Inside Circle of Competence: How Warren Buffet Navigates Uncertainty and Risks
Bonus: 5 Must Try AI Tools Besides ChatGPT + Prompts of the Week
We’ve often said it to ourselves or been told “Get out of your comfort zone”. We’ve been told that “growth happens outside the comfort zone”. We’ve been told to push ourselves if we want to grow. But, does that mean we operate outside our circle of competence? Should you take up an assignment or a job that falls outside your circle of competence simply because you want to “grow”?
It's essential to clarify the difference between stepping out of one's comfort zone and venturing outside the Circle of Competence. Growth can occur by pushing personal boundaries, but it's crucial to make well-informed decisions based on our knowledge and expertise.
“I’m no genius. I’m smart in spots—but I stay around those spots.”
— Tom Watson Sr., Founder of IBM
Warren Buffet popularised the concept of Circle of Competence. According to him, an an individual, investor or an organisation should operate within an area where they have deep knowledge or expertise. Operating within your Circle of Competence can help minimise the risks associated with overconfidence in your capabilities. Charlie Munger and Warren Buffet for example, found success by making financial investments “only” in sectors they had deep knowledge and expertise in.
Consider Pareto Principle, where 80% of the results come from 20% of your efforts. Combine Circle of Competence with the Pareto Principle; Spend 80% of your time working within your circle of competence and 20% exploring new areas / interests.
Examples:
“I’ve had a successful career as a software engineer, and I’ve recently become interested in data science. I should switch my career path and become a data scientist”.
It's natural to develop new interests and aspire to expand our skillsets. While pursuing new areas of knowledge is commendable, it's essential to carefully assess our strengths and weaknesses before making significant changes. In this case, the individual could consider taking online courses, attending workshops, and earning a relevant degree in data science to build a solid foundation in the field.
“I grew my client’s newsletter to 20k subscribers within a month. I should start one myself”
Real scenario: As a marketer who runs an advertising agency, it was somewhat of easy assumption for me to make. Last year, we helped a client grow to 50k subscribers within couple of months. However, I didn’t start a newsletter until now. Why? It was outside my circle of competence. It’s only after doing a lot of research and studying writing / content styles, I’m starting to venture out in this area.
Bottomline: never start something till you’re confident of delivering value.
Beyond ChatGPT: 5 Incredible AI Tools You Need to Try This Week
ElevenLabs: AI powered most realistic text-to-voice speech generation
KickResume.com: Create resumes quickly with help of AI and customisable templates
2short.ai: Turn your long Youtube videos into short and engaging content.
DoNotPay.com: The world’s first AI lawyer
Gamma.app: Create insanely good looking presentations with AI
Prompts of The Week:
In today’s edition, I bring you not just one but three prompts each for three different use cases:
Youtube Video Ideas:
"I need a YouTube video idea that will provide a behind-the-scenes look at my [company/brand] and persuade my [ideal customer persona] to take [desired action] with a sense of authenticity and relatability."
"I'm looking for a YouTube video idea that will provide a step-by-step guide on how to use my [product/service] and persuade my [ideal customer persona] to make a purchase with clear and compelling instructions."
"I need a YouTube video idea that will demonstrate how my [product/service] can solve the specific pain points and needs of my [ideal customer persona] in a relatable and engaging way."
Cold Email:
"I need a cold email idea that will engage my [ideal customer persona] with a unique and compelling perspective on [subject] and persuade them to take [desired action] on my [website/product]."
"I'm looking for a cold email idea that will establish trust and credibility with my [ideal customer persona] by showcasing the expertise and professionalism of my [company/brand]."
"I need a cold email idea that will provide a unique and compelling offer to my [ideal customer persona] and persuade them to take [desired action] with a sense of urgency and exclusivity."
Copywriting:
"I'm looking for a [type of text] that will speak directly to the needs and pain points of my [ideal customer persona] and persuade them to take [desired action] with a sense of urgency and strong offer."
"I need a [type of text] that will showcase the value and benefits of my [product/service] to [ideal customer persona] and convince them to take [desired action] with social proof and credibility-building elements."
"I'm looking for a [type of text] that will clearly explain the features and benefits of my [product/service] to [ideal customer persona] and persuade them to make a purchase with a strong call-to-action."
Hope you enjoyed today’s edition. Don’t forget to subscribe. As a subscriber you get priority access to the content plus there will be more benefits to come. Have a great week ahead!