Sponsors

Keep It Simple, Look at the Checklist

‘About a minute after taking off from New York’s La Guardia Airport on January 15, 2009, US Airways Flight 1549 collided with one of the aviation industry’s most threatening foes: a flock of geese. Crippled by the bird strike, both engines lost power and went quiet, forcing Captain Sullenberger to make an emergency landing. When air traffic controllers instructed the seasoned pilot to head for nearby Teterboro Airport, he calmly informed them that he was “unable” to reach a runway. “We’re gonna be in the Hudson,” he said simply, and then told the 150 terrified passengers and five crew members on board to brace for impact.’

The plane landed safely in the water, and there were no fatalities. No doubt, amazing flying by the pilot, Captain Sully. What else was credited for this heroic act by the Captain and his crew… a checklist.

There is nothing so simple as a checklist with just 5 – 10 reminder notes. It does not matter whether you are shopping at the grocery store, or running a safety protocol, a good checklist keeps you on track. It is a great way to run a business and have systems.

Businesses, from big to small need systems (I wrote another blog on Systems), and training of their staff. During business hours, there are all sorts of activity and employees get distracted. Using checklists can keep people organized, and be an easy way to review the important items of a task.

We have heard it from the time we were kids, our parents saying ‘safety first’. There is a big push in the medical industry over the last 20 years to use checklists to help with medicine and procedures. Dr. Atul Gawande wrote an entire book about this very topic, and the wider implications to other professions, notably airplanes.

‘One way to inculcate a culture of safety is with the humble checklist. Atul Gawande makes a compelling case for its use in his book, The Checklist Manifesto. In it, he tells the story of how a B-17 bomber crashed while the plane was being evaluated. Although the crash investigation established pilot error as the cause, newspapers dubbed the B-17 bomber “too much plane for one man to fly.” Boeing, in an attempt to save the plane, developed the first aviation checklist. Since then, checklists have been standard in the aviation industry. Each plane has many checklists covering a myriad of different situations and pilots do not think twice about using them—it is second nature.’

The core themes in his book deal mainly with the medical industry, and preventing mistakes that could lead to major health issues. In a summary of The Checklist Manifesto book - The Five Big Ideas:

  1. Checklists are required for success.
  2. When doctors and nurses in the ICU create their own checklists for what they think should be done each day, the consistency of care improves to the point where the average length of patient stay in intensive care dropped by half.
  3. The three different kinds of problem in the world are the simple, the complicated, and the complex.
  4. Checklists can either be DO-CONFIRM or READ-DO and must be kept between 5-9 items.
  5. The wording of should be simple and exact and fit on one page.
  • “Whether running to the store to buy ingredients for a cake, preparing an airplane for takeoff, or evaluating a sick person in the hospital, if you miss just one key thing, you might as well not have made the effort at all.”

 

Tony Robbins has a great quote, ‘Success Leaves Clues’. He is a big believer in modeling successful people. There are many habits of successful people, and one of them is their use of checklists.

‘A checklist puts knowledge into a useful form. However, you cannot get started with a checklist until you develop significant experience and knowledge. For example, if you are building a checklist for a monthly report, wait until you have issued the report two or three times before you create a checklist.’

Checklists to establish investing rules are very common for some of the biggest money managers. They use checklists as part of a systematic approach to investing to not let one’s emotions take over. No investor is more famous than Warren Buffet, and his partner Charlie Munger is a big fan of checklists, as is Monish Pabrai, who has modeled his successful approach after Buffet.

‘One should only consider buying if the answer to all seven is a resounding yes. If a well-understood business is offered to you at half or less than its underlying intrinsic value two to three years from now, with minimal downside risk, take it. If not, take a pass on entering this chakravyuh. There will be better chances in the future.

 

In essence, the questions above from Pabrai’s book are pretty much another way of saying the same thing as Warren Buffett did back in 1977 in his letter to shareholders:

“We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety. We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price. We ordinarily make no attempt to buy equities for anticipated favorable stock price behavior in the short term.  In fact, if their business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.”

 

As Pabrai, you should keep learning from the ones before you that you look up to as role modes. Bring to you all their wisdom and thinking that’s worth carrying on your own journey. Be it about life itself, value investing or any other endeavor. The most important thing is to never stop learning.’

“A man may die, nations may rise and fall, but an idea lives on.

Ideas have endurance without death.” ―John F. Kennedy

 

If Warren Buffet, one of the richest men in the world uses a system and checklist, then maybe we can all add it into our process. Thank you for reading. Many articles and other blogs were referenced for this blog. Please click on the links for the source material, and further reading. Good luck with your checklists.

 

We write this blog to help small business owners with their dilemmas, because that is what who we are, and those are our clients.

Thank you for reading the 1100 KFNX Blog. Click here to read more blogs we’ve written.

If you would like to get more information on 1100 KFNX, visit our website at:  www.1100kfnx.com

To learn about our advertising and show opportunities, visit the FAQs section of the website, with specific FAQ Blogs and Videos.

Please fill out the ‘Contact Us’ form to be sent information, or you can contact Francis Battaglia, President directly at: .(JavaScript must be enabled to view this email address)





Comments




Name:

Email:

Location:

URL:

Please enter the word you see in the image below:


Remember my personal information

Notify me of follow-up comments?