I recently read Reid Hoffman’s insightful book “The Start-Up of You”
wherein the path of one’s career is described similarly to building and running a start-up. Especially the concept of growing your professional skill set as well as building a deep professional network has resonated with me.
In the course of reading the book, one idea I had in my head for several months and has been discussed extensively in the financial blogosphere started to dawn on me again.
The concept of compounding knowledge…
Albert Einstein once called the concept of compounding the eighth wonder of the world. As a finance professional, I’m quite accustomed to the effects of compounding on financial assets, but only recently have I become aware of the importance of this effect on acquiring knowledge and applying it to practical problems.
To gain a better understanding of my train of thought, I’d like to start with a habit I’ve picked up over the last five years and further cultivated since working full time as a Portfolio Manager.
I set out my goal to accumulate as much knowledge as possible each day by listening to podcasts or reading books, blogs, and research papers.
On any given day I start my knowledge gathering activities when commuting to work by listening to my favorite podcasts on finance & economics, entrepreneurship or sociology.
After arriving at my workplace I dedicate the first one and a half-hour of my workday to a deep reading of research on various aggregators like Abnormal Returns or Quantocracy and a diverse set of other authors of financial research. (My all-time favorites are Aswath Damodaran, the Macro Tourist, and Epsilon Theory)
At first, I felt unproductive because reading general research didn’t contribute directly to getting rid of the daily workload. After a while, I noticed small changes in my way of dealing with new tasks especially when the objectives were unspecific.
Not exactly knowing where these changes came from, I was slightly confused. It seemed, that I subconsciously used my knowledge reservoir during the problem-solving process to view the tasks at hand from different angles and come up with fresh solutions. Not only seemed the rapid acquisition of knowledge to bear fruit, but the effect seemed to accelerate over time. The theoretical knowledge connected with my practical experience and created a feedback-loop that fed on itself.
This was the first time I experienced the compounding knowledge-effect first hand. Since then I upped my knowledge acquisition game and try to read as many books, listen to as many podcasts as I can and try to incorporate these ideas in my daily work.
I can’t encourage anyone enough to start compounding their knowledge and use it in their professional as well as personal lives. The rewards will be mindblowing!