THE ILLUSION OF OUTPUT: WHY PROCESS GOALS BEAT OUTCOME GOALS BY 15X

E115 The Illusion of Output: Why Process Goals Beat Outcome Goals by 15x

Transcript

Dalton Anderson (00:00.576) Welcome to Venture Step Podcast where we discuss entrepreneurship, industry trends, and the occasional book review. I'm your host, Dalton Anderson. In a world of frictionless AI, weight-loss miracle drugs and "fake it till you make it" leadership, what happens when you successfully buy the outcome without building the foundation? Spoiler alert, the system collapses. In this episode, we'll be exploring the

cognitive architecture of the shortcut mentality and why our brains are wired to prioritize outcomes versus processes. Then we'll dive into the psychological realities of bypassing the work, using the current weight-loss craze as a primary example, and then switching to organizational psychology, discussing the differences between earned prestige and forced dominance in leadership.

In this episode, I will be providing my screen. I'll be sharing a presentation. I've been on the presentation craze lately. I've been trying out Gemini's new beta feature to generate slides within the Gemini chat and within Google slides. And I could say that I'm pretty impressed with it. It's quite good. So I'll share my screen.

do this.

Dalton Anderson (01:35.823) and then we'll go into slideshow. All right. So this is the illusion of output, a behavioral and psychological analysis of unearned byproducts. And the reason why I wanted to talk about this topic was one, saw a social media post lately, I was one, I saw a social media post that was emphasizing how Ozempic,

or these jab drugs, changed his life. And he seemed like a young man in good shape. And from what I could tell, he didn't have any health issues on their profile or didn't have anything really going on. They said that they just tried it because they wanted to lose weight and get in shape, which is fine. But it doesn't have the same effect as in if

that person had a rigorous process of working out all the time, their diet. And it's great to use these, these drugs to help enable a person to one, live a healthier life. Two, help them out if they need to increase their metabolism because muscle or the lack of muscle means that you have a slower metabolism and metabolism fluctuates between how your body is, but

in a general sense, it takes energy to keep muscles and to use muscles. So if there's muscles on the body, you naturally use more energy. And so that being said, if you can reduce your fat, increase your muscle mass, then you would then increase your metabolism, which would lead to you consistently having a healthier life. And that's great. But in this example, the person just said,

that they took Ozempic and they did not have diabetes and then they did not plan on working out, which is like a double-edged sword because when you take those types of drugs, you also lose muscle mass and then you lose fat. You lose majority of fat, but you also lose muscle quite a bit as well. And that's why you're told to eat high protein meals and workout to ensure that you don't

Dalton Anderson (04:02.551) have issues that we'll talk about later in the presentation. But that's what prompted this conversation. I figured, "Why not?" It's great. It's a great topic. It's interesting. There's a lot of psychology involved with how to run an organization, how to be a leader, the things to think about and how to be more efficient in your structuring of yourself and the way to structure and to fight yourself is to know oneself.

And hopefully you get to the point where oneself does not exist. Getting very psychological here, but in philosophical.

Okay, so the first part is the cognitive architecture. "Why does your brain favor shortcuts?" Well, the easiest thing is we're animals. It's hard to believe it, but we are animals. So our brain is simply wired to one, use the least amount of brain power. Two, use the least amount of energy. Otherwise,

could be known as the path of least effort and then also remove us from danger. So one of the things that I think is important to point out when you're talking about the mind is why do people not like public speaking? Public speaking is like a huge phobia. Everybody has this public speaking phobia. Well, one of the reasons that people don't like public speaking is you literally put yourself in danger. You think about it, you're next to many different

otherwise known as apex predators and you're typically out in the open. There's nowhere to hide. You are stranded in that area. You're vulnerable. That's not a situation that your body typically likes given that it's dangerous.

