Are “book smarts” or “street smarts” more important? Although there is a place for both, we can tend to err on one side or the other. Young professionals with high GPAs tend to be noted for their “book smarts.” Several years into their careers they discover the necessity of developing “street smarts” that some of their peers might have come by more naturally.

Early in my career I tended to trust people and share a lot about myself. Perhaps, I reasoned, if everyone laid all their cards on the table, it would be easy to figure out how to create win-wins.

Do you notice any problems with this approach?

For example, in one of my early jobs I played a team-based game of business strategy that involved negotiation, sharing information, and trading. Much to my unpleasant surprise, I learned that not everyone shared my approach of making helpful information readily available. (Imagine that!) I learned that, although win-wins are often needed in order for people to advance, ultimately people are more interested in their own success than in mine.

Gratefully, getting a dose of reality can shake deluded idealism from a person fairly quickly.

Over time I learned that some of my assumptions, behaviors, and habits were flawed or at least needed tempered with a dose of realism. There is a place for being savvy or “street smart” — for example, “knowing how to close a sale, when to walk away from a deal, when to remain silent, and how to select winners as employees or colleagues.”

Whether street smarts are skills or attitudes, learned or inborn traits, a financial professional who aspires to a position of organizational leadership should seek and develop these attributes.

Here are five categories of street smarts drawn from Dr. Tony Alessandra:

• Heightened awareness – Understand your surroundings and don’t allow yourself to be blindsided. Military and law enforcement personnel utilize a “color code of mental awareness” that ranges from “condition white” (total oblivion) to “condition red” (all-out fight). In the context of business, finance professionals do well to routinely maintain “condition yellow” (comfortably alert to one’s surroundings). To put it simply, don’t be paranoid but do watch your back and maintain situational awareness.
• Confidence – I wrote previously about the importance of confidence, the role of preparedness in boosting confidence, and seven ways to develop confidence.
• Healthy skepticism – Take measures such as getting your agreements in writing so that people don’t take advantage of you. I wrote previously about professional skepticism, which is an officially recognized and required mindset within the audit profession.
• Resourcefulness – Be quick, persistent, prepared, flexible, adaptable, and connected.
• Risk-taking – Choose when to accept, avoid, reduce, or share risks. Don’t let fear hold you back, but learn from you mistakes.

Learn the theories. Develop “book smarts.” But never underestimate the importance of lessons from the “school of hard knocks.” Develop discernment and become increasingly savvy by carefully analyzing your experiences for lessons learned.