"Why Tacit Knowledge is More Important Than Deliberate Practice: Making Dollars Using Sense"

"Why Tacit Knowledge is More Important Than Deliberate Practice: Making Dollars Using Sense"

In today's fast-paced and competitive world, knowledge is key. But not all knowledge is created equal. Tacit knowledge, the knowledge that cannot be captured through words alone, is often more important than deliberate practice. Tacit knowledge is gained through emulation, action, and apprenticeship. It is the embodied feeling necessary to successfully ride a bicycle or make complex judgments in an instant.

Many experts agree that tacit knowledge is invaluable and difficult to learn through explanation alone. The process of learning tacit knowledge involves finding a master, working under them for years, and learning the ropes through emulation, feedback, and osmosis. This type of learning is common in fields like music, math, and chess, where deliberate practice is possible due to a long history of well-established pedagogy.

However, the concept of tacit knowledge goes beyond just these fields. It is something that can be applied to any discipline or area of expertise. By acknowledging that tacit knowledge exists and focusing on ways to gain that knowledge directly, we can enhance our learning and problem-solving abilities.

In the world of investing, the allocation of assets is seen as a way to help people. Whether it's capital or compassion, belief or bullion, investing in another human being can yield the most rewarding dividends. Prudent investment serves as the seeds, sunlight, water, and careful cultivation that bear a bountiful future harvest. Economic growth, driven by wise investment, alleviates misery, improves happiness and opportunity, and lengthens lives.

To achieve worldly wisdom, it is essential to cultivate a broad view that combines mental models from different disciplines. Each discipline strengthens and entwines with the others, leading to a cohesive understanding. This broad view allows us to make informed decisions and navigate the complexities of the world.

When it comes to investing, it is crucial to identify a hypothesis about how the world works. By tapping into capital to test and generate data, we can determine the likelihood of the hypothesis's inevitability. Replicating the experiment at increasing scale further solidifies the solution to the hypothesis. By positioning ourselves around the right people, places, and things, we can catch wind of emerging trends and opportunities.

When evaluating an investment opportunity, it is important to consider the absolute and relative value of the product. Can we quantify the potential return on investment in dollars? Is the solution incrementally or dramatically better than what is currently available in the market? Additionally, understanding how much the market spent to solve the problem last year can help determine the potential market size. Finally, considering the defensibility of the investment, what sets it apart from competitors, is crucial.

In conclusion, tacit knowledge and wise investment are two concepts that intertwine and lead to success in various fields. By acknowledging the importance of tacit knowledge and finding ways to gain it directly, we can enhance our learning and problem-solving abilities. Investing, whether it's in capital or compassion, plays a crucial role in driving economic growth and improving lives. By being thoughtful and deliberate in our investments, we can make a positive impact on the world and achieve worldly wisdom.

Actionable Advice:

1. Seek out masters in your field and learn from them through emulation, feedback, and osmosis.
2. Cultivate a broad view by drawing mental models from different disciplines to enhance your understanding and decision-making abilities.
3. When evaluating investment opportunities, consider the absolute and relative value, the potential return on investment, the market size, and the defensibility of the investment.