(By Bob McCurdy) This is a topic that’s been addressed before but it is one worth a few more words. It touches on the importance of amassing professional knowledge and how it “compounds” over time. What brought this subject to the forefront was an article written by Alice Schroeder, Warren Buffett’s biographer.
When we hear the word “compound,” we often think of it in financial terms, as in “compound interest,” which essentially means getting paid “interest on the interest,” which generates a terrific ROI. At 8% simple interest, a $10,000 investment would be worth $34,000 after 30 years. However, 8% on “compound” interest would catapult that $10,000 investment to more than $100,000 in the identical 30-year period.
It’s the same principle at work when we “compound” professional knowledge over weeks, months, years, or an entire career.
In Buffett’s biography, titled The Snowball, Schroeder wrote, “What Buffet has essentially done is created this immense vertical filing cabinet in his brain of layers and layers of information that he can draw back on now for more than 70 years’ worth of data.”
Most of us don’t have that amount of data or experience, but regardless, we all have some experience, knowledge, and data we can draw upon, and it is a good idea to have some type of “system” that enables us to retain, seamlessly access, and repurpose it. Since we’re all not Buffett-like, we could even cheat a little bit and use our computers and not rely solely on our intellect.
Schroeder went on to note that, “Buffett has been in business for a long time, giving him incredible opportunities to create a cumulative base of knowledge.” Regardless of one’s industry tenure, it pays off in commissions and job security when we accumulate a broad base of professional knowledge that we’re continually building upon and compounding over time. And the best part is it’s never too late to start.
Buffett’s biography concentrates on the concept of learning and the competitive advantage that comes from having the right information, at the right time. Charlie Munger, Buffett’s longtime business partner, has been quoted as saying, “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day. I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser and smarter than they were when they got up and boy does that help.”
What Munger is basically saying is that, all things being equal, the commission gods are on the side of the better informed, insightful AE.
There is a price to pay for compounding professional knowledge and it’s paid in a currency not built upon the gold standard, but on focus and discipline. It’s a fact that those who rise to the top in sales, or any profession, typically have more focus and discipline in their wallets than those who do not.
Snowball is about lifelong professional learning and the compounding of professional knowledge, and since it is winter and snowing in the Northeast this weekend, the following analogy is fitting:
Learning is akin to building a snowball. Focus and discipline impact learning similar to the way the weather and temperature impact the size of the snowball. If you stop building the snowball, it begins to melt. If you lose focus and discipline and stop learning, your sales production will also begin to melt, and melt even faster if your competitors are more aggressive learners.
The takeaway is a simple one. Develop a system that works for you to retain and repurpose important data, information, and insights that are being sprayed at you daily like water from a fire hose. When it is all said and done, compounding professional knowledge delivers a far greater payback than getting paid interest on the interest. There is simply no better professional investment.
Schroeder’s article can be found here.
Bob McCurdy is Vice President of Sales for the Beasley Media Group and can be reached at [email protected]