“What is Your Circle of Competence?”

Warren Buffett says, “Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital.”

Perhaps like you, I spent my earlier years wanting to know about and become skilled at everything. There were two problems with that: a. a wide range of competence is very difficult to achieve and b. it leaves no room for others to identify and develop their skills.

Buffett has also said that he is great at only one thing: identifying mispriced companies and stocks and buying and holding them for the long term. Using only this small circle of competence, he became the world’s wealthiest person, 99% of which he is giving away.

I was 50 by the time I became fully focused on my small circle of competence: I am very good at learning what people want or need, then finding a way to give it to them. That’s it! I’m not a great creative, financial guy or operator. I’ve also proven that I’m a lousy CEO. But I’m great at pleasing people. In return, I receive both love and money in abundance.

Which leads me to the second sentence of Buffet’s quote: learning my boundaries. In the case of pleasing people, I’ve added Covey’s win/win habit. If a customer or friend continually gains more benefit than I do, the relationship won’t be healthy in the long term.

• An abusive client – It took forever but I finally learned to fire them. There’s no
  future for me or our teams with a domineering client.
• Greedy customers – Discounting my product or service may please them but
  creates a loss for me which is, at best, short term and at worst, stupid.
•  A codependent friend or relative – It took a lifetime to learn I am not helping them if they are not (at the same time) helping themselves. Pity is a poor substitute for love.

My core competence is based on Marketing 101 principle: “Define the need, then fill it.” Later I added “at a profit to both parties”. This remains an enduring model upon which to build a great business. Consider: People needed simplicity to use a personal computer and smart phone: Microsoft and Apple; Taxis became slow, expensive and undependable and people needed side hustles: Uber and Lyft; People wanted to buy stuff without going to the store: Amazon; People wanted to watch shows when
convenient for them: Netflix.

What is your circle? Have you identified and leveraged it as well as you might? Warning: it takes patience and humility to become focused only on your circle of competence.