Friday, March 14, 2014

Usefulness of investing in career management.

Just read The Hard Thing about Hard Things by Ben Horowitz.

It talks about two kinds of leaders - "1"s and "2"s.

"1"s are highly intuitive thinkers and visionaries ( typically ENTJ Field Marshal types ) who revel in playing a game of competitive multi-dimensional chess with other business in the space. Bill Gates, Jack Welch and Steve Jobs is a "1".

"2"s are operational managers who are process driven and excel at making consistent and incremental changes ( typically ESTJ Administrator types ). Tim Cook is a "2".

You will need a combination of "1"s and "2"s to run an organization.

When managing a Tech career, you will need to understand your primary mode of thinking.

Most engineers and computer scientists are "2"s. They think empirically and like to frame problems in concrete terms. They are not very much into ivory tower theories. I think this is the main reason why many engineers don't climb very far in the corporate world. You skills to get you into middle management willl not be enough for you to get into senior management. This is why many engineers join MBA programs. But MBAs are only half the story, just because you take some marketing classes does not make you a visionary, and many engineers will probably focus on operational management or quantitative finance classes in business school.

The converse problem is rarer. A "1" in the corporate world will suffer in the initial stages in their career as they lack the experience and authority to push their ideas through. Many become rebels and heretics and subsequently leave the organization they work for. In this case, a "1" can get some industrial certifications to get the basic work done to bide their time or look for a mentor and hitch a ride to a career track where they can make a difference.

This concept also gave me some thought into how investing fits into this picture.

One of the fears upon getting my Engineering degree was getting permanently fixed at the operational track. After all, I an a textbook ESTJ when I was tested at age 18. Fortunately, my vision in the early part of my career was to build my salary in two ways. During the day, I manage systems and projects and earn a daily wage. At night, I use my quantitative skills to see if there is a way to constantly extract returns in the markets.

Using the skills of a pure "2", I have an income stream which is expected to plateau in middle age but I can begin to exploit market returns beyond my retirement.

Then something funny happened....

To do decent investments, you need a whole slew of skills in the liberal arts. Political science to assess the political risk of your stock counters. Economics to understand the moves made by the Feds. Psychology to assess herd mentality. Philosophy to ensure that you are not fooling yourself and engaging in logical fallacies. These combination of liberal arts skills are always profitable to discover the next stock which outperform the markets.

While investors start out as "2"s, ownership and management of multiple businesses can increase the "1"-ness in them.

They are also getting paid to play multi-dimensional chess against other investors and their peers in the salary game.

In summary, no matter how you manage your career, investing basically means taking ownership of multiple businesses. If you take this hobby seriously, you will be able to develop the ability to think on a broader manner and rapidly find ways to exploit your knowledge no matter how trivial it is.

( From a psychological perspective, I hypothesize that a strongly typed "S" can possibly enhance their "N" component of the MBTI by engaging in fundamental analysis. )

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