Dalton Anderson (06:02.317) Well, switching to the slide, this slide talks about switching your mindset because your brain thinks everything is scarce. It's like, "Okay, well, we only have certain amount of energy, so we've got to sleep. We've got to do this, we can't exert extra energy." But really, we live in a plentiful world. We've never had this much resources just devoted towards food, entertainment, AI data centers, energy,

all of space travel. All of that is incredible. And everybody's standard of life has increased. I don't know how many folds, but a lot. And that leads to you being in this plentiful environment. There's plentiful opportunities. There's plentiful amount of resources. There's enough for you, your friends and everybody else. So if you switch from this scarcity mindset,

from this plentiful mindset that does make it easier. But then there's still other cognitive biases that you've got to think about. And so I would say the cores are the principle of least effort, present bias and outcome bias. So the principle of least effort was coined by George Zipf and George Zipf had a paper. He was a Harvard linguist professor.

linguist professor and in that paper, he talked about the study of words and the words that people use consistently and why do words come up so often and as frequently and in a normalized frequency distribution. The most common word is "The," and then the second most common word is "Of." and the and of

"Of" accounts for the same amount of frequency as "The" at half. Since it's the second most frequent word, it's not close to "The," it's the close to half of the occurrence of "The." And he's like, "What? That's kind of weird when you think that they would be some kind of rank order instead of this weird distribution that I'm getting." And so after thinking about it, and studying it,

Dalton Anderson (08:30.133) he came up with this principle of least effort and people liked it to do things that took the least amount of effort. And when they're talking about communicating, they wanted a broad vocabulary, but they didn't want to have to use so many words. So they had words that occur more often than you would think. And then the the words that weren't occurring very often were normalized against the most often word, which was weird.

But that applies to not only words, but populations in cities. The city that is the most populous in each state or country typically is double than the most other populous city, the second one. And this story continues on and on where there's many examples of

this. There's income distribution, traffic, website traffic. Income distribution. The top earner typically makes double than that the second top earner and vice versa. You keep going down the rung. Website traffic. Google is by far has the most traffic. And then if you look at the fifth sites, one fifth the traffic of Google.

So that's the presence, or sorry, That's the principle of least effort. And then there's presence value bias or presence, Then there is presence bias. Presence bias is this, like, "It's there. I need to take it right now." It's the glitch that you have in your head where you're just so focused on, "I want it now, it's there."

It's the overwhelming favoritism towards the now. What is available now over delayed success. And then there's the outcome bias. Outcome bias is

Dalton Anderson (10:36.597) related to outcomes like the ends justify the means and if you are solely operating on the principle of least effort, the things that are right in front of your face and then outcomes, you have a legitimate issue when you talk about high performance. And we'll provide data on that in the next slides but I think it's dangerous because it

It validates shortcuts. These biases validate shortcuts.

And so when you think about it, "Well, how big of an effect does it have, Dalton?" Well, here's a graphic that was compiled over decades of research about different types of goal settings. So there's process goals, there's performance goals, and then there is outcome goals. Let's just start with easiest outcome goal.

"I win, I lose." Okay. A performance goal is a little bit better. "It's okay. I'm going to win and then I'm going to score 20 points in basketball." And our process goal is more, "I am going to play the basketball game and I'm going to take 10 shots every game." Or similar to be for this podcast. "I'm going to publish consistently once a week

for at least 10 minutes." That was the goal I made when I originally started making episodes again for this podcast. What that did was it wasn't related to a performance goal where I need to have a guest on the show or else I won't record or I need to have X amount of episodes in this amount of time. It was none of that. It was just, "Hey, all you're going to do is you're going to show up. You're going to record

Dalton Anderson (12:40.407) for 10 minutes at minimum. If you can record for 10 minutes, then you are good." And that makes a huge difference when you talk about the deviation of performance of performance process and outcome. There's massive differences. an outcome goal that the Cohen

deviation is 0.09, which means insignificant. And then performance goals is 0.44, which is moderate. Like it has an impact. But when you look at process goals at 1.36, that is massive, massive, like an insane difference.

So just make sure everybody understands the Cohen distribution. There is small effect, which would be under or about this 0.2 and then medium effect is about 0.5 and large is 0.8 plus. So if you think about the process goals, the deviation is 1.36. So it is massive.

And so when you think about that, when you think about performance, how does that work when you put out a real example? Well, that would be a 15X advantage. 15X is insane. That is just an insane amount. If you were to compare it, I think like a 15X could be a high school athlete versus an Olympian. They're just on different levels.

So when you think about your goals and what you're trying to do consistently, think about creating a process that supports your performance and moves towards where you want to go versus being tied to a KPI. And you see that consistently with organizations. They're tied to the KPI and making the numbers work and fiddling with things to get the right number

Dalton Anderson (14:51.083) versus fixing the process. The process is the most important thing in your life. is just fundamental to any outcome that you're getting is the process. And there's a good quote, I forgot who it's by. and I'm to butcher it because it's all off top of my head all this information. is if you, okay, So "Your goals or your outcomes will only rise to the highest output of your process.

