Last year, I saw a post from the seasoned Corporate / M&A Lawyer, Mugambi Nandi, in which he wrote: “On my first day of work as Head of Legal / Company Secretary for Stanbic Group in May 2007, my MD told me something on performance which I have never forgotten: On a golf scorecard, you have space for your name and your score – no space for comments, reasons, and excuses.”
This resonated with my growing interest in how decisions shape outcomes or how processes translate into results. Even the best decisions, strategies or systems can fail, while poor decisions sometimes succeed. I wrote about this in December 2020 – Bad Decisions and Good Outcomes – where I examined investment decisions and made a case against stock picking for the average investor.
One of my arguments in 2020 was based on a study that found most individual investors would have been better off investing in risk-free government securities rather than in 96% of all US-listed companies between 1926 and 2016. The stock market’s excess returns – gains beyond those of risk-free treasuries – were almost entirely driven by just 4% of listed companies. However, without hindsight, no investor could have predicted in advance which 4% of stocks would generate those returns.
The Bias Toward Outcomes
Mr. Nandi’s quote reinforced another important lesson: the world is heavily biased toward outcomes. The strategies, processes, etc., leading to a result, no matter how rigorous or well-intended, usually matter far less than the final outcome. This applies across personal relationships, professional environments, and in business settings.
In personal relationships, people judge us based on how they experience us and the impact that our actions have on them or on the people, or things, that they care about, and not so much by our intentions or the actions themselves. Contrary to the cliché, “it is not the thought that counts” in the real world. It is not even the action itself. It is often the result that matters the most.
Professionally and in business settings, Mr. Nandi’s actual words illustrate this bias perfectly: stakeholders generally want results. “…no space for comments, reasons and excuses.” Regulators, as well as boards of directors, legal, compliance, internal control and audit departments within organizations spend a significant amount of their time ensuring that “results by any means necessary” does not become the norm – an essential safeguard to counterbalance a tendency toward this bias, and to reduce the risk of unethical or reckless decision-making.
This bias toward outcomes sometimes goes against many of our early experiences as pupils or students.
Early Education vs. Real-World Expectations
During our early education, many of us were taught to prioritize processes and reasoning over simply arriving at the correct answer. In subjects like mathematics, statistics, accounting, etc., students were often penalized for not demonstrating their thought process or documenting the steps taken, even when they arrived at the correct answers.
As we transition into the real world, we quickly realize that outcomes often take precedence. You could make sound, well-thought-out decisions, but if they do not yield results after a considerable amount of time, people start to ask really difficult questions.
Failure in Innovation
This brings us to an important paradox: if the world is so unforgiving of failure, how do we account for the role of failure in progress and innovation? How do we explain the billions of dollars that flow into early-stage ventures all over the world, annually, most of which are almost certain to fail? How do we explain that founders who have successfully run a previous venture to the ground generally have better luck at attracting investors for their new ventures than founders who have not yet had the chance to fail?
Most major technological leaps have been built on failure. R&D spending reflects this, as experimentation (and failure) are essential steps toward breakthroughs. History is filled with countless examples of this. The Wright brothers’ early attempts at flight ended in crashes before they finally succeeded; Thomas Edison tested thousands of materials before finding the right filament for the light bulb; Pharmaceutical companies spend insane amounts of money on drug trials, with most failing before approval.
More recently, we watched SpaceX, another venture backed by Elon Musk, pull off what seemed like a miracle right before our eyes: successfully catching a rocket booster mid-air, after many years and many billions of dollars spent attempting to land reusable rockets, with multiple explosive failures along the way. Today, this technology is expected to revolutionize space travel. Similarly, recent AI breakthroughs required decades of failed attempts and refinements before reaching the sophisticated models we see today.
Whatever you may think of Musk’s antics and politics, there is no denying that many of the ventures he has been involved in continue to push the boundaries of innovation. But I digress.
One thing that is clear from these examples is that the failed iterations provided lessons, experiences and insights that paved the way for eventual success. Thomas Edison is often credited with saying “I have not failed. I’ve just found 10,000 ways that won’t work.”
