The World Rewards Specialization. But Should You?
Where you focus your time, so goes your life. And one of the big decisions you have to make is whether to go really deep into one topic / subject / skill / profession or to jump around and take shallow slices from various domains instead. Should you specialize or diversify?
The answer depends on who you’re asking. Naval Ravikant tells us that “specialization is for insects.” And that because you only have one life, you should do all the things you want to do in it.
Charlie Munger tells anyone who asks him that they should specialize - if only because they’ll find success faster.
Which one is it?
The World Rewards Specialization.
If you want to move up quickly, specialize in something. Specialists like surgeons, doctors, and lawyers - who know a whole lot about an ever-smaller domain - always have work because they solve a very specific problem. As long as that problem still exists, so does their career.
Charlie Munger encourages specialization for other people because it’s what the world rewards. It’s not what he chose for himself. His entire ethos is built around multidisciplinary study and elementary worldly wisdom. And it has helped make him one of the greatest investors to ever live.
Here’s Munger talking about this at a Redlands Forum series:
“Specialization is the safest way up for most people. And for that reason, the surgeons know more and more about less and less. And that’s what gets rewarded. If you have a nasty fistula in your colon, you do not want a surgeon who is good at Proust or political science. It’s understandable how the world rewards this specialization. I never liked it. And I loved picking up new ideas being a passionate reader. And so I decided I’d make whatever living I could make doing what I like to do which is sort of romping over a whole field. I do not recommend it to other people because the safe way up is to know a hell of a lot about something.”
My wife and I specialize in writing romantic comedies for film and television. Our brand is “diverse, funny, with heart.” That’s the problem we solve. And my goal is to know “a hell of a lot” about writing and producing comedy to try and create my own luck…
Specialization Leads To the Fourth Kind Of Luck.
Specialization helps you get lucky. It arms you with luck that is unique to you - the kind of luck that comes to you because of the specificity of what you offer.
Naval Ravikant uses the example of a deep-sea diver. If you are the best deep-sea diver in the world, and someone finds a lost treasure at the bottom of the ocean, they are going to come to you to help them get that treasure out. And you’ll get a piece of the treasure for your trouble. But they only came to you because you’re the best at this specific kind of diving.
The more specific you get in what you do and how you do it, the more people will seek you out when they come across the problem only you can solve.
Specialization Makes Sense If You don’t Have Leverage.
Leverage is just a word for tools that amplify your efforts. In the words of Naval: “leverage compounds your judgment.”
The different kinds of leverage include capital, labor, code, and media. If you have money or employees or websites or video content working for you, you have leverage. And you can use that to build wealth.
If you don’t have leverage, then specialization makes a lot of sense. Here’s Eric Jorgenson writing about this in a post called The Four Biggest Things I've Learned From Naval:
“The single word ‘leverage’ is a fantastic summary of ways to extend your impact beyond a linear, hourly input-output. If you can only earn with your own hourly time, the only way to build wealth is incredibly deep specialization (doctor, lawyer, etc). By creating and using leverage (through money, employees, or products) you can create more value for more people in the same amount of time.”
A surgeon can’t work more than the 24 hours in a day, so their earning power is capped. That’s why they specialize - so the rate goes as high as possible.
But, if that surgeon invents a new medical device they can patent, their earnings are no longer capped by the number of hours they put it. With leverage, they can get paid non-linearly. Without leverage, they need to specialize to maximize their hourly rate.
The Downside of Specialization: Man With A Hammer Syndrome.
The danger of specialization is that if you only have one or two mental models in your head, you’ll approach all your problem with the same solution. Remember: to a man with only a hammer, everything looks like a nail.
That’s why - while Munger recommends specialization for other people - he chose a multidisciplinary, diversified approach himself. Here’s Munger talking about this in a speech called “A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business,” printed in Poor Charlie's Almanack:
“You can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head…What are the models? Well, the first rule is that you’ve got to have multiple models—because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does… And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department… If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands”
You don’t want to be like a gallbladder surgeon who convinces himself that everything that ails his patient is a result of their gallbladder. He’s only got one model to use, so he uses it in every situation.
Learn The Big Ideas From Each Field.
Both Munger and Naval recommend learning the big ideas from each field. This may seem daunting at first, but Munger has some good news:
“Eighty or ninety important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.”
What ideas are worth learning? Munger lays those out for you too:
mathematics (combinations and permutations)
accounting
statistics (Gaussian distribution)
engineering (backup system, breakpoints)
physics (critical mass)
biology (natural selection, evolution)
psychology (the psychology of misjudgment)
Naval would probably add game theory, microeconomics, and computer science to that list.
Some are more important than others, but until you start to learn them, and then put them together, you are what Munger calls “a one-legged man in an ass-kicking contest. You’re giving a huge advantage to everybody else.”
So - should you specialize or diversify? The answer is probably both.
Get really good at one or two things and use leverage to compound your efforts. But don’t forget to build a multidisciplinary model along the way to get the most out of your specialization.
Start now.