Book Review: Spencer Johnson, Who Moved My Cheese?: An A-Mazing Way to Deal with Change in Your Work and in Your Life (1998).

I blame Who Moved My Cheese for the slew of copycat animal parables that followed through the last decade. I also think that Cheese is a seriously overrated book, not only because the message is simple – not deceptively simple, just plain simple.  I also found the parable itself confusing and poorly written, trying to figure out which were the people and which were the mice (seriously, the mice!).  Nothing I’m going to say is going to bother authors who’ve sold millions of these books, but the bottom line is that Cheese is really a terrible book that somehow caught a headwind and became an undeserved business classic.

So Who Moved My Cheese? has become a staple in modern management bookcases, a parable about management inexplicably involving a maze, some cheese, some mice, and some people. The whole fairy tale is distracting and strained – it doesn’t really work to explain the concepts of the book, so I’m just going to ignore it in this review.

The purpose of the book is to educate the reader on the choices we have to deal with change in our lives.  The concept is fairly obvious, namely that we become attached to the status quo, particularly where a particular methodology has been successful for us.  Therefore, the more successful we become, the more attached we get.  The more attached we get, the more we resist the possibility of changing – “why change something that’s been working for me for so long?”  Moreover, we become blind to the need to change, because we view new experiences through the prism of our past experiences.

How to avoid this?  The authors suggest the following:

1.  Accept that change happens, and that it’s unavoidable.

2.  Anticipate potential changes, by keeping your eyes open and avoiding becoming blinded by your own success.

3.  Monitor change, by carefully attending to signs that your way of doing things is becoming outdated.

4.  Adapt to change quickly, and take control of your reaction to change.

5.  Change when needed, and don’t let your attachment to your old ways inhibit your ability to change.

6.  Enjoy the experience of changing.

7.  Repeat the process.

That’s it.  Those are the lessons.  If you can read through those seven bullet points, I just saved you from having to read the book.

Takeaway

Even though I don’t like the book, the lessons are valuable for real estate agents who confront massive technological change in their business every year.  Essentially, the book tells us that we have to adapt to changes in our business, and that we can’t be tied to the old ways of doing things. I’m not sure that’s a lesson that people haven’t learned, but maybe it’s worth repeating.

Book Review: Ken Blanchard, Whale Done: The Power of Positive Relationships (2002).

Ken Blanchard’s book Whale Done is one of his “parables” about management success based on lessons learned by a disgruntled manager who learns a new method of motivated people from an unlikely source.  The lead character in Whale Done learns from the trainers at the Sea World show in Orlando.  Specifically, how is it that the trainers get the whales to perform the way they do?

The fundamental lesson of Whale Done is the insight that we can get better results from the people we manage if we “accentuate the positive” by drawing our colleagues’ attention to the things they do well.  The authors point out that the more attention we draw to a behavior, the more likely it is that the behavior will be repeated – thus, if we are constantly playing “gotcha” with employees who make mistakes, we’re actually heightening their attention to the wrong results.  Instead, the authors suggest that we constantly encourage employees when they do something right, as a means of giving them motivation to do it right again in the future.

Indeed, the authors break down potential responses to an employee behavior in four ways, based on whether the employee has done something wrong or right.

If the employee does something RIGHT, there are two potential responses:

1.  No response

This is what we generally do when employees do something right – nothing.  We ignore it, since, after all, people are supposed to do things rights.

2.  Positive response

This is what we SHOULD do when employees do something right – give them positive reinforcement, thus giving them an incentive to do it right again in the future.

This is what Blanchard calls the “WHALE DONE” response:

  • first, praise people immediately
  • second, be specific about what they did right
  • third, share your positive feelings about what they did
  • fourth, encourage them to keep up the good work

The ultimate goal of the positive response is to help people become self-motivating, where they associate good feelings with doing their jobs correctly.

Conversely, if the employee does something WRONG, there are two potential responses:

1.  Negative response

This is what we generally do when employees do something wrong – give them negative feedback in the hope that they’ll avoid the mistakes in the future.  The authors believe that this is counter-productive, because it unnecessarily draws the employee’s attention to the mistake.  This is what the authors call the “GOTCHA” response, and is unhelpful.

2.  Redirection

This is the strategy that the authors encourage when an employee makes an error – re-direct the agent’s attention  either back to what they were supposed to do, or to an alternative task.  The idea is that you want to focus attention on the task yet to be performed correctly, rather than harping on the mistakes already made.  Ultimately, it’s more effective than a negative response, which undermines confidence.

Redirection is accomplished as follows:

  • first, describe the error as soon as possible, clearly and without blame
  • second, show it’s negative impact
  • third, if appropriate, take the blame for not making the task clear
  • fourth, go over the task in detail, making sure it’s understood
  • fifth, re-express you confidence and trust in the person

The intention of Redirection is to set up a positive response in the future, such that employees learn, like the whales, to repeat the good behaviors.

