The Circle of Competence is a powerful mental model that can help you:
- Leverage your strengths and capitalize on them
- Make confident, clear decisions
- Discover your ideal path and the work you should pursue
More important than that: it helps you avoid being stupid. You’re less likely to do something out of overconfidence and ego when inside your circle of competence.
In Ego Is The Enemy, Ryan Holiday shows us why understanding our circle of competence is so crucial.
He shares the story of Ulysses S. Grant and William Sherman.
At the end of the Civil War, as Holiday writes, they “were two of the most respected and important men in America.”
They had vast amounts of power and freedom, and could basically do whatever they wanted.
Sherman hated politics and repeatedly declined requests to run for office.
Grant—despite having zero prior experience in politics—chose to become president. He was elected by a landslide, and then presided over one of the worst administrations in American history.
See, Grant was not suited for the role. He was far outside his circle of competence. And he—along with the public—paid the price.
History is filled with examples of people like Grant. Those who’ve had initial success in one area and naively believe they can replicate it elsewhere—even if it’s a completely unrelated field.
You see this with successful entrepreneurs. They succeed in a certain market or industry. Ego leads them to believe they have the “Golden touch.” They enter a new, completely unrelated market or industry and get crushed.
You see it with well-meaning, empathetic individuals who enter politics but don’t understand the game. They don’t get anywhere.
You see it in the successful actor who enters the music industry only to gain little traction despite their existing brand and profile.
Ignoring your circle of competence is unwise, and potentially catastrophic.
But how do you know what your circle of competence is? How do you define it?
How do you develop and grow it?
Also, isn’t it a good thing to challenge oneself? If you’re always in your circle of competence, aren’t you playing the easy game? Avoiding learning new things?
In this piece, we’ll work through all those questions. You can think of this as the “ultimate guide” to the mental model known as the Circle of Competence.
- We’ll begin by defining the concept and explaining its importance as a mental model. It’s essential to remember that it’s a useful tool and guide, not an unbreakable rule.
- Next, we’ll discuss how knowing your circle of competence can help you make better decisions, be prolific, and build personal leverage.
- Lastly, we’ll explore how to grow and expand your circle of competence.
Additionally, I’ve created a “Circle of Competence” worksheet to help you define your circle and determine your next focus. Click here to download it.
What is a circle of competence?
“You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.”
Charlie Munger
Your circle of competence is:
- What you’re good at and have an aptitude towards
- What you know well
- Where you have an edge
Your circle of competence does not include everything you know about or can do. It includes what you are competent at. What you’re able to do successfully and efficiently, or have deep knowledge in.
For example, I’ve been training Brazilian Jiu-Jitsu for ~6 months now. I know the basics. I’m more competent than an untrained person. But I’m not competent. I would not include it inside my circle of competence—it’s somewhere outside it.
Likewise, I know basic statistic modelling and algebra, but I wouldn’t place mathematics inside my circle of competence.
But I can write better and faster than most people. I’ve been writing for 14+ years. It’s something I’m competent at.
And I can synthesize information and teach it fairly well.
Both these skills are inside my circle of competence.
The Circle of Competence is a model for thinking, not a literal circle (use it accordingly).
While useful as a mental model, in reality your circle of competence looks nothing like a circle at all.
A circle has hard definitive edges. Real life does not. Skill and knowledge acquisition are not binary. You don’t flip a switch one day and become competent in something. You become more competent on the spectrum of incompetence to competence over time.
It’s important to remember that this is a model. Some people who learn mental models like this take them extremely literally and as an “iron rule.” Or they misunderstand the model completely.
For example, someone will read about the circle of competence and then fall into the trap of staying in the center of their circle of competence. Never venturing out. Never learning anything new.
This is fine if you’re doubling down and reaching mastery in a skill you’re already competent at (like if you’re trying to become a world-class artist). But a lot of people will stay rigidly inside their circle of competence simply because they’re afraid of being challenged, or failing.
So, it’s not that the circle of competence is some hard boundary that you can never pass through. Rather, it’s a model for making decisions and pursuing goals.
And you should stay mostly inside your circle of competence. Because inside it is massive amounts of leverage, aptitude, efficiency. Venture too far outside it and you start to lose those, and usually end up competing with people who have them. They will beat you at the game they know best.
You shouldn’t view staying inside your circle of competence as a limiter. It’s not. Being committed to leveraging your strengths and aptitudes—while avoiding things you aren’t good at—is not you limiting yourself. It’s you being smart and intentional.
Circles inside circles. And the outer layer of useful skills & knowledge.
There are things that are useful to know, both skills and areas of knowledge, that you may not be competent at but are helpful anyway.
