Process Over Outcome

The idea that, in any activity with a meaningful luck component, the quality of the decision process is a better thing to judge than the outcome it happened to produce. It is one of two moves Kyle draws from Michael Mauboussin in his investing research: in his HBR framing, “we have a strong tendency to dwell on outcomes without considering the role of process… we need to find performance measures that reflect skill, or elements of the outcome that we can control.” A good outcome can follow a bad process (luck), and a good process can still produce a bad outcome (bad luck) — so over short horizons the outcome is a noisy signal of skill.

This pairs directly with Mauboussin’s Skill vs. Luck continuum (placing an activity somewhere “from pure skill/no luck on one extreme to no skill/pure luck on the other”) and underwrites the Paradox of Skill: as everyone in a field gets better, skill differences compress and luck plays a larger role in who wins. The practical upshot Kyle takes from it is that a public stock-picker or a card counter should be evaluated on process, not on any single result, because their outcomes are heavily luck-mediated.

Where this appears

• Michael Mauboussin — Kyle’s go-to reference for skill-vs-luck; supplies the HBR “find measures that reflect skill, not luck” framing that defines this concept.