True success exists only when you understand the “how?” and the “why?”
Wednesday, April 30th, 2008 | Link | Spread The Word!
This post was inspired by a great article written by Sean Hannon this week. In his article, which is focused on understanding investment results, he used this simple chart to illustrate the possible results of an investment (I have reproduced this chart with my own color-coding):
Sean’s point is that you should only feel truly successful about when you have a good outcome that is produced by a good process. If you invest in a stock on a whim and it happens to produce a great return, you should not consider yourself a great investor-you should think of yourself as a lucky gambler. Similarly, if you are using a proven system that works, and you get a bad outcome sometimes, you shouldn’t feel too bad. Over time the right process will produce good outcomes more often then the bad process.
This idea is common across many endeavors where the process to achieving results has a strong “luck” factor. Poker is a great example. If you have the best hand, correctly estimate your odds of winning, and bet big, you will still lose a significant portion of the time. Even a good process can produce bad results, in the same way that a bad process can produce good results.
Building your business to perform requires understanding how process and outcome are correlated in the long term and yet can produce totally inverse results in the short term. During the housing boom, the problem that many mortgage brokers, banks, and direct lenders ran into, was that they used a simplified lens to measure their success. They looked at the world like this:
It’s counter intuitive but the outcome is not sufficient to measure success. Plenty of banks, brokers, and lenders made a killing and subsequently lost their shirts because they were only measuring outcome, not process. Building a good process builds a framework to produce more good outcomes in the future. Building a business around good outcomes often produces a process that will produce fewer good outcomes in the future; it’s self defeating in the long run.
As a company that builds lead management software (LMS), we understand that helping our clients by providing best practices goes a long way towards making them successful in the long run. But beyond that we know we can help our clients by getting them to place an equal or higher value on their process over their immediate outcomes.
Lastly here’s the way that we see the world. :
We see four kinds of businesses. We try to push our clients towards a good process and good outcomes. Yet, we are never satisfied. Every company, across the board, can always be more successful.