

VCs that use checklists are more effective - nandemo
http://www.ft.com/cms/s/2/86d97610-00ab-11df-ae8d-00144feabdc0,dwp_uuid=a712eb94-dc2b-11da-890d-0000779e2340.html

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karzeem
Atul Gawande wrote an article for the New Yorker in 2007 about checklists for
inserting central lines in hospital ORs which elaborates on some of the points
in this FT piece:

[http://www.newyorker.com/reporting/2007/12/10/071210fa_fact_...](http://www.newyorker.com/reporting/2007/12/10/071210fa_fact_gawande?currentPage=all)

The central line checklist was extremely basic — almost condescendingly so —
and some doctors resisted it as a waste of time. Here's the checklist, from
the article:

    
    
      (1) Wash hands with soap
      (2) Clean the patient’s skin with chlorhexidine antiseptic
      (3) Put sterile drapes over the entire patient
      (4) Wear a sterile mask, hat, gown, and gloves 
      (5) Put a sterile dressing over the catheter site once the line is in
    

That's it. Very, very basic. And yet one ICU that implemented it saw central
line infection rates drop by 66 percent, and that's representative of the drop
in infection rates at other hospitals that started using it.

~~~
cwan
He went on to turn the article into a book that was published last month:
[http://www.amazon.com/Checklist-Manifesto-How-Things-
Right/d...](http://www.amazon.com/Checklist-Manifesto-How-Things-
Right/dp/0805091742/)

This is something we're trying to apply to our operations. Definitely not an
easy task to convince everyone to use them and like the article says, many
people think checklists are beneath them so it's helpful when I can point to
data in medicine or now like the article, venture capital.

~~~
vdm
Loved the article when I first read it, and didn't know about the book.
Thanks!

PS The OP is actually an extract from this book, which I didn't see until I
read to the end.

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hedgehog
It seems like entrepreneurs should have this kind of process as well. I've
been developing what I'm calling "Idea Sieve" to help filter through ideas
more methodically. Basically it's a spreadsheet with a bunch of questions & a
scoring function to make a sort order. The impetus to this was a review of my
projects back to 2008 & a realization that I was seeing some avoidable repeat
problems.

Does anyone else do something like this or have some pointers?

~~~
plinkplonk
The checklist technique, like anything else can be abused to the point of
ineffectiveness. (So what's new?!)

When I was at Intuit, we had a VP (who was a management consultant in an
earlier life) develop an "innovation pipeline" with checklists at each stage
of the pipe line. Anyone who had an idea for a new product had to run through
this checklist before they could produce a prototype , get some funding, time
etc. IIRC there were about a 20 questions in all and to move from stage to
stage each set had to be answered in some detail. In theory it should have
worked. In practice it was disaster. The answers to these questions had to
make sense to the VP (who was very bright but knew nothing about prod dev or
the local market, so nothing would get past her "approval sense") and a whole
array of managers(and Intuit has a LOT of managers. Oh boy did we have
managers everywhere) who had to approve of every item in the checklist before
the person who proposed the idea could start moving on it.

Soon enough, anyone foolish enough to submit an innovative proposal would have
to send endless powerpoint slides in support of every checklist question,
usually to be gathered by a set number of what Intuit called "Follow Me
home"s. When one manager was satisfied, the next would ask for more data on
some other point. Then the first would have a rethink and ask for more data.
People spent months gathering data for something that could have been bulit
and deployed over a weekend and got _real_ data from real _customers_ (and
people wonder why Intuit is stagnant!).

What I took away from observing this "pipeline" in action, is that anyone
using a "checklist approach" to _creative_ work should be well aware of its
limitations. I guess this is good advice for any tool. Use it as a tool, not a
crutch - a substitute for thinking or deciding.

~~~
jey
I guess there's a big difference between one skilled person using checklists
to remind himself, and when a "checklist" is really an excuse to throw in 10
layers of design-by-committee.

If you're one person who is developing your own intuitions _and_ developing
checklists to remind yourself of insights, it probably works pretty well. When
you're considering checklist item number _n_ you'll bring your acquired
experience and intuition to bear on the checklist item, but if you didn't
codify it in a checklist you maybe would have just completely forgotten to
check criterion _n_.

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coffeemug
This is a really nice article. Venture capital industry reminds me of
primitive medicine - people used to do things because it intuitively felt
right, but had no rigorous means of telling good ideas from bad ideas (and
hence, made mistakes about half the time). Statistics revolutionized medicine,
and some day will revolutionize early stage investment.

It seems like even the most fundamental questions aren't answered yet - how do
VCs do compared to how they would have done if they picked the companies that
pitch to them at random? How do they do compared to each other (if you manage
to control for the fact that top-tier VCs get to pick the best deals later in
the game my guess is there will be no difference)? How do they do over long
term compared to investing into treasuries or other safe instruments (it's
comparing apples to oranges, but there _is_ valuable information there)?

Considering that even these simple questions aren't answered, any rigorous
study of the VC industry is like a breath of fresh air. At least we know now
that checklists work.

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RiderOfGiraffes
Related idea and discussion here:

<http://news.ycombinator.com/item?id=798009>

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wheels
This comparison is really broken:

\- Airlines and venture backed startups have vastly different goals. Flights
are supposed to, above all things, be predictable. Crashing is not acceptable.
If startups were predictable, there would be no reason for venture capital to
exist.

\- This is talking about an average over the whole of an industry, venture
capital, in which the average, and indeed most of the above average firms are
dysfunctional -- they don't make money. Not just, you know, 51%, like > 90%.
So being better than average can still mean that you're completely
economically ineffective. So the right question isn't, "What makes you better
than average?" but "What makes you one of the few that is even functional?"

~~~
blrgeek
Quote from the article

"Those with other styles were not failures by any stretch – experience does
count for something. But those who added checklists to experience proved
substantially more successful."

And Buffett might argue with you that investing (VC or otherwise) should try
to be predictable too!

~~~
wheels
If investments in startups were predictable they would be loans. Venture
capital exists because there is a gap for high-risk / high-return investments.

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Slashed
_But finding a good idea is apparently not all that hard, Smart learnt._

Can someone share this know-how with us, please?

If you were to invest in Google in its early days, would consider a yet
another search engine a good idea?

So basically, a good idea means that you're better than your competitors?

Or if you created something unique, how do you know it's going to work on the
market?

