Saturday, August 25, 2007

Success Secrets: Charlie Munger's Checklists

I have been writing a series of posts about the concepts of bllionaire Charlie Munger, now accessible as a separate category on this blog. Among the concepts Charlie Munger touches upon is the seemingly lowly checklist. Now, why would a billionaire mention checklists as a key component of success? As I continue to think through Munger’s ideas, I get a sense that Munger views human consciousness as many psychologists do: a thin beam of light in a dark room. Our consciousness has a narrow focus, and also can easily be distracted from its ends by such things as urgency, emotion, surprise, envy, etc.

As I learned in my reading of Flawless Execution, fighter pilots use checklists all the time. It keeps them alive. Civilian airliner pilots also use checklists. Tat keeps us alive.

What is a checklist really? It is the focused application of a huge amount of procedural knowledge, “fed” to the conscious mind at the right time, in order to assist a current task, without overwhelming us with a huge volume of knowledge which would distract us from the task.

We literally cannot remember all that is good for us. Checklists allow the structured use of unlimited amounts of knowledge to aid us at the exact points we need them.

Checklists also free out mind to actually do conscious work, without the necessity of using our brain as a collection of “Post-it” notes.

Checklists help us counter emotions that might get in the way of decision-making. An example: If you have a portfolio of different financial assets, it is often a good idea to sell a bit of one asset class when it exceeds a given percentage of your portfolio, and buy some more when that percentage is too low. But try doing that in a raging market, either up or down. It is emotionally painful to think about trimming your stocks when they are hitting new highs, and buying some in the depths of a panic. This is where a checklist can help.

Checklists help us do things we should do even when we don’t want to do them. Humans may get bored, but that does not change the fact that many repetitious acts, habits, etc are very good for us. Checklists can remind us of daily, weekly, monthly commitments that are in our best interest.

The human mind can only remember a few things at a time. But what if the task at hand requires a lot more “things” than you can remember? Who says your memory is the standard for what it takes to get things done? Obviously, the “task” doesn’t “care” whether you’ve remembered everything you need to remember. And that could cause a lot of problems.

Perhaps we need to divorce our consciousness form our ego. Our minds need tools just as our bodies do. We do not hesitate to use tools to attain our ends in the physical world: we have no “ego problem” using hammers, forklifts, dishwashers, automobiles, etc to attain our physical ends. Why do we hesitate to use mental tools? Checklist , and lists in general are one of the most powerful tools imaginable. Do we think we are “too good” to use them? In fact, we could even postulate that, for any list we can hold in our memory, a written list would be a dozen times more effective.

Checklists are particularly useful for things we rarely do, since we don’t hve a “routine” procedure. For instance, if we don’t negotiate frequently, it is helpful to review a checklist of negotiation principles. . The same might be true of such things as international travel, seasonal activities such as home maintenance, the particular specs of a given client, etc.

Checklists get us to our goals more quickly, safely, and consistently than we ever could without them.


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