Warren Buffet and Charlie Munger have been quoted on multiple occasions saying, "Risk comes from not knowing what your doing.” This is what leads them to always stay within their circle of competence. If you know the edge of your own competency and focus on things within your circle, you have a significant advantage over others in your space. Here are a few thoughts on how to stay within and expand your circle:
1) Staying within your circle does not mean you have to be one dimensional or that you cannot adopt continuous learning and improvement. It means to view your circle of competence as a skyscraper. Use your past experience and knowledge as your foundation to build on brick-by-brick. Expanding that building over time is more impactful than building a bunch of small unrelated buildings.
2) There will always be new opportunities to expand and innovate within your circle of competence. This means to let your current set of experiences and competencies open new doors of opportunity rather than starting from scratch. For example, our competency around timberland led to an opportunity with pine straw, and then our competency around pine straw is leading to new opportunities of disruptive innovation within the industry.
3) Be very careful thinking that the grass is greener in the other pasture. Most people make their money within their circle and then lose it trying to play in someone else's circle. Always stick to areas where you have an advantage and don't worry about what others may or may not be doing. Chances are it is not as glamorous as it may seem.
The most successful people in the world make a habit of keeping things simple. Know your circle of competence and focus on things that will expand it. What could be simpler than that?