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. Should you stick to what you know, or is it wiser to broaden your abilities?
Discovering Your Circle of Competence
A mental model that helps mitigate the risk of failure associated with overconfidence by having a realistic view of your strengths
- To determine your circle of competence, you have to understand where your true competence lies
- Have an honest look at your background, training, qualifications, or personal familiarity in a subject to determine the areas in which you have deep, well-rooted knowledge and experience
Stepping outside of your circle of competence
Chief investment analysts Rusmin Ang and Victor Chng write: “Remaining within one’s circle confers a number of benefits, such as an unfair information advantage, the narrowing of available options, and the reduction of poor decision making.”
- If your goal is to avoid risk, you should stick to your center of competence.
- However, if you want to innovate, step outside so you can come up with non-obvious solutions.
How to Make the Most of Your Circle of Competence
Ensure predictable progress
- Push your boundaries
- Reassess your circle of competence
- The Pareto Principle states that 80% of all output results from just 20% all inputs
- Spend 80%, and 20%, expanding your boundaries and exploring new territories that may feel less comfortable
- Acknowledge your capabilities and strive to expand your horizons
- This model serves to indicate true strengths and expertise while preventing overconfidence