For example, financial and accounting skill is outside my circle of competence, but I know enough about it for it to be useful in business. I wouldn’t feel comfortable being a fractional CFO—because I’m not skilled enough—but I’m confident reading through P&Ls and balance sheets and making decisions.
This outer layer can’t be neglected or ignored. It’s always there in some capacity. We’ll look at it further later on when we go over how to expand your circle of competence.
Knowing your circle of competence helps you avoid being stupid
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Charlie Munger
Most of us aim towards goals and aspirations. We try to be intelligent—like Munger says.
Thinking about what you should stay away from and avoid can help you better think about where you should go and what you should do.
For example, if you want to lower your chances of getting into a car crash, you could try to become the most brilliant driver, or you could focus instead on avoiding mistakes and avoiding being a stupid driver. The latter is a better mental reframe, because it illuminates the potential risks more than the former.
In making decisions, growing a business, building your life and career: knowing where your circle of competence is helps you avoid being stupid—better than anything else.
When you’re enticed by a goal that’s far outside of your circle of competence, you can recognize it as a big risk—something that’s probably stupid to pursue—and act accordingly, while the person who’s trying to be smart and intelligent might trick themselves into thinking they can pull it off, only to fail.
Circle of Competence Humility vs. Stagnation & Limiting Beliefs
It’s important not to mistake your circle of competence for what may be limiting beliefs.
The truth is, if you want to achieve something in life, you’ll naturally have to venture outside of your circle of competence. The point is to do so in a strategic way, choosing the path that leverages your existing competencies instead of the one that’s completely unrelated.
For example, I’ve never built a service business with dozens of employees. I have a theoretical idea on how it could be done, but I wouldn’t call myself a competent manager. I haven’t developed that skill yet.
And let’s say I wanted to build this service business.
I could easily rationalise and psyche myself out of doing so by telling myself that it’s outside my circle of competency and that I can’t pull it off.
But the truth is, I probably can. I’ve built businesses in the past. I’ve offered services as a consultant. I’ve had employees and managed small teams. It’s not that big of a leap.
And in this case, psyching myself out would be a limiting belief, because it’s close enough to my circle of competence that I can expand into it (as we’ll look at soon).
But let’s say that I had an idea to start a competitor to SpaceX.
The only reason I would pursue that is pure delusional ego. And in this case, understanding that it’s lightyears away (ha) from my circle of competence is not a limiting belief, it’s avoiding being stupid.
And I know someone watching this will be like, “Yeah well that’s still a limiting belief. If everyone thought like you do, we’d never have companies like SpaceX in the first place.”
You might be right. But unfortunately there are many unhappy, broken people out there who’ve tried to do extremely ambitious things outside of their circle of competence and failed miserably. You just don’t hear about them. I personally like playing games where I have a high chance of winning.
An easy test to know if you’re dealing with a limiting belief or not is to pay attention to how you feel.
If you feel slightly scared, hesitant, and anxious—but you know you’re probably capable of doing the thing—then chances are it’s a limiting belief.
If you feel supremely confident about a decision or opportunity and you don’t have any competence in that area, then you should check yourself, because it’s likely your ego talking.
Growing and deepening your circle of competence
There are two ways to grow your circle of competence:
You can expand the overall circle to acquire new competencies 👇
Or you can expand and “deepen” the existing competencies inside your circle 👇
We have our general circle of competence which houses our smaller circles—the individual competencies. Some of these are bigger and more developed than others.
The goal is to put yourself in a game where you’re forced to expand and deepen your circle at the same time. One game that forces this expansion and deepening is business. You’re forced to develop competencies under pressure, and it’s not theoretical, it’s real. And so are the stakes.
Regardless of whether you’re in business or not, you should be both deepening and expanding your circle of competence. It’s not one or the other unless you are trying to be a specialist. If you want to be the best neurosurgeon in the world, then expanding your circle of competence widely doesn’t make as much sense as deepening your existing skill, because there’s an opportunity cost to everything, and if you spend 3 hours a day reading history as an ambitious neurosurgeon then that doesn’t get you closer to your goal.
But I’ll assume that most reading this want to be the generalist-specialist. They wanted to be T-Shaped individuals, like I talked about in my Metaskills video.
Where to start if your circle of competence is small
Maybe you’ve read up until this point and you’re thinking, “this sounds good and all, but I don’t have a circle of competence.”
Well, you absolutely do. You just don’t think you do. Everyone has a circle of competence. Some have bigger circles than others.
But I get it. Maybe you’re young and you’re not sure what your unique superpower is. Maybe you don’t really have one yet. You have some areas of knowledge, but not much depth.
If you’re in this position—you have a small and shallow circle of competence— the best place to start is by developing a single skill or area of knowledge instead of trying to expand.
