judgement
Process versus outcome
The rule
Judge a decision by the thinking behind it, not the result. A good process can lose and a bad one can win, over any short run.
Where it flips
Worshipping process can become an excuse. Where it misleads: if the same "good process" keeps losing, the process was wrong. The fix: treat outcomes as evidence too, just noisy evidence, and update when the losses pile up.
In anything ruled by chance, the result and the quality of the decision come apart in the short run. A careful, sound process that lost money this year may still be the right one. A reckless bet that happened to pay off is still reckless. Grade the thinking, not the luck.
A worked example
Picture a two-by-two. Good process plus bad luck gives a loss you should keep faith in. Bad process plus good luck gives a win you should distrust. [illustrative]
How to spot it
- ·the decision written down before the result is known
- ·reasons that stand on their own, apart from the outcome
- ·willingness to repeat the same process after a loss
Michael Mauboussin · research notes