GENERAL(ist) or specialist?

Dear guys,

GENERAL(ist) or specialist?

Cheers,

Sunstone.

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In feudal times the leader of each clan was, to put it bluntly, the biggest and strongest person around. Why? Simply because the biggest, strongest is able to physically make their point heard to anyone who might consider challenging him or her. Things didn’t change much in those days and any one leader could rule for a lifetime.

Business was also very simple as the stability of the leader and the unchanging nature of the times meant everyone knew their place in life. Most people were content just to keep on producing over their very short life spans.

That was until the spear was invented.

Now, technology began to have an impact on the group. The most proficient spear user became the potential new leader. Then the bow and arrow came along, followed by body armour. This development necessitated the invention of an even more sophisticated weapon – the gun.

The most effective user of this new technology (the bow and arrow, the gun, etc) could now quite easily become the new leader.

As more and more inventions came to pass, and more and more products hit the market place, business and staying in charge began to tax the minds of the leaders.

Here’s where it all gets interesting….. the leaders realized one very important fact. If they were to stay on as leader, they needed to ‘think hard’ rather than to ‘work hard’.

You see, if the leader was the smartest as well as the biggest person around, something truly extraordinary happened. The leader enrolled the inventors, those who knew things the leader didn’t, as employees.

The leaders now made sure these spears were only made for them, the guns were only made for them. As a result, another amazing thing happened.

The leader taught each employee to be a Master Specialist. He then encouraged his Master Specialists to take on apprentices so they could teach other people to specialise in the same skills. By doing so, they started a trend where everyone aspired to learning a trade and getting a job rather than becoming a landowner.

Eventually we moved from an agrarian-based society to a manufacturing-based one. The leader still employed all the specialists who knew more than he did in certain areas. Schools were built to teach people from early on how to be good, how to do as they were told, how to fit into society and how to get a good job (as a Specialist).

Society started to teach us a good citizen was someone with a good education and a good job.

Eventually colleges and universities appeared, making us specialise even more. Over time we’ve been taught to specialise into the tiniest fields of expertise and thus become even better employees.

You see, in the agrarian age, you made the most money as a landowner, not as a specialist worker. In the manufacturing age, you made the most money if you owned the manufacturing plant, not as a specialist work in the plant.

Those who specialised have always worked for those who led – in other words, those who generalised led those who specialised. However the high cost of land ownership, and then plant ownership, stopped most from progressing from worker to owner.

Yet now, in the information age, you make the most money if you own, or simply have, the best information. And, information is not only available in abundance, it’s relatively cheap.

In other words, breaking free from the specialist mould has never been easier.

Let me take this one step further……..

With most people being taught to specialise, to follow orders, to conform, to fit in, and to get a good job with a good salary, we’ve created a monster when it comes to letting people start their own businesses.

You see we’ve been taught to do the opposite of thinking for ourselves, to do the opposite of getting rich, and in most cases to do the opposite of learning how to be a true entrepreneur.

A true entrepreneur is best described by this fable about Henry Ford. I’m sure the story has changed a little over the years but there’s still a level of truth to it. As the story goes, a major newspaper defamed Mr. Ford when it published an article that portrayed him as ‘ignorant’.

Mr. Ford took them to court and whilst on the stand, he was questioned a length by the newspaper’s legal counsel. Question after question was put to him. And he only had answers to a few of them. Thus, concluded the attorney as he presented his case to the jury: “Mr. Ford is ignorant.”

Ford’s own lawyer then asked some questions.

“Mr Ford, when you need to know the answer to any of the previous questions, what do you do?”

Ford’s reply teaches us one of the secrets to true entrepreneurial success. This is a common sense secret that is the opposite of what we’re taught as a specialist employee.

“When I need to know about finance, I call in my finance manager and ask him all the questions I need to have answered. The same goes for any other subject,” Ford replied.

In other words, the smartest leaders in the world employ specialists who are smarter than they are.

Henry Ford knew what every great entrepreneur knows…..

Being an entrepreneur is about becoming a generalist, rather than a specialist.

A specialist (often known as an employee) is easily replaceable. A specialist is taught to follow. A specialist ends up working for a living, rather than living a life.

Let me explain …..

