The Power of Sticky Products and Understanding Your Circle of Competence

The Power of Sticky Products and Understanding Your Circle of Competence

Introduction:

In today's fast-paced and competitive world, creating a product that captures users' attention and keeps them engaged is crucial for success. Two key concepts that can help achieve this are sticky products and understanding your circle of competence. This article will explore how companies like Facebook and Evernote have mastered the art of sticky products, as well as how individuals, inspired by Warren Buffett, can leverage their circle of competence to avoid problems and find success.

Part 1: The Power of Sticky Products

Sticky products are those that use user-generated data to enhance the user experience, making it more engaging and difficult for users to leave. The idea behind sticky products is to create accruing benefits and mounting loss for users. Accruing benefits refer to the notion that the more users engage with the product, the better it gets. This can be achieved by leveraging both explicit and implicit actions.

Explicit actions are the actions that users consciously take while engaging with a product. For example, on a social media platform like Facebook, users explicitly share posts, comment on others' posts, and like various content. These explicit actions generate data that can be used to tailor the user experience and provide personalized content, making the platform more engaging.

Implicit actions, on the other hand, are the actions users take without consciously realizing it. These actions can include the time spent on the platform, the types of content users consume, or the interactions they have with other users. By analyzing these implicit actions, companies like Evernote can offer personalized recommendations, reminders, and suggestions that make the product more valuable to the user over time.

Another aspect of sticky products is mounting loss. As users become more dependent on a product, it becomes part of their identity, and they accumulate value within the product. For example, influencers on social media platforms have accrued a following and investment in their followers. Leaving the platform would mean losing this investment and starting from scratch elsewhere. This sense of mounting loss creates a strong incentive for users to stay engaged with the product.

Part 2: Understanding Your Circle of Competence

Understanding your circle of competence is a concept popularized by Warren Buffett. It involves recognizing the areas in which you have expertise, experience, or knowledge and operating within those boundaries. By staying within your circle of competence, you can avoid problems, identify opportunities for improvement, and learn from others.

Your circle of competence is unique to you and can be built through experience or study. It is not about being a genius in every field but rather focusing on your strengths and playing to your advantages. Just as Tom Watson Sr., the founder of IBM, said, "I'm no genius. I'm smart in spots - but I stay around those spots." By understanding your own aptitudes and areas where you have an edge, you can increase your chances of success.

Defining the perimeter of your circle of competence is crucial. It helps you avoid situations where others have the expertise and you don't, which would put you at a disadvantage. By operating within your circle of competence, you can make informed decisions, take calculated risks, and maximize your chances of success.

Actionable Advice:

• 1. Identify your strengths: Take the time to reflect on your skills, experiences, and areas of expertise. Identify the areas where you have a competitive advantage or a deep understanding. This self-awareness will help you recognize your circle of competence.

• 2. Focus on your strengths: Once you have identified your strengths, make a conscious effort to focus on them. Allocate your time, resources, and energy to activities and projects that align with your circle of competence. This will allow you to excel in your chosen areas and increase your chances of success.

• 3. Continuously learn and adapt: While it's important to stay within your circle of competence, it's equally important to keep learning and expanding your knowledge. The world is constantly evolving, and new opportunities may arise. Stay curious, seek new information, and adapt your circle of competence accordingly.

Conclusion:

Creating sticky products and understanding your circle of competence are two powerful concepts that can drive success, whether you're building a product or navigating your personal and professional life. By leveraging accruing benefits and mounting loss, companies like Facebook and Evernote have captured users' attention and created engaging experiences. Similarly, by recognizing your strengths and staying within your circle of competence, inspired by Warren Buffett, you can avoid problems, identify opportunities, and increase your chances of success. So, embrace the power of sticky products and understand your circle of competence to thrive in today's competitive world.