The Checklist Habit

Business operations is like a water-filled bucket.

The only difference is that the water never stops flowing, and the bucket is always changing size. When the bucket reaches a new scale, the material that used to hold it together stops working. You can’t anticipate where the leaks will occur before the hole breaks. Whenever a leak occurs, you have to scramble to patch the hole and prevent the flow of water. In short, build a checklist.

Before I went to college, I spent a lot of time flying airplanes. Pilots are always looking at checklists. They have pre-flight checklists, take-off-checklists, in-air checklists, safety checklists, stall checklists, landing checklists, and shut down checklists. There’s a checklist for everything. That’s why flying is so safe. Throughout the history of aviation, whenever there has been a crash, pilots have responded by creating a new checklist or improving an existing one. That way, the problems of the past are prevented for the future.

Checklists will help you get more done faster. Instead of relying on yourself, you can prevent errors and mistakes by externalizing repeatable processes into checklists.

Like the aviation industry, you shouldn’t stop at checklists. Look for systemic issues and identify repeated mistakes. Make checklists for every repeated process, so the same problems don’t happen twice. Aim to make sure the problem never happens again. One-time problems are fine; repeated ones are a failure.

As Alfred Whitehead once said: “Civilization advances by extending the number of important operations which we can perform without thinking of them.”

The less you have to think, the better. When you’re fully dependent on your memory, consider making a checklist. Don’t under-estimate the compounding benefits of fixing small operational leaks. Externalizing your processes is the best way to see them with clear eyes. Inefficiencies stand out like a lone tree on a desert plateau. Once the checklist is made, almost anybody in the organization can perform that operation.

Improvements shouldn’t end with checklists. Once you’ve externalized your system, you should try to automate it. Checklists are a smart first step, but their success is limited by the diligence of the people who run them.

My inspiration comes from Warren Buffett. In his 1991 letter to shareholders, Buffett wrote about the difference between a franchise and a business. Franchisees don’t depend on the talents of their operators. Bad managers will hurt the business, but they can’t destroy it. In contrast, a business can be killed by poor management. People are the bottleneck because the company can only survive if it’s a well-oiled machine with strong management.

The number of operations you’ll need will grow faster than the business. Taken as an absolute, each aspect of the business is simple. Taken as a collective, all the moving parts will make your hair turn grey. Don’t let brains be the bottleneck. A system that depends on the memory of its employees will never scale.

Even from the beginning, you want to think like a Buffett-defined franchise. It doesn’t matter who is making your burrito at Chipotle. The food is made by recipe, and the portions are made in standard sizes. No matter where you are, every Chipotle has the same beige chairs, metal tables, and tin aluminum. Chipotle’s chefs, vendors, and store managers all follow checklists.

Work in systems. The faster you can create checklists for the business, the faster you can automate it. And the faster you can automate it, the more profitable the business will be.

Whenever the bucket leaks, default to the checklist habit.