So if you're not achieving your goals, you gotta fix your process."

Okay, and the last thing that you to think about is the goal-gradient effect. And this is another issue that you have is if you're far away from a goal or perceived to be far away from a goal, then you have less of a willingness or motivation to execute and attack that goal. So

It's common to break big problems up into small steps and many different tasks. So feel less overwhelmed and or think about it as like a process versus an outcome. But if you think about a goal as just outcome, okay. An example would be "I'm going to lose 50 pounds." 50 pounds is a lot of weight and that's going to take a long time and a lot of effort. But if you say "I'm going to lose 50 pounds," then

that is a big, big goal. If you say, "I'm going to do 10K steps today, every day, and I'm going to throw in a juice a day. No, no sugar, no nothing. Just organic juice with greens and vegetables, whatever it is." If that's your commitment, it is more achievable than

Dalton Anderson (16:51.307) "I'm going to lose 50 pounds." versus "I'm going to walk every day." And the goal is "I'll do 10K." And I get how you could think about how that could be an outcome-based goal, but it's really more breaking it down your Your goal of the 50 pounds into a process versus a outcome. Because getting the outcome, you can do that. But if you skip the process and the discipline that it takes to achieve that, then you have

no structural foundation. And if you lack the structural foundation, then you will collapse under stress of life or change or moving, whatever it may be. If you don't have the right operation, operating procedures, then operationally you are vulnerable.

Okay. The next thing is the psychology of byproducts. So there's a big desire in society for status. So status of thinness, status of fitness, status of money, leadership, job title. And that makes sense because we're a hierarchical society, no matter how you want to think about it, we are. And the people that say, "Oh, I don't care about money at all," typically come from an area with plenty of wealth and

they see it as something normal. Someone who doesn't come from money is like, "I care about money quite a bit because I know it's important." And just a sidebar was I've never seen somebody unhappy on a jet ski. I've never seen somebody super bummed like, "Oh, I've got to go on the jet ski today. It sucks." Never have I seen somebody not grinning ear to ear on a jet ski. So keep that in mind.

So the first thing that I talk about is aesthetic versus physiology

Dalton Anderson (18:50.978) the psychology of the aesthetic. This is...

the use of gloom. man, I'm blanking now. The GLP, glyco glycomin glucagon like peptides, are a mimic of a hormone that's in your stomach and in your intestines that regulate your

Dalton Anderson (19:26.082) hunger, your need to process nutrition, nutrients in your stomach. And then also it does another thing where it sends a signal to your brain to be hungry or not hungry. And so if you control this hormone or manufacture this hormone and inject it in your body, it basically controls how hungry you are and how you process nutrition. What that does is it helps you lose weight because you're not hungry, but your body's still

is using energy. So that allows you to lose weight, which is great because that's awesome. Everybody should be more healthy. But what, as I said, is if you skip the process of being healthy and you're not doing the due diligence of what it would take to get healthy and using this as a push on the back, then it can create issues.

And one of those is. I'm going to probably butcher this pronunciation. I've practiced it before the episode. but now it's Sarcopenic obesity. And that basically means that you are obese with the with lack of muscle to support your structural foundation of your body. And what that means is you have more fat than you do muscle. And if you are using

this tool to help lose weight. You should be eating high protein and working out at least low resistance or low impact workouts to get your body going and get your tendons flowing and the blood juices going, you know. Trying to rhyme. But,

it's dangerous if you don't do that and you have this you have this drug that's suppressing your appetite. Well, then, as I said earlier that your muscles are constantly requiring energy to live and survive. If you're not feeding them, then they'll die. And if they die with the fat, then you essentially are removing your, your

Dalton Anderson (21:48.226) your foundation, which can lead to an output of thinness, but then you lose the muscle, which is important for your body.

Dalton Anderson (22:06.029) And these are the shortcuts. These are the consequences of the shortcuts, the clinical consequences. And by the way, I'm not a doctor and I'm not your therapist. So just keep that in mind when you're listening to this episode.

probably mark that and put it in the front of my episode and then keep it here as well. Okay, organizational leadership. Organizational leadership, there is two dynamics, I think. Within, there's many, but there's these dominant strategies, dominant versus prestige. Prestige is this authentic pride and followers defer out of admiration.

And then there's dominance, which has hubristic pride and arrogance and followers comply out of fear and shame. So there's coercion with dominance and then there's admiration with.

prestige.