For example, let’s say you want to become an expert digital marketer.
It would be most efficient to pick one skill, like copywriting, get good at it, and then expand from there.
The less efficient approach would be to try and expand your circle of competence in multiple different directions and try to learn 6 digital marketing skills at once.
You can do some initial discovery to figure out what this single skill or area might be, but I would limit this to no more than a few weeks or months. You don’t want to end up as the person who constantly explores but never actually does anything.
The reason I suggest developing depth in one skill to begin with is for a few reasons:
- It forces you to develop the metaskills of focus and persistence. You will need these anyway if you want to continue to deepen and expand your circle in the future.
- You need to make money. Everyone does. And having an income-producing skill is a good place to start.
- It mitigates overthinking and analysis paralysis. When you pick something and commit to it for a time period, you’re not swept in different directions constantly.
I’ll make a dedicated video on this topic, but if you’re in this position, here’s what I recommend:
- Pick a skill you want to develop.
- Commit to a minimum of 6 months learning and developing it. Have a bias towards action and practice rather than theory. Do at least one hour per day, ideally 3 hours.
Most people underestimate how much competency can be developed in 6 months, but that’s because very, very few people will be consistent. How many people put in 1-3 hours every day for a month, let alone six?
How to expand your circle of competence
At a certain point, it makes more sense to deepen the existing competencies inside your circle instead of trying to expand the overall circle further.
But until then, expansion is useful. Becoming the generalist-specialist requires you to have a reasonably large circle of competence, and an even larger outer layer of useful knowledge (things you know about but aren’t necessarily competent at, but are useful regardless).
So, how do you effectively expand it?
Organic proximity is the best guide
Imagine there’s a sea of skills and areas of knowledge.
Your circle of competence sits somewhere in this sea, floating around.
There are other skills floating around.
Some are close by. Some are far away.
The ones that are close by are more closely related to your existing circle of competence.
Now, let’s say you want to absorb one of these competencies—pulling it into your circle. You need to expand your circle in order to do this, which takes time, energy and effort.
Attempting to absorb a competency that’s far away from your existing circle is very difficult. It will take much longer than absorbing one that’s close by to you. There are many reasons for this, namely that you don’t have the foundational knowledge, mental map, related knowledge required to quickly pick up the new competency that’s unrelated (or very distantly related) to what you already know.
But the ones that are close in proximity are the ones you should absorb. This is what you’d be doing if you didn’t “think” about the process. It will likely happen organically if you’re a curious person.
To give you an example, let’s say you’re one year into building your first business. It’s a web design agency. You make websites for small businesses that lack an online presence or have a poorly designed website.
You’re the only full-time person, but you engage with the odd contractor and freelancer to help with work when things get busy.
You’ve already developed a bunch of competencies:
- The skill of web design
- Basic sales skills, expectation management
- Business admin 101 (bookkeeping, managing expenses, etc)
- Basic delegation: defining work scope, outsourcing, etc.
And in the sea of competencies, there are a few that are pretty close by to your existing circle. They might be:
- Team building/management (allowing you to scale and take on more clients)
- SEO optimization (allowing you to offer another product line or add-on to your website design services)
- Multi-step sales cycle management (allowing you to take on higher paying clients)
The obvious step is to start absorbing these competencies through taking the actions required to do so.
What you wouldn’t do is try to absorb competencies that are further away, or don’t make sense in light of your goals. For example, you don’t need to learn advanced financial engineering with your business model. You don’t need to understand the detailed intricacies of supply chain management. These things are far away from your existing circle, and the opportunity cost of developing them is high.
So, look at what’s already close to your circle. Think about what would happen organically anyway, and head in that direction. Don’t overthink it.
Note: it can be useful to pull mental models and ideas from far outside your circle of competency, to help you think laterally and open your mind. For example, you might be a creative marketer who studies some basic mental models from engineering (a distant field), and you pick up a few ideas that help you think more creatively about what you’re already competent at. But it usually doesn’t make sense to try to develop competency in these far away fields, unless you desperately want to. For example, I love studying basic concepts from engineering—it helps me think better about business, but I don’t think I’ll ever develop significant competency in the area. The mental models are enough for what I’m trying to do.
Pay attention the bottlenecks
The most useful way to expand your circle of competence is to do so out of necessity.
This requires that you have a goal that you’re committed to.
When you’re working towards a goal—let’s say it’s building a business—you’re going to encounter bottlenecks along the way.
Sometimes, the bottleneck is something you can pay someone to fix. Often it’s something that you have to overcome yourself. And often, it requires that you develop new competencies to remove it.
Ask yourself: Where are the bottlenecks? Are there any obvious ones? Are there non-obvious ones that I’m choosing to ignore?
