The Balancing Act
In life, there's a crucial distinction worth noting. Some individuals possess intelligence but lack practical wisdom. Their potential for success might fall short of expectations. On the other hand, some lack raw intelligence but overflow with practical wisdom, and their potential can pleasantly surprise you.
Occasionally, you encounter individuals who combine both intelligence and practical wisdom, outperforming everyone else. To define this difference, consider intelligence as the ability to grasp technical details, while practical wisdom involves an understanding of emotional nuances.
In simpler terms:
Intelligence: This encompasses memory, logical reasoning, mathematical aptitude, test-taking prowess, and adherence to rules.
Practical Wisdom: This involves a high degree of empathy, the ability to detect deception, organizational skills, effective communication, persuasion, social awareness, and the capacity to comprehend the consequences of one's actions.
Both attributes hold significance, but they are valued differently. Schools excel in teaching and measuring intelligence, which often becomes the primary focus. However, in almost any domain, practical wisdom is the long-term key to success.
You can't quantify empathy like SAT scores, so it's unsurprising that it carries more weight on resumes. But who is more likely to thrive in life? Someone who excels at memorizing formulas or someone who effortlessly relates to the emotions of colleagues, clients, partners, and friends? The answer is clear.
This distinction explains why there are intelligent but disagreeable individuals who struggle to advance while average students who navigate calculus can lead successful, fulfilling lives. One of life's most significant decisions—the choice of a life partner—remains untaught in schools. It's a decision demanding practical wisdom, not just intelligence.
It's crucial to recognize that people are not mere spreadsheets. They are emotional, hormonal beings, often misinformed, driven by status-seeking and insecurity, striving to make it through each day. So, when choosing between understanding how the world theoretically operates and how it practically functions, lean toward the latter. As historian Will Durant wisely stated, "Logic is an invention of man and may be ignored by the universe."
Here's an extreme example:
George Soros famously rushes to buy assets in a bubble. To an intelligent person, this might seem illogical. Why invest in an overvalued asset deliberately? But to a person with practical wisdom, it makes sense. They understand that bubbles can expand longer and larger than anticipated. They grasp the psychology driving investors to make irrational decisions, fueling the bubble.
Derek Thompson of The Atlantic points out that baseball became dull as every team pursued an intelligent strategy, using data to maximize strikeouts. While this was an intelligent approach to winning games, it robbed the sport of its essence. It required practical wisdom to foresee this outcome.
Here are some other "smart" traits that defy easy measurement:
Recognizing that individuals with diverse life experiences have different desires and perspectives. What may seem like debates often devolve into individuals with contrasting experiences talking past each other.
Henry Ford wisely said, "If there is any one secret of success, it lies in the ability to get the other person's point of view and see things from their angle as well as your own."
Acknowledging that being kind doesn't equate to weakness. Kindness is a strategic approach to garnering cooperation in the long run. Honesty, as Benjamin Franklin noted, is the best policy, not just morally but selfishly too.
Embracing multi-disciplinary thinking. Understanding how the world operates involves connecting dots across different fields, transcending mere financial knowledge. This requires practical wisdom.
Fostering true independent thinking. When your views on various topics cannot be predicted from your stance on others, you're thinking independently. Most people prefer the comfort of tribal affiliations, but true independent thinking leads to greatness.
Recognizing that the best story often prevails over the most accurate answer. Effective communication and storytelling are critical, as even the most potent truths go unnoticed if not presented effectively.
Understanding that expertise goes beyond knowing the right answers; it involves addressing the practical aspects of a situation, such as patient concerns in healthcare or investor psychology in finance.
Lastly, appreciating the importance of storytelling in investing. Great investors like Warren Buffett, Charlie Munger, and Seth Klarman excel in conveying their strategies effectively, ensuring their investors stay the course during tough times.
In essence, practical wisdom, or being "smart," often trumps raw intelligence in the journey to success.