Working in a job, you have about 1/3rd of your pay taken off in taxes, about 1/3rd taken to pay for your mortgage or rent, even more to pay for your car/s and so on. Eventually you’ve got just enough left over to EXIST on.

Generalists, on the other hand, think for themselves. They are great leaders, they take on the risks and reap the rewards from things like tax deductions and more importantly, they collect long-term income from the work they do today. They also enjoy the profits, as well as so much more.

The generalist, the person I refer to as the entrepreneur, works today to make money for the long-term. They work to build wealth rather than make income.

In school, we’re taught to learn exactly what we’re told, how we were told it, and when we were told it. Plus you’ll get good grades as long as you repeat it back in your tests exactly as it was taught in the books.

Even teachers are taught to follow the system. In the military every solider is taught to follow orders. Only the GENERAL(ist) is taught to think for him or herself and to make decisions.

In the business worlds employees are taught to acquire higher and higher levels of education, to specialise, work hard, and make enough income to pay taxes, the mortgage, and then to exist until retirement.

True entrepreneurs, on the other hand, are required to be generalists, to think a lot and work a little, take profits, write expenses off before paying taxes, and live the life of their dreams …

In the truest sense of the word generalists are leaders. They live by the ideal that it’s better to have 1% of one hundred’s people’s effort than 100% of their own.

Becoming a generalist is the first major task of anyone considering venturing into business for himself or herself.

It’s the single biggest mindset change all employees who want to start their own business must make. Being the best at your trade, your profession or your job in no way means you’ll succeed in the world of entrepreneurial business.

In fact, this is often the biggest hindrance to the success of most businesses.

Excerpt from “Billionaire in Training” –Brad Sugars.
http://www.bradsugars.com/cart/suns...=27&prevaction=category&previd=24&prevstart=0

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Hmmm, what about specialist generalists? I have found a great number of people are good at nothing in particular and clearly are going nowhere fast.

However those who are good thinkers, good communicators, seekers market differentiators, understand "the difference that makes the difference", passion, desire hard work, seem to move forward. Surely it is better to be absolutely excellent in one thing and leverage it to the max than be good at nothing?

Clearly true that the best cook doesnt mean they will automatically be able to create the best resturant, or the best programer can build the next Micro$oft.

I think in the 21st century the winners will be those who can maximize the leverage their talents.
 
Not bad, tho a bit too simplistic. I have to disagree with this line:

"True entrepreneurs, on the other hand, are required to be generalists, to think a lot and work a little"

Which flies in the face of the classic line:

" Success is 90% perspiration and 10% inspiration"
 
Thinking is the hardest work that exists!

That's one reason why most people let others do it for them....


I think Generalist/Specialist is way too basic. It's a snapshot.

What about the serial Specialists who can shift from one Specialisation to another over time?
What about the people who start off Generalist and become Specialists in an area over time - or vice versa.

Do what works for you. Everything else is opinion.

Cheers,

Aceyducey
 
I agree. Instead of the mantra "The poor and middle class work hard for money. The rich have money work for them." I preferred John Burley's formulation, which replaced the second sentence with "The rich work hard to make their money work for them."

It hearkens back to the Richest Man in Babylon image of your golden slaves (coins) working to increase themselves and their children and children's cheldren all contributing. In my world that includes plain investments, plus the OPM and OPT of tenants and PMs, attorneys and accountants and all the others who bless my bank accounts.
 
Build the team

OPT
Most on this forum have started along this path, they would have the accountant, the lawyer, the PM, the conveyencer. Maybe a financial advisor, stock broker. Doesn't matter which bits, but what matters is you start using other people to do work.

Had to do some work a couple of weeks ago that involved organising other people to do the work. Never had to do it before and found it difficult, just wanted to get involved and do the work myself because it was easier than explaining to others what I wanted them to do. Found some people would understand when given very general directive, others needed a step by step this is how you do this task. Big learning curve but I've done it once and will be better next time.

Bring on the employee's.
quoll
 
Work on the business, not in the business is a quote I often remind myself of.

I also remember the story of Henry Ford who remarked that he never needed to be the expert himself - he had a phone on his desk and he could ring one....
 
I am a highly specialised specialist. The field I work in may have roughly 60 (my guess, but absolute max) people in australia working in the field. I earn a great wage. Sadly there is only one of me. To continue on this path is to continue working for a wage. I cannot leverage myself any more.

