Ineptitude - knowledge exists, yet we fail to apply it correctly.
Three different kinds of problems in the world:
SIMPLE
… like baking a cake from a mix. There is a recipe. Sometimes a few basic techniques to learn. But once these are mastered, following the recipe brings a high likelihood of success.
COMPLICATED
… like sending a rocket to the moon. They can sometimes be broken down into a series of simple problems. But there is no straightforward recipe. Success frequently requires multiple people, often multiple teams, and specialized expertise. Unanticipated difficulties are frequent. Timing and coordination become serious concerns.
COMPLEX
… like raising a child. Every child is unique. Although raising one child may provide experience, it does not guarantee success with the next child. Expertise is valuable but most certainly not sufficient. Outcomes for complex problems remain highly uncertain. It is possible to raise a child well. It’s complex, that’s all.
CONSTRUCTION SCHEDULE:
A line-by-line, day-by-day listing of every building task that needed to be accomplished, in what order, and when.
The whole checklist is sent to the subcontractors and other independent experts so they can double-check that everything is correct, that nothing has been missed.
What results is remarkable: a succession of day-by-day checks that guide how the building is constructed and ensure that the knowledge of hundreds, perhaps thousands, is put to use in the right place at the right time in the right way.
COMMUNICATION:
Trust in the power of communication. Don’t believe in the wisdom of the single individual, of even an expert. Believe in the wisdom of the group, the wisdom of making sure that multiple pairs of eyes were on a problem and then letting the watchers decide what to do.
USABLE CHECKLISTS:
The checklist was too long. It was unclear. And past a certain point, it was starting to feel like a distraction.
The checklist cannot be lengthy.
A rule of thumb some use is to keep it to between five and nine items,
After about sixty to ninety seconds at a given pause point, the checklist often becomes a distraction from other things. People start “shortcutting.” Steps get missed.
So you want to keep the list short by focusing on what he called “the killer items” - the steps that are most dangerous to skip and sometimes overlooked nonetheless.
Ideally, it should fit on one page.
It is common to misconceive how checklists function in complex lines of work. They are not comprehensive how-to guides.
They are quick and simple tools aimed to buttress the skills of expert professionals.
Balance between brevity and effectiveness. Cut too much and you won’t have enough checks to improve care. Leave too much in and the list becomes too long to use. Furthermore, an item critical to one expert might not be critical to another.
BAD CHECKLISTS
… are vague and imprecise.
They are too long; they are hard to use; they are impractical.
They are made by desk jockeys with no awareness of the situations in which they are to be deployed.
They treat the people using the tools as dumb and try to spell out every single step.
They turn people’s brains off rather than turn them on.
GOOD CHECKLISTS
… are precise.
They are efficient, to the point, and easy to use even in the most difficult situations.
They do not try to spell out everything - a checklist cannot fly a plane.
They provide reminders of only the most critical and important steps - the ones that even the highly skilled professionals using them could miss.
Good checklists are, above all, practical.
The power of checklists is limited.
They can help experts remember how to manage a complex process or configure a complex machine.
They can make priorities clearer and prompt people to function better as a team.
By themselves, however, checklists cannot make anyone follow them.
READ-DO checklist:
people carry out the tasks as they check them off - it’s more like a recipe.
We adopted mainly a DO-CONFIRM rather than a READ-DO format, to give people greater flexibility in performing their tasks while nonetheless having them stop at key points to confirm that critical steps have not been overlooked.
INVESTING:
Neuroscientists have found that the prospect of making money stimulates the same primitive reward circuits in the brain that cocaine does. And that, Pabrai said, is when serious investors like himself try to become systematic. They focus on dispassionate analysis, on avoiding both irrational exuberance and panic. They pore over the company’s financial reports, investigate its liabilities and risks, examine its management team’s track record, weigh its competitors, consider the future of the market it is in - trying to gauge both the magnitude of opportunity and the margin of safety.