Shifting From Outcome to Process
A goal is a specific, measurable objective that you want to accomplish. It comprises several key components:
- What do I want to achieve?
- Why does it matter to me?
- How will I achieve this outcome?
Setting goals helps clarify what we want to achieve and the behaviours needed to reach them. Often, we focus more on the desired outcome than the process required to achieve it. While the end goal provides direction, reaching it depends on every step taken along the way. It’s important to periodically assess progress and make corrections if necessary.
When you have a clear goal, you should shift your focus to the process. It’s the consistent, small steps that bridge the gap between where you are and where you want to be.
A helpful framework is to separate the outcome from the process:
- Outcome Goal – This is the final product or effect you hope to achieve. It answers the question, “What do I want to achieve?” Understand what you need to achieve and why it’s important.
- Process Goal – This defines the specific actions and behaviours needed for success. It’s the procedural behaviour you can accomplish daily, weekly, or monthly to achieve a larger goal. It answers the question, “How will I do this?”
Outcome-based goals and process-based goals are two different approaches to setting targets:
Having clearly defined process goals makes achieving outcome goals more likely.
While many investors focus on outcome goals, such as achieving a certain level of return, it’s equally important to set process goals that outline the specific behaviours needed to increase the likelihood of success. Long-term investment success is usually more dependent on investor behaviour than market cycles.
Setting process goals can help investors stay focused on the things that they can control, rather than getting caught up in the unpredictability of the market.
By focusing on the behaviours that lead to positive outcomes, rather than the outcomes themselves, investors can build a solid foundation for achieving their long-term financial goals.
The above article was written and adapted by Marius Kilian.
