. Remember, each new challenge is an opportunity to deepen your knowledge and prepare for the dynamic shifts of our world, contributing to both personal and professional growth.
The Art of Mastery in Your Circle of Competence
In the intricate dance of defining and expanding your Circle of Competence, the true mastery lies not in the vastness of your knowledge, but in the depth and agility with which you navigate. It’s a journey of aligning your innate strengths with your passions, continuously evolving as you do. Like a skilled sailor in the vast ocean of potential, the art is in steering your ship with precision and confidence, knowing when to ride the waves and when to anchor in your expertise.
So you’ve got to figure out a game where you have an advantage, and it has to be something that you’re deeply interested in.
Charlie Munger
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👉🏽 What is Circle of Competence and why is it important to recognize your circle?
👉🏽 Charlie Munger and Warren Buffett’s Circle of Competence investing strategy
