Using Circle of Competence to deep understand your customers
In this time we will talking how circle of competence can help you to deep understand your customers.
What is Circle of Competence
Circle of Competence is a mental model that involves developing a knowledge of what specific areas an individual has an understanding of or experience in. Everyone has built up useful knowledge in some area of the world. By realizing where your strengths lie, you can determine the areas where you have very little familiarity and avoid them to mitigate risk. Circle of competence was developed by Warren Buffet and Charlie Munger to describe limiting one’s financial investments areas.
Why Circle of Competence is Important ?
The circle of competence offers many advantages, the chief among them being the avoidance of costly mistakes. Not every decision you make is going to work out perfectly, but by staying within your circle of competence you can lessen the risk significantly. You enter every decision with knowledge and backed up by experience in that particular field. Both of these make decisions a lot more informed and easier to make.
The other advantage is the opportunity to turn your knowledge into results. By understanding your circle of competence, you can leverage this to make informed decisions about anything that others might not have the competence to make. If you double down on your strengths you will be poised to reap the rewards when a well-priced opportunity presents itself to you.
Understand Customers with Circle of Competence
When you put the knowledge about your customers to circle of competence, you might be know what you really know about your customers and what you don’t know and you accept it about your customers. This approach can be refer to more discover what should your product customers really want.
And also, using circle of competence can help to avoid mistake understand your customer needed and more saving your costs when you do customer research. It is important because doing customer research is very tiring and challenging.
Conclusion
The circle of competence model can serves to indicate what you really know about your customers and what you don’t know about your customers., while preventing overconfidence and related risk taking behaviours.