Dalton Anderson (23:10.173) Where does that really differ? Well, if you take shortcuts, then you could you could find yourself in a dominance strat with you being a dominant leader. It is highly fragile and it collapses both on your identity that you've created and it takes a lot of energy to keep that ⁓ up. That leadership style takes a lot of energy.

One, to convince your followers that you're the right person. And then two, the pressure, the psychological pressure of you following down this path when most likely you're not cut out for this is big. Okay, so there's some examples. Some examples, The Liver King. Liver King is a great example. This is aesthetic fraud. And if you're not familiar with The Liver King, they have a great Netflix documentary about The Liver King.

And it goes through all of this at Nausium. But basically the Liver King was this guy and his family. They lived in Texas and their kids were sick. For some reason, one of their kids were sick. And so they turned to the ancestral tenets and that includes like move, stress, pain, love, whatever it is. They have a whole bunch. There's like seven. And

it's like essentially, you know, you eat liver, you go outside, you go in the sunlight, you take cold plunges, you do whatever, whatever it is, whatever they tell you that you got to do, right? And they're like, "We want to look like the Liver King. The Liver King is so cool. He lives this. He lives his ancestral tenets and he eats a lot of liver." Okay. And he also sold a brand called

ancestral living or the like the elite primal. I'm pretty sure it's ancestral living, ancestral living was his.

Dalton Anderson (25:22.606) What is it called?

Supplement Company. And ancestral living was his supplement company. And he was selling people the idea that if they took this, they could look like him too. And that's so common in the sphere of, I would say both men and women, where they're just different, right? They're served to different people, but the plate's the same. Anyways.

Brian Johnson was obviously on steroids. Everybody was saying it for years. I'd called it out right away when I saw it. I was like, "There's no way this guy's natty." Look at his stomach. His stomach's bulging. His lats are huge. His traps are massive. His shoulders are massive. His skin color is very odd. He's got all the signs. He's taking steroids. And he defended it for years.

Everybody was defending him. He's like, "No, I don't. You got to follow the tenets." And that was his best marketing. He's like, "People wish I did steroids." But what really happened was there was a leaked email that it was found out that he was paying $12,000 a month for steroids. So what examples is provided? This example provides this dominance aesthetic of being ripped

using ancestral tenets and their Liver King brand when really this person was taking steroids and lying to the public.

Dalton Anderson (27:07.724) What happened was, under the pressure of this identity that the Liver King created by Brian Johnson, he was.

he was folded by his identity due to its foundational absence. Brian Johnson was in good shape before, but it seemed like he was very insecure about himself for a long time. And he had lacked the ability to be okay with himself without performance enhancing drugs. And

that's sad and that's part of himself and who the Liver King is and Brian Johnson. That was a mistake he made and owned up to, but it's a great example of what not to do when you are trying to build something and or trying to exercise and it could go the other way. But this is a good example. Everybody knows the Liver King. And if you don't, where are you at? You living in Iraq? Somebody told that to me one time when they were saying,

"Do know what this is?" I'm like, "No, I have no idea." And they're like, "What are you? Under a rock?" I was like, "Honestly, that kind of hurts because I feel like I am under a rock." So next thing is Elizabeth Holmes. This is the "fake it till you make it." And she had this turtleneck, black turtleneck, aesthetic Silicon Valley visionary. And she was charismatic and

she was the next big thing. or so we thought.

Dalton Anderson (28:54.338) She really played on the Steve Jobs, Steve Jobs aesthetic. Plus she was her own person. And when you combine it all that she was manifesting this revolutionary blood testing system, but did not stand up to the scientific rigors of examination.

And such an odd thing where there's a couple of times where AI companies try to defraud. or yes. Yeah. They try to fraud. They try to, They try to do fraudulent announcements of their AI and their models and this things that they're able to do. And I have some episodes about this and it's like, "Are you really trying to BS? You're trying to bullshit some of the smartest people in the world and you don't think they're going to fact check you?

Hello. You're an idiot." And lo and behold, like a couple of days later, people are like, "This doesn't seem right. I tested the model and I looked at so-and-so and I looked at the backend and this seems like it's just a straight up API pull from this model to that model. And this is not their own model." And it's like, "Uh-oh, someone made a lie." And this is a similar thing. It's like, okay, so

you're going to be asked people that are laboratory scientists. Like what were you thinking? These people are really smart. It's not going to Even if you wanted to pursue fraud, pursuing fraud in areas where there is a high density of extremely intelligent and curious people is probably the worst vertical to deploy that method.

