110 ShowMetheMoney
constantly stretch her knowledge of that industry and in doing so
redefine her investment circle of competence. If an editor, publisher,
or other industry member simply stuck with only what she knew in
the beginning, she riske dlosing not only power in her job but in-
vestment insight into her industry as well. If you stop learning now,
you will know less as the worl dchanges. An das the worl dchanges,
you nee dto know more just to stay in the same place.
Those who can discern trends in their industries are better able
to ascertain which businesses in an industry are likely to remain or
emerge as leaders. Equally important is recognizing that industries
you know can be affecte dby other in dustries about which you know
less. In book publishing, putting 4-pound, 3-inch volumes on tape
or compact disc (CD) created competition for the music industry—
people listen to books in their cars an deven at home instea dof
listening to music. Turning multivolume encyclopedia sets into the
single-disc CD-ROM format sucked a huge chunk of the profit out
of the traditional print encyclopedia business.
To maintain your circle of competence in the face of invasions
an dforce dchange from other in dustries thus requires that you know
something about those other industries. That calls not merely for a
commitment to maintain your circle of competence as the things in
it change but for constantly stretching your circle of competence to
include things that might affect it.
Some people were raise din tech environments an dknow more
about computers, digitalization, and the Internet than they know
about fashion an dpublishing. Companies in those in dustries may
dominate their initial circle of competence. However, sticking to
those industries alone is dangerous. A tech company’s value will be
affected by how its products are used by other industries, such as
fashion an dpublishing.
Likewise, those who work in industries such as fashion and pub-
lishing may know more about those fields than about anything tech-
related, and their initial circle of competence will be filled with com-
panies in that cohort. But if they don’t learn something about the
tech businesses that drive changes in fashion and publishing, they
will know less about fashion an dpublishing too.
All companies and industries are exposed to change from outside
forces. Among those forces are globalization, computerization, and
the rise of the service sector in the Unite dStates an dof e-business
globally. Keeping up with such developments helps gauge their prob-
able impact. Other external forces are much harder to measure, such