1. A growth mindset
Is intelligence fixed from birth? Some would say yes, but psychology professor Carol Dweck argues that intelligence can be developed if we have a growth mindset about it.
Dweck ran an experiment on elementary students whom school personnel had identified as helpless. Through a series of exercises, the experimenters trained half the students to see insufficient effort as the cause of their struggles and encouraged them to keep going. Those children learned to persist in the face of failure and to succeed, while the control group showed no improvement at all. If we want to improve, we have to believe that we can improve.
2. Effortful study
Doing things you're comfortable with and already good at allows your abilities to reach a plateau. Effortful study, in contrast, includes taking on challenges just beyond your competence.
In my case in ADP, this means studying the master investors and reverse-engineering their successes and failures. In addition, master investor Charlie Munger has said that learning the key points in all the major academic disciplines is of great benefit to investors. We need to partake in effortful study on a regular basis, and I try to devote at least two hours per day to my studies.
3. Deliberate practice
It's not enough to sit back and read the Financial Times or watch CNBC and think you're improving as an investor. You actually have to study and value businesses.
You also have to talk about your ideas and receive feedback so you can adjust and improve your process. This approach is a key part of ADP, and we regularly pitch stocks to other advisors. But remember, study your successes and your failures so you learn not to repeat your mistakes.
To become a master, you must be honest and humble enough to identify your own weaknesses, strengths, and natural tendencies. Improve on your weaknesses so they don't destroy you, and then focus on developing your strengths. After all, your strengths are your competitive advantage -- they're what give you your edge. It's vital to identify them early on and spend as much time as possible strengthening them.
Without motivation, everything I've just talked about is worthless. Even the most talented people will fail if they don't have the motivation, desire, and work ethic required to succeed. I've seen amazingly talented No. 1 overall draft picks fail miserably in the National Football League while undrafted and less physically gifted players have earned their way into the Hall of Fame.
You don't become an expert overnight. Research has shown that it takes 10 years or 10,000 hours of disciplined practice to become a master -- and performance is often proportional to time spent practicing.
In a study of 20-year-old violinists by psychology professor K. Anders Ericsson, the best group (as judged by conservatory teachers) averaged 10,000 hours of practice over their lives; the next-best averaged 7,500 hours; and the next after that, 5,000. We value experience when evaluating a company's management team.
My challenge to you
Where would you like to be in 10 years? If you're willing to do all of the things I've written about here, I believe you'll be successful as you work toward mastery. So why not start today? A decade-long effort may seem daunting, but remember, the journey of a thousand miles begins with a single step.