Not trying to provide any advice on that, but just an observation.

Dalton Anderson (30:52.064) Okay, so the next thing is this psychology of labor. This is an important thing where you think about the effects of your labor on something, it's otherwise known as the IKEA effect, that you provide a disproportionately higher financial and emotional value to things that you physically help to assemble.

And that, that means a couple of things. One, it's good to get involved, but two, it's also good to recognize that you are providing this extra variable on top of whatever you've done just because you worked on it. So just keep that in mind when you're thinking about how successful something is, because you're trying to extract the friction from whatever you worked on. And friction is good. Friction is good, but also,

you got to think about it in both ways because as I talked about in the first part of episode, one's self does not exist. And if you think about it that way, there is no good or bad or ownership. It's just what does it mean? And so what does it mean when you put together furniture and you feel like it's beautiful and it's the best ever? Is that true? Or do you just feel good about it? Or if you worked on a project with people for a year and

you're immensely proud of it. Does that mean that your project is really that good or are you proud of the work that you've done? And don't get caught up on one, feeling like the work is that amazing and then two, recognizing that since you put in the work, it's good.

Those are essentially opposites, but you've got to find yourself somewhere in the middle.

Dalton Anderson (32:46.656) Okay, so this is the next thing. 38% of labor is just wasted in the world. And this is a study from the World Economic Forum. The World Economic Forum.

Dalton Anderson (33:01.87) and now I'm blanking. World economic forum, pretty sure.

Let's see.

Dalton Anderson (33:13.578) anyways.

I'm having issues here.

But in a world where there is, we're moving, or so, let's go back.

Dalton Anderson (33:33.006) 38 % of talent is systematically wasted according to the World Economic Forum.

There is something to call out here. One, we're inefficient. Two, getting too efficient is also a problem. If you have nothing but frictionless processes and there's a lack of friction, there's a lack of learning, there's a lack of structure, then what are you? What are we as people? If AI does

all the thinking and the doing and you outsource your thinking and you don't have the ability to take on cognitive load,

what are you then? And does having friction make you high status? Like doing things that have friction, does that essentially make you high status? Does friction create purpose? Where do you go if there is no friction? Do you just drift through life and find aesthetics that you find pleasing to the eye? Temporarily, of course.

Do you think of yourself as a bird flying through the sky against no wind, no drafts, just there, soaring somewhere, but you have no destination. There's a lot of things to think about when we're moving towards this world, this unknown world. What does it look like? What does it feel like? No one knows.

Dalton Anderson (35:22.932) What is our world in 10 years? I have no idea. You've got no idea either. But one thing that I do know is it's important to have the right process for your life, for your loved ones, and for yourself. And that being said,

Dalton Anderson (35:46.191) what do you do? Well, you wanna master mastery through friction. You've got the cognitive struggle of learning stuff. You've got the IKEA effect of the value input because there was labor from yourself, oneself. And then the judgment. You are forged with this corrective feedback of outcomes. And this is kind of essentially a video game when you think about it. And then there's authentic

prestige when you have went through all of these steps, you find yourself with legitimate prestige and confidence. And if you dial it back and just say, okay, let me get an example. Think about video games. You try a level. I think everybody's played Mario. So let's do Mario. You do Mario and then you jump over the turtle and then another turtle throws a thing at you, a turtle and they get you.

Okay, you've gotten, you're dead one time. So now you know the next level, the next time you try that level, then you are going to look out for that shell. Okay? Somehow you still die. Your timing's wrong. You fix your timing. You get past that part. Now there's a fire breathing flower that's throwing balls at you. And then there was an invisible block that got you. Then you got trapped in the fire guy.

After those occurrences and that cognitive struggle and then you tweaking your input with both your labor and your judgment and you pass a level, you've got authentic prestige. You could tell your friends how to pass that level. You can pass other levels because you've already dealt with the issues. And that's why being a subject-matter expert and whatever it is,

and having a process and being obsessed and pursuing your dreams and doing all of these crazy things. That in my mind is what it means to be human. To explore, learn, and build. For me, that is the foundations of humanity. And

Dalton Anderson (38:06.735) I think it'd make you a more interesting person. Just try it out, see how it goes. Build whatever, do whatever. Just do something.

And see how it goes. Let me know. But of course, wherever you are in this world, good afternoon, good evening, good morning. Thank you for listening in and listen in next week. Goodbye.