I remember years ago when I was running my online course business, EDMProd, I was faced with a big bottleneck: I was extremely busy and needed to hire someone. That was the bottleneck. The business was capped by my input.
So I had to develop competency around hiring. I had no choice if I wanted to grow the business.
Skill acquisition sprints
One way to quickly absorb and acquire a new competency is to do a “sprint.”
A set period of time where you focus intensely on acquiring the competency.
It’s best to align this with a project. For example, I vastly improved my writing ability when I wrote a book in 30 days—and it made me money too when I launched it. If I’d just set a vague goal to “write for 30 days” — chances are I’d be less likely to stick to it.
Maybe you need to shore up your sales skills, so you set up a “sprint” where you decide to cold call 30 businesses every weekday for a month. You push yourself into the deep and and focus on volume.
Or maybe you want to get really good at presentation on camera. So you decide to set up a sprint where you publish one YouTube video every day for 21 days.
If you have the capacity to do this, it’s worth it. You’ll make rapid progress. Combine this with the above two concepts: organic proximity and removing bottlenecks—and you become an extremely effective human being.
By the way, this is one of the reasons I created WorkSprint. It’s a 21-day group challenge with daily accountability. Everyone has their own project or focus, and puts in minimum 90 mins of deep work per day on it.
How to deepen and expand existing competencies
Sometimes, the answer isn’t to expand into new skills and competencies, but rather double down on existing ones.
You never stop learning, but you structure your learning for maximum leverage. And as I mentioned earlier—at some point it’s far more efficient to double down on improving your existing circle than to try and expand it.
One way to think about this is in terms of opportunity cost.
Let’s say you’re pretty competent at copywriting and landing page design. That’s a highly paid combination of skills. You’re probably in the top 10% of copywriters in terms of competency.
And you’re looking at the other competencies close by. One of them is sales.
So now you think through it: If I improved my copywriting ability by 25%, would that give me a better result than learning sales skills?
The answer is probably not, especially if you lack sales skills now. From a strict financial perspective, sales skills are going to enable you to make more income from your existing competencies of copywriting and design—because you’re able to better pitch your offer and answer objections. So the answer in this case is to expand.
But let’s say you’re writing a newsletter and you’ve experienced rapid growth. People like your content.
You kinda want to get into video, but the traction that the newsletter has gained is astounding.
Doubling down on your competency in research and writing will likely reap more rewards than developing the competency of video—at least right now. If you’ve got the time to do both, then do both. But if you don’t, then the opportunity cost of expanding your overall circle instead of deepening and expanding your existing competency in writing is very high.
The beginner’s mind
The moment you think you’re great at something is the moment you start stagnating.
The beginner’s mind means approaching a subject with openness, eagerness, and a lack of preconceptions—as if you were a beginner.
This helps you deepen existing competencies. For example, you’ve been writing for a decade and you’re competent at it.
Embracing the beginner’s mind might look like:
- Revisiting the basics, as stupid as it might feel to do so. You’ll likely see them in a new light.
- Seeking feedback from others. We do this often as beginners, but somewhere along the way it usually stops. There’s always someone better than you. Ask for their feedback.
- Never stop learning. Once you reach a certain level of competency, it’s easy to stop actively learning. If you’ve been writing for 10 years, you’re probably quite good—in the top 5% of people. But there’s always room to improve..
Deliberate practice
Popularized by Anders Ericsson, deliberate practice is the fastest way to gain mastery in a skill.
There a few key components to deliberate practice, and I recommend reading Ericsson’s book if you haven’t already, but here’s the basics:
- Specific goals. Break down complex skills into specific components that can be practiced.
- Frequent feedback. You should be able to tell where you’re going wrong and where you can improve. Having a coach is helpful with a lot of skills, but you can also rely on self-assessment with many.
- Full focus and concentration. Think “Deep Work.” You want to be intensely focused. In flow.
- Repetition.
Get 1% better
When expanding and deepening competencies, one temptation is to try to learn everything all at once, which results in feeling overwhelmed and often causes people to give up.
The other temptation is one I mentioned earlier—to coast, and not really improve at all.
The 1% better approach is exactly what you think it is. Get 1% better every day, or with every iteration.
Mr. Beast said this in an interview with Lex Fridman,
“All you need to do is make 100 videos and improve something every time. Do that. And then on your 101st video we’ll start talking.”
It’s a volume game, as we know. Iterative improvement compounds like nothing else.
Conclusion & Further Reading
We looked at what a circle of competence is and why it’s such an important mental model to understand.
We then looked at how to grow your circle of competence, both in size and depth.
If you want to read further on this topic, here are some resources I recommend:
