Today, we’re going to dive into a fascinating and fundamental concept in the world of expertise and course creation: the “Circle of Competence.” and also niche selection tips based on that.
This concept is famously brought to the forefront by Warren Buffett and Charlie Munge.
It is all about understanding where your strengths lie and leveraging them in your teaching and content creation.
Let’s explore what this means for you as a course creator.
Circle of competence
What is the circle of competence?
The Circle of Competence is essentially the subject area where you have significant knowledge and expertise.
Picture the vast domain of all possible knowledge as a huge circle.
Inside this, there’s a smaller circle – this is your playground, where your expertise truly shines.
It is a concept popularized by Warren Buffett and Charlie Munger, referring to the area of the world where an individual has useful knowledge that provides them with a competitive advantage
Here’s the thing you need to remember – “The size of the circle is not as important as knowing when one is approaching its perimeter.”
Why it’s crucial to know your limits
Venturing outside your circle can be risky.
It’s like a chef trying to fix a car or a mechanic conducting a symphony – they might have a basic understanding, but lack the in-depth knowledge required for success.
In course creation, teaching outside your circle can lead to misinformation, unsatisfactory courses, and a tarnished reputation.
For instance, a guru known for their expertise in digital marketing might try to create a course on personal finance without having the necessary qualifications or deep understanding of the subject.
There’s a saying, “You don’t know what you don’t know,” and it’s particularly relevant here.
Operating outside your circle often means stepping into a field where you’re unaware of your own knowledge gaps, leading to overconfidence and potential mistakes.
Beware of the Dunning-Kruger effect
This cognitive bias is where you overestimate your abilities in a task or field, a common trap for many in the initial stages of learning.
It’s like thinking you’re a gourmet chef after your first successful recipe. Real competence takes time and deep understanding.
The Dunning-Kruger effect often leads to a mismatch between confidence and competence.
Initially, your confidence might be high, but your actual skill level is low.
As you delve deeper into a subject, you realize the complexities and your confidence adjusts to a more realistic level.
It’s only after comprehensive learning that your confidence and competence align properly.
Identifying your true expertise
Now, how do you pinpoint your real circle of competence, especially in the context of course creation?
Here are some guiding questions:
- Can you create depth?: Ask yourself: could you comfortably produce 100 videos on this topic? If not, it might indicate that this area isn’t your true circle of competence.
- Are you the go-to person?: Consider if you could provide unique solutions to 100 different students on this topic. Being a sought-after source of knowledge in a particular field is a strong indicator of your expertise.
- Is it part of who you are?: Do you identify deeply with this field? When your expertise becomes an intrinsic part of your identity, it’s a powerful sign of true competence.
- Do you understand intuitively?: Can you explain the core concepts of your field effortlessly and in your own words? This indicates an intuitive, deep-rooted understanding, which is essential for creating effective and transformative courses.
Let me take #1 example of creating 100 videos.
Initially, when your confidence levels are high, even if you have low competence (Dunning Kruger effect), you may believe that you can create 100s of videos on a specific topic.
However, it is only when you start jotting down all the 100 ideas for videos that you need to create within that domain that you will realize your actual level of competence.
The power of niche expertise
In the world of online courses, understanding and embracing your specific area of expertise – your niche – is not just beneficial, it’s essential.
Let’s explore how narrowing your focus can actually broaden your impact.
Riches are in the niches
It’s a common misconception that broader is better.
In reality, the opposite is often true, especially in the digital age.
Let’s break this down:
- Embracing your unique niche: Your circle of competence might be more specific than you think, and that’s a good thing. For instance, instead of creating a generic course on video production, imagine focusing on a niche like ‘Automated Video Editing for Beginners.’ This specificity can make your course stand out in a crowded market.
- Underestimating the online audience: The internet is vast, and even what seems like a small niche can have a surprisingly large audience. Take, for example, a subreddit dedicated to a specific technology or hobby. You might find thousands of passionate individuals actively seeking information and expertise in that niche area.
- Creating entry barriers through specialization: In more focused niches, it becomes easier to establish yourself as a leading authority. This specialization creates a natural barrier to entry for competitors. For instance, a course on ‘Productive Video Editing Techniques for Documentary Filmmakers’ targets a specific audience and sets you apart as an expert in that field.
Identifying your niche: Practical steps
Now, how do you determine your specific niche?
To begin, you must first identify a significant problem within your industry that you can solve.
Once you have identified the problem, narrow down your target audience to a specific sub-segment that you can serve.
For example, if you specialize in Facebook ads, determine the audience you can assist and focus on a particular niche, such as helping real estate owners scale their Facebook ads.
This becomes your niche, establishing you as the go-to person for real estate owners looking to scale their Facebook ads.
By doing this, you create an effective entry barrier, as real estate owners will choose you over a generic Facebook ad specialist.
You need to repeat this process for at least 3 to 4 major problems you want to solve and the corresponding sub-segments you wish to serve.
However, this process is not as straightforward as it may seem. You must also validate the niches you have identified based on your passion, intuitive connection, and ability to teach, which I will describe in detail below.
Here are some actionable steps:
- Brainstorm and pattern recognition: Start by jotting down all your areas of knowledge. Look for patterns and areas where you have both expertise and passion. Can you see yourself creating numerous pieces of content in this area?
- Assessing your intuitive connection: Do you have an intuitive feel for the topic? When you think about this area, does it excite you? Does it feel like a natural extension of your interests and identity?
- Validation through teaching: Can you explain the concepts in this field from first principles, in your own words? Being able to break down complex ideas into simple, understandable components is key. This ability not only proves your expertise but also enhances your effectiveness as a course creator.
In conclusion, understanding and embracing your circle of competence is crucial for course creators. Knowing your strengths and staying within your area of expertise ensures that you provide accurate and valuable knowledge to your students. Venturing outside your circle can lead to misinformation and a damaged reputation.
Furthermore, narrowing your focus and finding your niche can have a significant impact on your course’s success.
Embracing a specific area of expertise allows you to stand out in a crowded market, attract a targeted audience, and establish yourself as a leading authority.
Remember, finding your circle of competence and identifying your niche requires self-reflection, pattern recognition, and a deep understanding of the subject matter. By staying true to your strengths and focusing on your expertise, you can create transformative and impactful courses.