December 31, 2013
The Power of Process in Sports and Financial Decisions
Nick Saban, love him or hate him, has been the most successful coach in all of sports over the past 7 years with the Alabama Crimson Tide holding 3 national titles and a 74 -14 record. When asked about his success he and his team largely attribute it to his PROCESS. According to Saban, “Process guarantees success. A good process produces good results”. As we review the year end and make our economic and market forecasts for 2014, what lessons can we learn from the success of Alabama football?
Process is about control and focusing your efforts where you have the most control. Consequentially Saban doesn’t focus on or talk about winning. Winning is an outcome and not something he can control. Instead the focus is on effort and activities that applied consistently tend to result in success. Nick’s Paradox: “The more one emphasizes winning, the less he or she is able to concentrate on what actually causes success.”
Saban, his staff, and team focus on perfecting the process. Nick states: “Eliminate the clutter and all of the things that are going on outside and focus on the things that you can control with how you go about and take care of your business… Take the other team out of the game and make it all about you and what you do.”
Similarly eliminate all the clutter and things that are going on in the markets, the economy, and the world and focus on getting your financial house in order. But it’s very easy to hyper focus on analysis of these external issues. Turn to any financial media outlet and the hot topics will invariably be along the lines of: Are we in another stock market bubble? Are bonds too risky? How will Janet Yellen’s policies affect the economy? All are great questions but the answers will only be revealed with time. We can spend our limited time trying to guess the outcomes of these external events or we can focus our efforts on areas within our Circle of Influence.
What can you influence? You can reevaluate your goals and prioritize them according to your values. You can identify potential risks and put together strategies to address each with contingency plans. You can review portfolio expectations and risk capacity to make sure you are prepared to weather potential bubbles. You can review your estate plans and ensure you and all participants know how to execute on them when needed. Stress test your plans to make sure you are ready for game day.
In their book, Decisive, The Heath Brothers detail how human decision making is disrupted by irrationalities and biases. They state that we often put our faith in careful analysis and skip process, the softer, less analytical side of decision making. “When researchers compared whether process or analysis was more important to making good decisions – they discovered that process mattered more than analysis by a factor of six. But the reverse was not true: Superb analysis is useless unless the decision process gives it a fair hearing.”
Although it may sound easy to adopt, a process mentality is very difficult to maintain. The noise of results can become so deafening at times that it feels impossible to remain disciplined toward the process.
Write down your most important goals and revisit them regularly. When you hear the siren song of “winning” remember Charlie Sheen and review your notes. You want to focus on both what is important and what is within your control. Success is then determined by your behaviors and discipline to maintaining the process.
Okay – so Alabama suffered a stunning defeat at the hands of Auburn no more than a day after I’m inspired to write this article. Recall the process mentality doesn’t focus on winning. Success here may not always end in a win but it will give you the satisfaction of knowing you focused your efforts where you had the greatest impact and control.
Gardner Sherrill, CFP, MBA, is an independent financial advisor with Sherrill Wealth Management. To learn more visit sherrillwealth.com. The opinions expressed in this material do not necessarily reflect the views of LPL Financial. Securities and advisory services offered through LPL Financial. Member FINRA/SIPC.