Your circle of competence: should you stick within it or step outside of it? - Deepstash
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The circle of competence

The circle of competence

The circle of competence model states that everyone has an area, or circle, of expertise. However, the circle of objective competence may be surrounded by a larger circle of subjective, and often over-inflated, belief in your ability.

Your circle of competence represents what you really know, versus what you think you know.


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The circle of competence: a mental model

  • A circle of competence is a mental model that helps mitigate the risk of failure associated with overconfidence by having a realistic view of your strengths. The term was first coined by Warren Buffett, one of the world’s most successful financial investors.
  • Alongside his business partner Charlie Munger, Warren Buffett found success in only making financial investments in sectors that he had a comprehensive grasp of. In this way, Buffett avoided overconfidence in his knowledge or abilities, and instead relied on objective competence.


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Discovering your circle of competence

To determine your circle of competence, you have to understand where your true competence lies, without allowing subjective beliefs to create undue assurance in your abilities. 

To determine the breadth of your circle of competence, you need to have an honest look at your background, training, qualifications, or personal familiarity in a subject. 


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Stepping outside of your circle of competence

If your goal is to avoid risk, you should stick to your circle of competence; however, if your goal is to innovate, you will be better off stepping outside of your circle so you can come up with non-obvious solutions.

Never stepping outside the boundaries of your circle of competence may stunt your creativity and ability to discover new ideas.


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Make the most of your circle of competence

To take advantage of your circle of competence is to find a balance between honestly acknowledging your capabilities, and strategically striving to expand your knowledge and horizons.

  • Ensure predictable progress. Define the limits of your circle of competence to ensure progress.
  • Push your boundaries. Acquire new skills, set ambitious goals, offer your help on a project you are unfamiliar with.
  • Reassess your circle of competence. By leaving your comfort zone for just one-fifth of the time, there is potential for learning, growth, and behavioral change.


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