Another thing that stands out from these examples is that each venture was tackling a challenge with the potential to deliver groundbreaking solutions to big problems. Ventures with substantial risks as well as substantial potential rewards. Here, ‘rewards’ could simply mean survival or staying in the game and avoiding obsolescence, as well as the more conventional return on investment.
It appears that in every case, failure was not just an accepted possibility, but often a calculated part of the process. Investors and backers (from external financiers to R&D budgets within already profitable organizations, or to self-funded projects) understood that the ultimate breakthrough, if achieved, could generate returns far exceeding the cost of capital invested. You could say that the risk (of failure) was priced in. This mindset allowed these ventures to push boundaries, iterate relentlessly, and ultimately redefine what was possible.
It then follows that even when the world appears to be very forgiving of failure or bad outcomes, this forgiveness is usually offered with the expectation of success – eventually. Even when failure is expected or encouraged for the sake of innovation, there remains a clear bias toward outcomes.
Since the world is heavily biased toward outcomes, should we prioritize results above all else, above process, learning, and good decision-making? Should we focus solely on winning at any cost? Absolutely not!
Going back to early education, we were taught to emphasize structured thinking because, if principles are applied correctly and consistently, they should lead to the right outcome over time. This aligns with my conclusion in 2020: “In the long run, making good decisions continuously should lead to consistently good outcomes, despite occasional failures. Conversely, good outcomes resulting from bad decisions are unsustainable and will eventually lead to failure (on a more consistent or severe level).”
I also recently wrote about the allure of mastery and how the desire for continuous improvement has driven humanity’s greatest advancements. If we only judged success by immediate outcomes, many of the world’s greatest innovators and entrepreneurs would never have persevered long enough to succeed. Bad outcomes and failure are an inherent part of progress.
I am a little more experienced than I was when I wrote both of those pieces and as I have learned with greater clarity during the process of thinking through and writing this, outcomes really are unforgiving. Because of this, the burden of failure often falls on the risk taker – whether a company’s management, a founder, or a project leader – even when they make all the right decisions (worry not, shareholders – I have not forgotten that you risk your capital for better or worse, and that without you, many of these breakthroughs will not be possible, this requires its own article).
Much of the time spent writing this was spent figuring out how to bring it to a close. Yet, I could not find a happy ending. It matters to be aware of our own capabilities and limitations (engaging the right resources to support us), our appetite for risk and the cultural considerations in the markets that we operate in. Despite the risk of failure, staying ambitious, curious, and optimistic remains essential.
This brings us to an important cultural dimension. Some environments, like the U.S., are designed to embrace calculated failure in ways most countries do not. Jeff Bezos articulated this well at the New York Times DealBook Summit in December 2024.
You can watch the entire video here, but his explanation (from the 11 minute mark) is as follows “…We are the luckiest country in the world… people get confused about ‘why does the United States have so much… entrepreneurial success? Why are the big Tech companies here and not somewhere else? What’s really going on with all this dynamism in this country…?’ and there is a bunch of reasons for that, but the biggest one… is that we have better risk capital… What’s different here is that you can raise $50m of seed capital to do something that only has a 10% chance of working… But the people who are giving you that seed capital know that their expected value is still positive in many cases… That risk capital system that we have in this country is turning out to be very hard for other countries to do…”
We began with Mugambi Nandi’s golf analogy about how, in many professional and business settings, there is no space for comments, reasons, or excuses, only results. We then saw that, even when the world tolerates bad outcomes in risky or innovative ventures, it is not equally forgiving of all failure. Investors, companies, and societies are willing to tolerate setbacks when they are priced into a broader strategy or plan aimed at significant breakthroughs.
Jeff Bezos’ observation about risk capital highlights this principle in action. The U.S. venture ecosystem thrives not because it avoids failure, but because it is more likely to fund failure with the expectation of asymmetric returns than most other countries.
Ultimately, whether in personal, professional, or business settings, the challenge is to strike the right balance between process and outcome. While results matter, long-term / sustainable success depends on making good decisions consistently, even if some of those decisions lead to short-term failures. Maybe my 2020 conclusion wasn’t so naïve after all. The world may only remember the final score, but those who consistently refine their capabilities, decision-making, etc., will always have the best shot at success.