The power of checklists

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Business Matter

By Manish Shah

Air carrier cockpit checklists to be reviewed in an effect to ensure that each list provides a means of reminding the crew, immediately prior to takeoff, that all items critical for safe flight have been accomplished.
— National Transportation Safety Board, 1969

In 1987, Northwest flight 255 crashed and 154 people on board perished. Investiga-  tion into the cause of this accident revealed that the flight crew did not use the taxi checklist and as a result failed to ascertain that flaps and slats were extended for takeoff.

In 2001, Peter Pronovost, a critical-care specialist at John Hopkins created a checklist to avoid line infections. Pronovost looked at the results of enforcing the line infection checklist after a year. The results were impressive; the line infection rate had dropped from 11 percent to zero. Over the next 15 months, it was observed that the checklist had prevented 43 infections and eight deaths.

The benefit of a checklist is that it helps us to reduce the chance of missing critical items that need to be checked in performing complex tasks. A checklist can also help us better navigate the complex world of business. Suppose you are evaluating a business for investment. A possible checklist for evaluating the business is:

*Is the business understandable?
*Does the business have sustainable competitive advantage?
*Is the management able and honest?
*Is the price reasonable?

To design an effective checklist, we need to keep the following guidelines in mind.

Checklist needs to include critical items so that we don’t have to rely on memory for items that need to be checked.

When critical items are overlooked they cause mishaps and so the pilots call them “killer items”. In the above example, overlooking checklist item number 4 and paying exorbitant price for a business can result in sub-par return on investment.

Checklist should be easy to use.

A checklist’s purpose is to simplify a complex world; a complicated checklist defeats this purpose.

Checklist has to agree with reality.

A checklist should be consistent with reality and therefore practical. It is unrealistic to develop a checklist for forecasting the stock market because the stock market is a complex adaptive system comprised of multiple interconnected elements.

Manish Shah is the former president of Midwest Law Printing in Chicago. He also worked at Intel, PwC and Motorola. He has an MBA from Kellogg Graduate School of Management, and a MS in Computer Science from Illinois Institute of Technology. He can be reached at manishshahus@yahoo.com.

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