Same as Ever: A Guide to What Never Changes

by Morgan Housel

Five big things tend to eat away at competitive advantages. One is that being right instills confidence that you can’t be wrong, which is a devastating characteristic in a world where outlier success has a target on its back, with competitors in tow. Size is associated with success, success is associated with hubris, and hubris is the beginning of the end of success. Another is that success tends to lead to growth, usually by design, but a big organization is a different animal than a small one, and strategies that lead to success at one size can be impossible at another. There is a long history of star investment fund managers from one decade underperforming in the next. Some of this is the unraveling of luck. But success also attracts capital, and a big investment fund isn’t as nimble as a small one. The career version of this is the Peter Principle: talented workers will keep getting promoted until they’re in over their head, when they fail. A third is the irony that people often work hard to gain a competitive advantage for the intended purpose of not having to work so hard at some point in the future. Hard work is in pursuit of a goal, and once that goal is met the relaxation that feels so justified removes paranoia. This allows competitors and a changing world to creep in unnoticed. A fourth is that a skill that’s valuable in one era may not extend to the next. You can work as hard and be as paranoid as you’ve always been, but if the world no longer values your skill...