We all know leverage speeds up wealth creation (and of course can speed up wealth erosion too). Leverage doesnt only mean money, it means time and other people too.

I will most definitely make more money being a generalist with my investments than a specialist in the work force. I will retire earlier, do more things that I wanna do etc etc etc not by working harder, getting higher education, taking on more jobs. But by being smarter and letting go of some of the fine details.

However - I still need to know a fair bit about investing. Much more than avg Joe. We all know this, thats why we frequent this excellent forum. I dont need to be a lawyer, an accountant, hold a license as a financial planner, a mortgage broker, etc etc etc. I need a good grasp of the fundamentals, just like any Manager of any company, General of any army etc but I dont need the specialised knowledge in each field to achieve my goals.

I am financial strategist. I lay down my strategy, and leverage other people where my depth of knowledge could not possibly reach. Mind you, there are excellent financial strategist outthere that can help you too .. you dont even need to do that anymore !!

We all know this, and sometimes a thread like this is good to keep our eye on the big picture.

One of my rules .. If you must be a specialist, do it where you LOVE spending time. Some people love renos, option trading etc. Do it if its fun for you, but dont get bogged down in the engine of the ship ... you're needed up top to steer it !!

T.
 
Leverage

Agree with leverage, OPT and OPM as well as your own time.

It doesn't hurt to be the specialist though. The more specialised you can become and the more indispensible your skill set is the more you can leverage your own time. I get a nice six-figure salary plus bonus and work with a great bunch of people. Plus, I have enough time left over to work on my investments and leverage other people's time and money. Also, having a good income gives you more leverage of OPM since it increases your debt servicability.

I think its a little simplistic to say one way is right and the other wrong. Its important to make your money work for you and not the other way around, but it is nice having a hefty salary turn up every month, particularly when getting started in investments.

When building the team its important to remember the rule of comparative advantage. You may be able to do a better job at sourcing property than a bird dogger, but maybe you could earn more if you spent your time managing a team of bird doggers to source for you. In a 1-on-1 sense you'd make a better bird dogger, but that's competitive advantage. By comparison you make more out of your time by delegating certain activities to others and paying them for their efforts.

A nice post and a good reminder...

Cheers,
Michael.
 
The successful entrepreneur is the person who makes an Idea happen,
even if there are a lot of unexpected problems,and even if its not a very good idea in the first place,imho thats the common mindset highly successful have in place before they even start..
good luck
willair..
 
Nice Article Sunstone - thanks

It made me ponder a subject I have not really looked t before.

What if we apply it to our portfolios?

Does that mean you are a true entrepreneur if you have an eclectic portfolio full of a good mix of shares, propery, cash etc?

Or better if we apply it to our bounds of knowledge. For example you can be a generalist know it all in Property or you can do 1 sub-field within the Property game, say wraps for example.

So does that make you a super generalist if you know most everything about each facet of each type of investment and have personally applied that to your portfolio -(lead by example)? To be honest there are a few guys in this forum I believe come close - and to me that makes them the leaders.

<KS>
 
Great posting everyone ... just my cup of tea.

Being the general of my own little army of gold coins(men) requires me to have some specialist knowledge for two reasons.

1. To hopefully have the ability to pick a real specialist as opposed to somebody pretending to be a specialist (eg. determining whether a property finder is a great finder of investments or a scammer who is taking me for a ride.) Sending my gold army off to fight a war with a bad commander will cause higher casulties in the army.

2. To help me save a number of my army men by doing some specialised work myself. eg. My grass needs mowing, I could mow it myself or bring in a 'specialist'. As a general I need to determine whether my leadership at that point will produce more army men then the cost of using the existing army men.

When I'm thinking about spending money I imagine that I have a gold army, I decide what size army will be required to attack the problem... how I might get the army back (retreat) and whether I will need to constantly send reinforements to the front line to continue my assault. I also determine whether I could use mercenaries (loan) to attack the problem or whether the problem can wait a little longer until the army men have less fronts to fight.

I believe that if I can look after my army of gold more gold will want to come and fight with me... every gold wants to be on a winning team.

Well I'm off to recruit!!
 
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