Why you probably have a low leverage career (and how to create more leverage)
Career Leverage is like having a catapult to launch you forward, while everyone else is marching steadily forward (or for some, pulled backward). [Work in Progress: Part 04]
Series: Work in Progress | Part: 4 of 10 | Reading Time: 7 mins
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This is the 4th part of the series Work in Progress. Last week, I talked about reinventing ourselves in a world of change. Subscribe to get the next part in the series.
You either have leverage or someone else has leverage against you.
I’m not a fan of “kill or be killed” type of advice, but I do believe that if you don’t arm yourself, you’ll be at risk. Or at least won’t get the best return out of your efforts.
The harsh truth is that companies drive you toward commodification and standardization.
And the antidote to commodification is career leverage.
Defining Career Leverage
Having career leverage is when your work is valuable, hard to replace, high impact relative to the input, and high upside. It’s when certain opportunities yield greater return than others.
It’s like having a catapult to launch you forward, while everyone else is marching steadily forward (or for some, pulled backward).
Those returns can come in many forms. It’s not just about money, but can be about increasing your impact, autonomy, flexibility, development, or status/level.
And when you don’t have career leverage, it usually means someone or something has leverage over you. And your work and returns are severely limited.
But the big mistake is that most seemingly good careers are actually low leverage. I’ll get to that later.
Please note: I do not mean that having high leverage equals “good,” as in morally. There are many important, high value careers that are unfortunately low leverage in our system today. But I am here to talk about what you can do about it.
No Leverage
▸ Examples: retail jobs, service work, ride-sharing gigs, warehouse jobs
In No Leverage careers, there is no track. We call these “dead end” jobs for that reason.
There is no opportunity to advance. While you can work more hours, there’s no opportunity to increase your earning power (how much you earn per your input). And there’s no ability to move into a different position.
No Leverage jobs are transactional relationships. You may not know your employer, and they may not know you. The pay is set by an algorithm. There’s no negotiating.
No Leverage jobs have a very easy on ramp: almost anyone, with little training, can get up and running quickly. Thus, the supply for No Leverage jobs is very high (if people are willing).
The problem is, since it’s easy to fill No Leverage work or it’s easily automatable, you can be pushed aside as soon as you are not the most efficient/cheapest option.
This makes No Leverage employment unstable and compensation low.
Low Leverage
▸ Examples: (most) lawyers, doctors, teachers, consultants, corporate jobs
Unlike No Leverage, Low Leverage careers have a clear track. The path ahead is well defined and has been walked by many people before you.
It’s a formula: if you do this, then you’ll get that. The rewards ahead are clear.
Because of this, they are usually considered “safe” career choices. They look good on paper. They are looked favorably upon by your parents or teachers.
Low Leverage careers are stable and certain. Once you get there, it may be hard to get fired. Your employment and compensation are predictable (for now, at least).
There are usually a lot of rules around Low Leverage careers and you can’t skip steps.
There are committees or associations in charge of milestones that you must pass. There is a strong hierarchy, which governs the necessary requirements around education, credentials, training, and years of experience.
Low Leverage roles are seductive to join and hard to leave. But they lack leverage because your upside is limited to predetermined guardrails set by others before you.
So Low Leverage careers can be short-term high value, but long-term that value hits a ceiling.
Many people in these careers seem to wake up one day, realizing they are stuck on a track that is hard to get off or expand beyond.
While they started as higher status, the value they get out is capped and inflexible, and they may see other people around them continuing to progress beyond them.
And Low Leverage careers, because of the clarity of track, can still be replaceable, as many lawyers and doctors are realizing.
High Leverage
▸ Examples: founders, owners, investors, early/small company employees, leaders of new business units, independent/high value experts
High Leverage roles are open-ended. There is no track. The opportunity ahead of you is wide, like an open landscape.
There’s no question, High Leverage careers are high risk. Your basic employability may be at risk on a day-to-day basis.
Ironically, a lot of the components of a No Leverage job look the same as High Leverage: low stability, certainty, and clarity.
The difference is the upside. Your work can have a higher return because you are not limited by the guardrails and track of a Low Leverage role. It’s up to you and it’s on you.
High Leverage roles mean that your work delivers greater returns over time. The returns may seem low or especially hard at first, but your input leads to an outsized opportunity later (hopefully).
And High Leverage work is hard to find and replace. That’s what makes them elusive, but valuable.
