Learning from Books: Checklist Manifesto

My Rating: 4/5

My learning: Checklists can be used in investment research and decision making. It helps fight forgetfulness, distraction, greed and laziness.

Atul Gawande is a surgeon in the US. Through this book, he explains the importance of checklists.

There are two kinds of checklists:

  1. Read-do: those which we need to read and then do
  2. Do-confirm: first do the activities and then confirm with the checklist whether you have missed anything

Choosing one of the above depends on the circumstances.

Why do we need a checklist?

Human brains are susceptible to forgetfulness, distractions and carelessness. This is most true in high pressure or distracting situations. We cannot rely on our memory  to carry out important tasks. Checklists help us fight this problem.

There are two reasons why mistakes can happen in any profession:

  1. Lack of knowledge
  2. Inability in applying the knowledge

This book is about how how the second one can be avoided using a checklist.

A key question most people ask about a checklist is – “can a complex and judgemental profession like medicine be bound by something as simple and restricted as a checklist?”

The answer is “yes” – as Atul Gawande proves by scores of real-life examples in his professional life as a surgeon.

One thing to keep in mind is that, checklists are not “how-to-lists”, and are also not intended in putting bounds to judgement and creativity. It is  just a reminder of the most critical and important things.

Checklists have to be precise and short.

  • If they are too long, that makes them impractical. There is a tendency to skip steps if checklists are too long.
  • Concentrate on the “killer items” that are super-important.
  • Use familiar words of the profession, and try to fit in one page.

An effective checklist needs to balance brevity and usability.

Once we make a checklist, test it out in the real world, and make changes based on how it turns out.

Investment Checklists 

Checklists can also be used in investment research:

  • One advantage of the investment checklist is that, it enforces controls on the “cocaine brain” which gets greedy and disregards / skips several logical steps that should be followed while evaluations.
  • Another advantage is in handling complexity. Evaluation of each company is very complex and it is easy to miss obvious patterns.
  • Checklists can lower time to take decisions on each investment proposal, as it de-clutters the research and decision making process.

Bottom line

I highly recommend this book.

Atul Gawande is a really good story teller. I wish, he had shortened some of those medical stories, which I found to be too long. It is a small book, but could have been even smaller.

In all, it was an engaging read. Now, I am going to test it out in my investment research!

Buy the book from Amazon US / Amazon India


Image source: Pixabay

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