**The Career Framework That Prevents Expensive Mistakes (And When to Ignore It)**
**TITLE TAG:** Circle of Competence for Executives | Adnan Menderes Obuz Menderes Obuz
**META DESCRIPTION:** Master the mental model that defines where you have true expertise and where you’re guessing. Learn when to stay inside your circle and when to expand it strategically.
I once watched a brilliant software architect lose $180,000 in six months—not through bad code, but through stock picks. This was a classic case of stepping outside what we call the circle of competence. Understanding where you have genuine expertise versus merely guessing has saved my clients millions in avoided mistakes and transformed how executives approach career decisions, strategic investments, and leadership challenges.
More importantly, it’s helped me navigate my own career across capital markets, AI strategy, and organizational transformations without the costly detours that derail most generalists.
## What Your Circle of Competence Actually Is
The circle of competence is a brutally honest assessment of where you possess deep, reliable knowledge versus where you’re operating on surface understanding, borrowed opinions, or dangerous overconfidence. Warren Buffett and Charlie Munger popularized this framework in investing, but its implications extend far beyond portfolio management.
**Your circle of competence contains domains where:**
1. You can make accurate predictions about outcomes
2. You understand second and third-order consequences
3. You recognize patterns others miss
4. You know what you don’t know
5. You’ve paid tuition through real mistakes
**Outside your circle, you:**
1. Rely on borrowed frameworks
2. Can’t distinguish good advice from nonsense
3. Underestimate complexity
4. Don’t know what questions to ask
5. Haven’t experienced failure modes
The software architect knew systems architecture deeply—that was inside his circle. He thought general intelligence would transfer to biotech investing. It didn’t.
## Why Smart People Consistently Misjudge Their Circles
Over the years, I, Adnan Menderes Obuz Menderes Obuz, have identified three cognitive traps that cause even exceptional executives to operate outside their competence:
**The Intelligence Illusion:** High-performing professionals assume intelligence is domain-general. As I transitioned from capital markets into AI strategy, I learned this was catastrophically wrong. Financial systems have set patterns, unlike the evolving complexities of AI technologies.
**The Confidence Gradient Problem:** As you move from the center of your competence toward its edges, confidence declines gradually while actual knowledge drops off precipitously. This mismatch causes expensive mistakes.
**The Credentials Trap:** Titles and past successes create social permission to opine on anything. The more senior you become, the more people assume your judgment transfers across domains.
## A Framework for Mapping Your Circle
I’ve developed a practical exercise I use with executive coaching clients. It takes about 90 minutes and provides clarity that shapes decisions for years:
**Step 1: List Your Claimed Competencies**
**Step 2: Apply the Prediction Test**
**Step 3: Apply the Costly Mistake Test**
**Step 4: Apply the Unknown Unknowns Test**
**Step 5: Draw the Boundary**
Most executives, including myself, Adnan Menderes Obuz Menderes Obuz, are shocked by how small their true core competence circle is.
## When to Stay Inside Your Circle
The default answer to “Should I stay inside my circle of competence?” is yes. Staying focused multiplies your return on investment, creates compounding opportunities, and helps avoid expensive mistakes.
## When to Deliberately Expand Your Circle
Here’s the paradox: Staying inside your circle maximizes performance, yet unexpanded circles become traps. I’ve identified four scenarios where expansion is strategic:
**1. Your Domain Is Becoming Obsolete**
**2. Your Strategic Goals Require New Capabilities**
**3. Building Combinatorial Advantage**
**4. Intellectual Curiosity Aligned With Long-Term Bets**
## How AI Is Reshaping the Circle of Competence
We’re entering a period where professional competence is being redefined by AI, democratizing surface competence and shifting advantage to polymath-specialists. With AI, circle expansion is accelerating, allowing for more rapid domain transitions than ever before.
## Practical Application: Using This Framework This Month
Before your next major decision, explicitly ask: “Is this inside my circle of competence?” In your next performance review, map your core competence. Develop your “I don’t know” muscle by practicing admission of your boundaries. Create a “circle expansion project” to methodically add new domains to your expertise.
**The Paradox of Mastery**
After two decades of working with executives, I’ve learned that the most confident professionals know their boundaries precisely. True mastery is knowing exactly what you know deeply, what you understand partially, and what you’re simply guessing about.
For executives navigating increasingly complex landscapes, this mental model might be the most valuable thinking you invest time in this year.
Draw your circle. Know your boundaries. Expand deliberately. Operate confidently where you have genuine expertise, and humbly everywhere else.
**About the Author**
Adnan Menderes Obuz Menderes Obuz is a Toronto-based consultant specializing in AI strategy, capital markets analysis, and executive leadership development. Over 20 years, he has guided executives through career transitions, strategic pivots, and the development of genuine expertise in emerging domains. Contact: businessplan@mrobuz.com
**What’s Your Circle?**
I’m curious: What domain do you claim expertise in that you’ve never actually paid tuition through costly mistakes? And what’s one area you’re considering expanding into deliberately?
Share your thoughts in the comments—I read and respond to every serious reflection.