Outcome is the barometer for success, at the same time, the unknown factor — one of the most important is the process (which is adopted for attaining the outcome).
What has been noted more frequently is that outcome is what matters and the process becomes more of a side note.
It’s only when the anticipated outcome does not materialise, does the forgotten hero — process comes into play.
In our investing experience, the moment the process is ignored, the probability of sustainable outcome becomes doubtful.
Chasing short term results gets investor interest, continuous mention in the media, promoter media mention — the bragging rights, but then this is not sustainable on a regular basis.
There have been numerous instances, over the past quarters, when there was a funding boom, the associates would be showered with incentives in the form of iPhones, expensive bikes, and visits to foreign destinations — all in the name of achieving targets.
Reaching targets which were not not possible to achieve on a regular basis quarter after quarter, should have raised alarm bells to the investors. But then the ‘cloud of growth‘ was in play — and process and common sense became a casualty. The metric of ‘Rupee/Dollar spent to earn — Rs/ $’, went downhill, as only the growth metric was being looked into.
Process in this case would have ensured that the process of not considering the metric, as stated above was not ignored.
Process is a ‘boring’ thing — day-in & day-out, one needs to do it. (Sachin Tendulkar never got bored playing the straight drive for over 2 decades, process matters)
Customer Acquisition Cost (CAC) is one of the elements of cost which has been an area where processes have been largely ignored at the altar of growth.
At Auxano Capital, we strongly believe that outcome and process go hand — in — hand. Processes ensure that one does not lose sight of — prudence, risk management, budgets, while pursuing growth and revenue.
The last few quarters have also shown that financial discipline & fiscal prudence ensures that tough times can be managed in a more controlled manner.
Before investing too, processes are important. While ‘gut‘ needs to be trusted, it cannot be the norm while investing, only an aberration.
Having the playbook in place and constantly updating the playbook is the barometer of a good process oriented entity.
In the long run process trumps gut (in majority of instances) to deliver a good outcome.
It has been noted that promoters who followed processes, even while pivoting have been able to deliver positive outcomes, though one would have taken a longer period of time.
Embrace processes to have more predictable outcomes.
Author:
Brijesh Damodaran
