Tuesday, December 12, 2017

Edge / Comparative Advantage


I would define a personal edge as ”A possibility to achieve, produce or offer something with less amount of time and better than others.” Comparative advantage can be defined as ”A country should specialize in the goods or services it can produce at the lowest opportunity cost, and then trade with another country. I will concentrate on the personal edge.

Talent+Motivation+Deliberate Practice = Personal Edge

Personal edge is best achieved in the field of competitive expertise, when all the three components are combined. Depending on the competitive field, it is possible to have an edge with two of the three components in place. If you think about professional athletes in sports like tennis, basketball and golf, they need all of them. There are some exceptions, but they are extremely rare. In the less competitive fields of expertise, you can live without one component. It usually is talent or motivation. 

Your brain has almost hundred billion neurons. Each of them have from one thousand to ten thousand connections with other neurons. The amount of possible brain states exceeds the number of elementary particles in the universe. The idea that talent do not matter is insane. It is not the only thing that matters when you are trying to gain a personal edge. People relying only on their talent, will have a faster development, when they are young. When time goes by, the edge is gone without practicing enough. When people with talent do the same things as people without talent with the same amount of time, the people with talent get better. When you talk about highly competitive fields of expertise, margins with winners and losers can be small. In these situations, talent makes the difference. You should concentrate on the fields of expertise where you are talented. This may be the only way of competing against billions of people.

Motivation is the second component. To be honest, I am having a hard time to answer the question: ”Is motivation to practice hard a talent or a learned skill?” Some people say it is a form of talent, others say you can learn it. I still haven´t made any conclusions about it. I quess it is a combination of both. Being interested in some field of expertise helps you to gain an edge. All people are not interested in the same things. Some people like sports, others music. In a highly competitive field of expertise, you need a desire to practice. Especially, deliberate practice is almost impossible without intrinsic motivation. The question is how to find a field of expertise, in which we have intrinsic motivation? One way of doing it is think about our childhood and what we liked to do then. All of us do not need intinsic motivation. Outer sources work for them better.

Some people can have a bigger need to please others. They can get motivated by an authority figure like a coach or father. Sometimes you get impulses from around you which can increase or decrease your motivation towards something. The right kind of environment and people around you is important in motivating you. It is even better to have these external factors with intrinsic factors to have a motivation to get better at something. Everything is easier with better motivation. 

Deliberate practice is a last component of the edge. It is probably the most important one. It can be also the most complicated one. In many areas of expertise, there are no established practices for getting an edge or being great at it. Developing skills have the same neurological effects in whatever you are practicing. Therefore, practice is the only obligatory components for gaining an edge. And deliberate practice is the best way of developing skills. 

You are in trouble in the information age without an edge

You live in a highly competitive world. Information age gives more equal opportunities for people around the world. Millions of people get better chances to show how good they are in something. Competition gets tougher every year, especially, in intellectual and creative fields of expertise. Record companies had all the power to decide who could succeed before. Now every singer, for example, can download her performances to youtube. It is a platform in which millions of people compete against each other for viewers. The best singers can reach millions of people. This wasn´t possible about twenty years ago. At least, not in this scale. This doesn´t only mean tougher competition. It also means winners take it all effects. A few people get most of the profits and glory around the world.

Having an edge is necessary in a modern world. You should ask yourself ”When competition gets tougher, what can I do to have an edge? You have to remember that edges are always relative. You compare yourself with others. You do not have to compete with millions of people. You have to remember it is easier to be the best in a niche. Being the best singer using, for example, Dutch is lot easier than being the best singer using English. Being the best Dutch Jazz singer is easier than being the best Dutch R&B singer. You can also have a combination of micro skills to have an edge. When you have a combination of skills which is unique, you do not need to be best at anything. You cannot forget a need for demand. If there is not enough people or companies to pay for the edge, it is not useful.

I am not saying we should all leave our current jobs to get an edge in other. But you should definitely try to get one before it is too late. Without an edge you may get into trouble. My advice to all the younger people is to start developing and edge and think about in which field of expertise they have intrinsic motivation and talent. Then find out what are the characteristics of deliberate practice and design your own ways of doing it if necessary.


Poor Charlie´s Almanack, Peter Kaufman, Charles T. Munger
Peak, Anders Ericsson
Drive, Daniel H. Pink


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