However, when listening to High Leverage people giving career advice (cough, cough), you need to be mindful of survivorship bias. Yes, they made it. But remember you aren’t hearing from the people that didn’t make it.
Progress toward higher leverage
When I joined Privia Health as a startup, people told me it sounded risky. The truth is that staying in Low Leverage careers too long can be even more risky.
We might need a No Leverage role to get by. Or we might use a Low Leverage career to start. But we should consider High Leverage off ramps along the way. For example, you might start as an employed doctor of a hospital, with the eventual plan of owning your own practice.
Sometimes, you can turn a Low Leverage role into High Leverage by a small change. For example, you might be a consultant, whose endgame is to join your client’s company in a higher leverage role. Or you might move from an organization with a rigid hierarchy (Low Leverage) to one that has more mobility (High Leverage).
If you are more risk averse, whether psychologically or for more practical reasons (like raising a family), then by all means do the lower leverage thing. But you can move to higher leverage progressively, and choose the timing and pace in which you go there.
How to get leverage
▸ Be an owner.
You can do this as a founder, investor, partner, and sometimes an employee (in my case, joining an early stage company). Equity and ownership means that when the company does well, you do well. And holding more ownership gives you more control. With less ownership, someone has control over you (i.e. they have the leverage).
▸ Buy leverage.
You can buy your way into leverage by buying ownership in a company. This allows you to acquire leverage, without the struggle to build leverage (which many finance folks have realized).
▸ Manage more.
Ownership over a unit inside a company can be higher leverage as well. Managing people is a form of leverage - together you get more done. And you may have more autonomy and be rewarded based on the performance of the unit, especially as a general manager of a business (e.g. “P&L Owner”).
▸ Be the first.
Take over a new division, new product, new process, or new team. You will develop a unique perspective that is hard to replace, increasing your leverage. If you’re a general manager, the earlier you take on a unit, the more leverage you create for yourself.
▸ Be the only.
If you are the only expert or only person who knows how to do something important, and it’s hard to train someone else to do it, you have leverage. You can increase your “prices”, whether in higher wages or higher flexibility. A great example are celebrities. If you want to work with them or buy their product, you have to meet whatever “price” they command.
▸ Be results oriented.
Find a role where you are judged on output, not input. As Naval Ravikant says, “especially if they don’t know how you did it.” When you are judged based on input (e.g. time worked), you have limited leverage because it’s impossible to work beyond a certain point. Performance-based roles give you more upside leverage.
▸ Build replicable things.
If you can design, build, or distribute products or services that are easy to reproduce, you have more leverage. This can be in the form of product design (physical or digital), development (e.g. coder), or media (e.g. writing, podcasts, etc.). The key is that you have control of the build, not downstream after the build.
▸ Follow leverage.
If your boss has leverage, some of that may flow down to you. As they rise, you can rise with them. Many great careers (mine included) were built on riding the wave of the people in front of them.
▸ Go smaller.
Join a smaller company or startup. The earlier and smaller, the more leverage you can create. The smaller it is, the more important you can be. And with more relevance, you translate that into more High Leverage opportunities.
▸ Go faster.
If you join something fast growing, opportunities pop up around you. If you have an established reputation, in a high growth company, you can fill opportunities when they arise. You will have leverage to fill them.
▸ Go together.
Find group power. Our individualistic culture has a distaste for collective power (e.g. unions), but it still exists and can be potent. If you doubt the power of groups, look no further than the largest sector of the US economy: healthcare. The entire healthcare market is governed by group power: doctors banding together against payers, and vice versa.
In the end, a High Leverage career may not be for you. But if you’re aiming for a bigger impact in your work and to reap higher returns (in whatever form), you should consider ways to add leverage to your career.
Next up, we talk about being clutch - how to nail key moments.
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Note: views are my own and do not represent the views of any companies or people referenced within.
I think this is one of my biggest regrets career wise. Not realizing how much I was capping the upside both growth wise and money wise in my 20s
Great article clearly defines the thought process to make conscious decisions about whichever path you choose, but at least you will be doing so understanding the pro's and con's of both. Would have been very helpful for me 30 years ago, I suppose in an indirect way I split the baby in half maintaining a low leverage good paying job by aggressively managing my company savings plan and eventually 401K. This gave me the opportunity with each successful move in an out of company stock to function high risk / high reward while maintaining a steady cashflow. It worked out well while allowing me excellent work/life balance.