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

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