After speed reading thru a child psychology book gifted by a client, I was struck by the recommendation to treat parenting as process-oriented rather than goal-oriented and I can see the similarities to sensible management and investment approaches.
The book gave the example of a baby repeatedly putting on and taking off her sock on her feet and seem to enjoy it. Some parents might get worried that this is an autistic behavior and why does my child do things repeatedly is there something wrong with my child? In actual fact, doing repeated activity with sensory and motor organs is a type of process-oriented learning behavior where babies check repeatedly the cause and effect of their actions.
Goal-oriented parents might try to stop the baby from doing so, thinking that it is not productive. Instead of allowing the child to learn the cause and effect by themselves, they think they should teach it. And there is evidence that learning by abstract ideas without experiencing real world cause and effect creates a disconnect in the brain.
Similarly, in management, there is a trend of management by KPI, which is goal-oriented. Have you heard this phrase, “by hook or by crook deliver the results, I don’t want to hear excuses”? Is it a wonder that in reaching the KPI, there are always unintended consequences whether in terms of reduced trust and teamwork cooperation?
Conversely, the Japanese management always talk about “doing right the first time” and “Gemba”, which is on site inspection, which is process oriented. For them, if you get the process right, results will come. And the whole “kaizen” or constant incremental improvement concept was born out of this. The Japanese management did not set a goal to be the most efficient businesses. But in focusing on processes, they helped society reduce cost and improve standard of living.
Similarly in investment, we talk about process oriented in the sense we get our system of asset allocation, diversification, rebalancing and restructuring right. The long term result will always be achieved regardless of short term uncertainties. Most people have become goal oriented as in insisting on a specific target ROI irrespective of market circumstances. This is where people go into money games and high risk gambles because they have a goal, which is high ROI regardless of the underlying assets.
Focus on the process, then we can establish the correct cause and effect. Being goal oriented means we might be blinded to the cause and effect and end up going around in circles.