The Power of Admitting Your Own Ignorance
“It takes considerable knowledge just to realize the extent of your own ignorance.” — Thomas Sowell
My University career is coming to a close soon, and I decided to reflect on the most valuable lessons I’ve learned over the past four years. Undoubtedly, one of the most important lessons I’ve learned is the power of admitting your own ignorance.
Sometime in my second year, I became interested in the concept of microfinance and read the book “Banker to the Poor: Micro-Lending and the Battle Against World Poverty.” The book is an autobiography of Muhammad Yunus, an economist and entrepreneur who won the Nobel Peace Prize for founding the Grameen Bank in 1983. The bank was established on the belief that credit is a basic human right and the organization has facilitated over 2.5 billion dollars of micro-loans to 2 million families in rural Bangladesh. I was fascinated with the idea of providing financial services to those in underdeveloped markets and thought that it would become an exciting new field in finance.
Later that same year Bruce Flatt gave a talk at the Asper School of Business. Bruce Flatt is often referred to as “the Warren Buffet of Canada” and the speakers who introduced him made sure to point that out. Being an alumnus of the school, the talk mostly centered around his career path and general career advice. I decided that after the talk I’d go thank him for speaking to us and ask him about my new found interest. The comparison to Warren Buffet made my naive brain go:
Bruce Flatt = Warren Buffet of Canada = Knows a lot about finance = Knows a lot about microfinance
I eagerly walked up to Mr.Flatt, shook his hand and thanked him for his talk, proceeded to ask him what he thought about microfinance, and prepared myself to be gifted with supreme knowledge. His response will stay with me forever. He politely said, “I don’t know.” Confused and disappointed, I asked him what he meant by that, and he replied: “I haven’t spent much time thinking about it, so I can’t really give you an opinion.” I thanked him once again for his time and then he walked away. I then stood there for a few moments, taken back by how willing he was to admit he didn’t know anything about the subject.
I had always thought that admitting you don’t know something is admitting defeat. Throughout my childhood and early teenage years I was surrounded by friends, teachers, and coaches, who when asked about a particular topic, always “knew” the answer. That’s not to say that these people were intentionally deceitful, rather that they were also operating under the notion that to admit you don’t know something is to admit defeat. Most people are afraid that if they confess that they don’t know something, they will be perceived as stupid.
It took me a while to fully internalize my brief, but powerful, interaction with Mr.Flatt. I struggled to figure out:
1. How could a highly successful financier like Bruce Flatt not know a single thing about microfinance?
2. Why was he so willing to admit he didn’t know anything?
I finally got my answers when I stumbled upon the concept of the circle of competence. The idea is simple: most of the returns in business and life come from operating in areas that you know best. Warren Buffet popularized the idea in his 1996 shareholder’s letter:
“What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”
When Charlie Munger was asked how one should devote their limited time in life in order to achieve success, he responded by saying:
“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.”
Bruce Flatt made his fortune in finance by focusing on the real asset sectors of property, renewable energy, and infrastructure. He’s taken the timeless advice of only operating within one’s circle of competence. Since microfinance is outside Mr.Flatt’s circle of competence, he doesn’t spend time worrying or thinking about it. By focusing on what he knows and is good at, Bruce Flatt has been able to achieve massive success in the finance world. In hindsight, it was incredibly naive of me to think he would even care about an extremely niche area of finance like microfinance.
Honesty is one of the most powerful traits a person can have. Society has a general understanding that when dealing with others, we should be as honest as possible. But what about when we deal with ourselves?
The thing that holds most of us back from achieving massive success in business or life is the ability to be intellectually honest with ourselves. By never admitting our weaknesses, we can never identify our strengths. By pretending to be generalists, we can never become specialists. By never admitting our own ignorance, we never give ourselves the opportunity to learn.
If you want to improve the odds of achieving success in life or business, you need to define the boundary of your circle of competence and operate inside of it. Work to expand the circle, but never fool yourself into thinking it’s bigger than it truly is.
The first step is to never be afraid of admitting you don’t know 💩 about a subject.
“Education is a progressive discovery of our own ignorance.” — Will Durant
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(Note: This post is merely a reflection of what goes on in my weird little head)🤓