Saturday, June 19, 2021

Circle of competence

When you look around, everybody is glued to the mobile, internet and on social media. We receive a lot of information on social media like WhatsApp, twitter, Facebook, LinkedIn etc. This gives the feeling that we know everything, and information is the power. What we forget is that we have just the information and not the knowledge. I have seen people hardly learning from those messages and information about what they are consuming daily. Most dangerous part is people making their opinion based on that or taking decisions without understanding enough. 

During the current pandemic, people have a lot of dilemmas. Should we take the vaccine or should we not? Is one of the dilemmas created by social media. However, very few people tried to contact their doctor and take his/her opinion instead of believing the news on social media. In today’s times, the perception of knowledge usually engulfs your true knowledge. Hence, our knowledge graph looks as under.

As you see, the circle of competence is the area that matches your experience and skills or ‘what you already know’. However, we think otherwise claiming that we have knowledge & skill in other areas also. This is because of the lack of reflection and insight we have.   

You must be knowing that Warren Buffet writes a letter every year to CEOs and shareholders of different companies where he invested. He does this to set expectations.  He referred to this concept in the letter he wrote to shareholders on behalf of Berkshire Hathaway. 

He says, “Intelligent investing is not complex, though that is far from saying that it is easy. What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.” – Warren Buffett 

Knowing the circle of competence is not only useful to investors but also everybody. Everything which comes under your knowledge, skills, and competence comes under your “circle of competence.” Wise person knows exactly what his or her circle of competence is. Knowing your circle of competence increases the success rate and better decision making. It doesn’t mean that you can’t expand your circle of competence; however, your perception about the knowledge you have, needs to be corrected. 

Identifying the circle of competence is easy but overconfidence is the major hurdle in identifying it. We actually ‘think’ that we know better but in reality, we don’t. We need to understand that we may have limitations to expand our competence in certain areas where you need specialized expertise. For example, if you are a salesperson and you wish to become a data scientist, it is beyond your expertise. You can, but then you need to learn different skills to become a data scientist. 

One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset. We are not superhuman who have all solutions and all knowledge. Our mind brings out solutions based on our past experiences. However, the mind does not relate those experiences to the contexts. Good news is, we can condition the mind to understand the context and that’s why learning is crucial.

(Opinions are purely personal & does not represent my organizations, current or past) 

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7 comments:

Jayesh Bhoyar said...

very well written.
I really liked the crux of the article
One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset.

Jayesh Bhoyar said...

very well written.
I really liked the crux of the article
One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset.

Jayesh Bhoyar said...

very well written.
I really liked the crux of the article
One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset.

Jayesh Bhoyar said...

Very well written. I really liked the crux of the article.
One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset.

Jayesh Bhoyar said...

Very well written. I really liked the crux of the article.
One of the solutions to expand the circle of competence is moving from a “know-it-all” to a “learn-it-all” mindset.

Unknown said...

Very nice and helpful article. The way of explainantion of a complex point in a simple manner.
Thank u so much for sharing, Sir.

Unknown said...

Very nice and helpful article. The way of explainantion of a complex point in a simple manner.
Thank u so much for sharing, Sir.

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