Knowing the notes makes everything easier. I can only speak in respect to how I teach them. For example, in 2 lectures from now Don will see what I would term the "big picture" in the way that I teach Lead Guitar Phase 1 improvisation, and he'll also in 4 lectures from now, be able to understand how I teach the guitar neck in ways that most may not have even known as possible, and in doing so, he will make an immediate association as to how knowing the notes on the neck, were absolutely essential, in accomplishing this.
(This doesn't mean that Don himself will have learned anything new or groundbreaking, or become a better player, because I cannot speak to the results that his years of prior study or schooling or lessons have had, and I'd never presume to do so.)
Don is a well versed player and with his degree in music education, I doubt he needs any help from me or what I teach, but he's picking things up for the purpose of maybe finding ways to better reach his students. But, most students aren't like Don nor have his experience or breadth of exposure to musical education and theory.
What I mean, is, as a guy that's played as long as he has, and with his background formally in studying music, he already knew the notes, but he learned a few ideas as to ways they might be taught to his students, as he's already indicated. Regardless, whether a person knew them to start with or learned them through us, the results will be the same, and that is, to get to what I am teaching, you cannot use it without having the notes on the neck down.
I say this, because my quest to learn the guitar, was a self taught one. Twelve years long and I was self taught. One discovery, lead to the next and so how it progressed, is how I teach. I cannot understand the musical world or how learning progresses, outside of what I do today, as it seems so painfully backwards, clunky and illogical, not to mention time consuming.
So, to be honest Olly, knowing the notes on the neck would be useful for those goals, however, I only understand how to reach those goals in the context of what I teach. I am aware that sounds horribly biased/slanted towards my approach, and I do apologize, but I'm also stuck without a better answer - ultimately if you learn the notes on the neck and can play barre chords, or recognize the occasional note when you stop and look at it, it's going to seem terribly insignifcant.
However, for what I teach, the student can go to any note on any string and just start soloing.
The student never needs a chord book because he knows the letters that make up every chord.
Anything that you know the musical equivalent of, and know the notes on the neck, becomes knowledge that you can use quickly.
If I know the notes of a Gm7b9 are G Bb D Ab, then I can also see where on the guitar that falls.
If I decided to improvise to a track where the song left key, and I saw that the chord that was "outside" was F, I could chose to play on a triad tone, a 7th or even outline an extension over the chord when it came up, and by knowing the notes on the neck, say that the extended chord I wanted was a major 9 I could play a C Major Triad over it at that time, to pull out it's extended notes, and a C Maj7 arp to pull out a Lydian Maj7#11 feel over that F chord, before it came inside again.
Knowledge is power, in composition and improvisation.
Instructor
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