We have an old friend who just got a promotion.
Poor boy, we told him last week.
He’ll be incompetent in no time.
It’s not because he works for the government (in California!)… or that he’s topped out at the executive level.
It’s something bigger. And if we were to bet on such things, we’d bet you’ve seen the same thing.
We first learned of the Peter Principle back in business school. It was part of a management course.
It’s simple. And oh so true.
According to Laurence Peter and his research, the average worker rises to his level of “incompetence.”
The idea was first published as a bit of satire, but quickly became an obvious (and painful) trend in so many workforces.
But we argue the idea is not just true for workers… It’s true for everybody.
The idea makes sense. Good people get good promotions. But nobody is so good that they can do everything. So eventually they get promoted into a role where they’re no good at what they do… and because they stopped succeeding, they stopped rising.
They rose to their level of incompetence.
Take Michael Brown, for instance.
If you’re a fan of Arabian horses, you probably know him well… and love his work.
But if you live in New Orleans and are still waiting for somebody to pluck you off your flooded roof or open the door to your FEMA trailer… you hate the man.
This is funny. And it’s why Big Government tends to be a big disaster.
Michael Brown, as you may know, was the head of FEMA when Katrina devastated New Orleans.
President Bush thought he’d be a good pick. He was good at everything else he did in life.
The problem was he was good at other stuff.
Brown, after all, was commissioner of judges for the International Arabian Horse Association when Bush appointed him to lead FEMA.
He was smart and had a long history of success… What could go wrong? And who can say no to the president?
True to the Peter Principle, Brown excelled in life until he rose to his “level of incompetence.”
Then he utterly failed. He famously asked – as Katrina raged – “Can I quit now?”
We open our eyes and see examples all around.
Michael Jordan was a basketball phenom… but he found he was quite an incompetent baseball player.
Steven Spielberg is a top-notch moviemaker… but he’s no good at running a restaurant. His nautical-themed joint failed in just a few years.
The Kardashian sisters are experts at something, we’re sure… but they’re definitely not experts in creating and marketing prepaid credit cards. Their “Kardashian Kard” made their level of incompetence quite apparent.
Same story with Kim Basinger. She made for an alluring Bond girl. But she found her incompetence when she spent $20 million to buy a small town in Georgia… just to turn it into a tourist trap.
“Nothing good came out of it,” she later said.
Ain’t that the truth.
You’re Incompetent, Too
So what’s our point with all this? Is Andy cursing his entrepreneurial ways and saying we shouldn’t try something new?
Should we take no risks?
Not at all.
Besides proving that government is filled with folks who have risen to their maximum level of incompetency… our point is that we must live our life well aware of Peter’s Principle.
You may be a good stock investor… but you may soon find out bonds are a different game… or that picking stocks for a friend requires a whole different talent.
Or perhaps you made your living in real estate… so why not use your retirement cash for flipping houses?
That could be a painful lesson from Mr. Peter.
And, the big one, perhaps you were successful running one business… so you can jump right into another business, right?
Please see above.
Fortunately, there’s a simple trick to beating Peter’s flaw. It’s one that throws the whole idea into a tailspin.
It’s an idea that we talk about often. It’s core to our little passion project.
Folks who commit to continual learning are rarely held back by their incompetencies. They can’t be. They’re always learning new skills and adding to old ones.
We’re not sure an Arabian horse expert could have ever beaten Katrina… but a bit of Know-How surely could have kept him (and the nation) out of that mess.
It takes us to another idea – specialization.
Horses are horses… and helicopters and relief aid are, well, not horses.
It’s why instead of taking high risks outside of their specialization, successful folks know how to say no.
If something’s not in our skill set and it’s not something we’re willing or capable of learning… say no.
Basinger claims she was pressured by her family into buying that town – certainly something well outside her prized skill set. Now she and her kind don’t talk. And she has a few million less in her bank account.
Understanding and admitting that we all have limits is a good way to ensure we don’t lose what we’ve got.
Evolution Isn’t a Sin
Finally, we can never be so ignorant to think Know-How doesn’t evolve. It does.
It grows… and it dies.
This is good news.
Many folks try things in their retirement that they failed at in their younger years. And guess what… They succeed.
It’s because they were smart enough to realize they know more than they did then.
One of the toughest lessons in life is learning what we don’t know. It’s often very expensive and can be quite embarrassing.
The Peter Principle seems perfectly built to accelerate us to those two painful ends.
With each passing day, we’re marching closer to our maximum level of competency.
It’s no good.
We should all end our careers and our lives on a high note… not with failure.
Peter’s Principle affects us all. But now that you know about it, you can avoid it.
A bit of Know-How is all it takes.
Note: What’s the best thing my old friend can do in his new job? It’s the same thing all of us should do each day – write down what we want to accomplish that day and do whatever it takes to get it done.