We are professionals. We do not need checklists to our job. Checklist cut creativity. Checklist force us into routine and monotonous behavior. Checklist may be appropriate for simple tasks but not for such difficult tasks as saving lives in a hospital or investing in the complex securities around the globe. Atul Gawande, a surgeon and author has been pushing the idea of checklists in medical management. His latest book is The Checklist Manifesto: How to get things right. These rules of thumb work. Following a set of procedures with even simple things like introducing all of the team members on surgery can make the difference of life or death. Following the rules of washing hands can make the difference between high or low infection rates.
This idea of of using checklists should also work for investment decisions. There are simple decisions which can be easily followed by a recipe. There are more complicate tasks which may require a cookbook, and here are complex problems where there is limited guide. Investors need to spend most of their time on the complex problems and to do that usually requires following a disciplined approach for the less difficult or routine. Get the simple stuff right. Following a checklist for how you will address more complex problems and use most of your time to focus on those issues which are highly uncertain or unique.
Checklists can be as easy as doing a task and confirming that is done or reading a a task and then doing it. Either way it can marginalize the chance for making simple mistakes. This discipline can save money because tasks are made less emotional and more structure. This should work for everyone.
This idea of of using checklists should also work for investment decisions. There are simple decisions which can be easily followed by a recipe. There are more complicate tasks which may require a cookbook, and here are complex problems where there is limited guide. Investors need to spend most of their time on the complex problems and to do that usually requires following a disciplined approach for the less difficult or routine. Get the simple stuff right. Following a checklist for how you will address more complex problems and use most of your time to focus on those issues which are highly uncertain or unique.
Checklists can be as easy as doing a task and confirming that is done or reading a a task and then doing it. Either way it can marginalize the chance for making simple mistakes. This discipline can save money because tasks are made less emotional and more structure. This should work for everyone.
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