Takeaway

For the most part, I’ve always loved Blanchard’s lessons, even while I find his parables a little difficult to read.  Although it has more application for real estate managers than agents, the foundational idea that we can all do a better job of promoting good behaviors by praising good decisions rather than harping on errors is a good lesson to learn.  Anyone who has trained a dog, for example, has heard the same lesson from modern pet training techniques: praise the good behavior, ignore the bad behavior.  A reinforcement of that lesson is worth hearing, although I generally don’t think that Whale Done is so persuasive on the topic.  Not a must-read, but not a bad book.

Book Review: Robert Kiyosaki and Sharon Lechter, Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money — That the Poor and Middle Class Do Not!

Rich Dad, Poor Dad became a phenomenon based largely on its simple allegorical concept: that the author had two dads, one rich and one poor, who gave him conflicting advice about how to achieve success.  The poor dad advised him to stay in school, study hard, get a good job, buy a house, and save conservatively to a moderate, safe retirement.  The rich dad advised him that the key to success was not in getting a job working for someone else, but to work for yourself and strive for financial independence.

The book’s been a huge success, probably because of its provocative title and message.  Certainly, it’s success doesn’t come from the nuts and bolts financial advice that Kiyosaki gives, since Kiyosaki does a better job of explaining his philosophy than illustrating how to put those philosophies to work for you.  For example, the thrust of his book is that you want to work for yourself, building assets that throw off positive cashflow to the point that your “passive income” covers your expenses.  That is, say, if you own an apartment building that throws off $100,000 of cash every year, and your personal expenses are under $100,000, then your passive income (assuming you don’t work full time maintaining the building) pays your expenses, giving you the ideal of financial freedom.  That’s essentially the point.  Sadly, how you get to the point in your life when you can buy an apartment building throwing off $100,000 of cash each year goes unexplained.

Lack of specifics notwithstanding, and putting aside some of the controversy surrounding whether Kiyosaki is basically a charlatan who made up his “rich dad” and made his money in multi-level marketing scams, the book provides some fundamental advice that’s at least worth repeating:

  • Pay yourself first.  This is a concept that comes from any number of financial planning books (all the way back to the Richest Man in Babylon), but it’s a worthwhile reiteration: always put a portion of your income into savings before you pay your bills, to give you the discipline to save.  If you pay yourself first, and don’t have enough money to pay your bills, you’ll either cut your expenses or you’ll find some way to scrape together more money.  Never shortchange your long-term future, which relies upon regular savings.
  • Separate your assets from your liabilities.  One of the more provocative, unconventional concepts of the book is that your personal residence is not an asset, it’s a liability.  Kiyosaki takes a narrow view of an asset, saying that an asset is something that puts money in your pocket, rather than taking money out.  A personal residence, according to Kiyosaki, is a liability, since it costs you money every month.  That’s an interesting concept, challenging the conventional wisdom that “your house is your greatest investment.”  Obviously, the point of the conventional wisdom is that you have to live somewhere, so you’re better off living someplace where your monthly payments build equity for you rather than your landlord (indeed, Kiyosaki’s fundamental tool for building wealth is to buy investment property).  But Kiyosaki makes a very good point that too many people sink too much of their money into their primary residence, when it might be better invested.
  • Invest instead of save. Kiyosaki takes a somewhat unconventional view of savings versus investment.  Essentially, the point would be that if you have, say, $10,000, you can do one of three things with it: (1) spend it on “doodads” like flat screen televisions that will depreciate in value, which is a waste of money in his eyes, (2) save it someplace where you can get a conventional rate of return, which is a waste of an opportunity, or (3) invest it in a business.  His orientation is to invest in business opportunities (or real estate) that will throw off positive cashflow to get you to the ideal of your passive income overcoming your expenses.  So if you want a $40,000 car, he would counsel to take the $10,000 you have to spend and invest it in a business that will throw off enough cash to cover your monthly payments on the car.  Thus, you’ll still have the $10,000, but you’ll also have the car.  That might seem oversimplified, but so is the book.

The bottom line on Rich Dad is that it understates the element of risk in investing, making it seem as if putting money into small businesses or investment real estate is a no-brainer way to make double-digit returns.  Most people following his advice without proper training will probably go broke, with just enough people muddling through toward success for him to use as “success stories” in follow ups or on his website.  I liked some of the philosophies in Rich Dad, and the premise is brilliant, but at its core the book is empty of practical advice.

Takeaway

Rich Dad Poor Dad is a great book.  Not “great” in that it’s a good read, because it’s not.  And not “great” in that the author actually provides any help in showing you how to become successful, wealthy, happy, or whatever.  But “great” in the sense that it evokes a simple aspirational message that we should all be focusing on our financial futures by creating investments and businesses that will generate sufficient income to cover our expenses.  This is most easily done, of course, with real estate, which is why real estate is always going to be such an attractive investment vehicle for everyday people.   The larger message should resonate with every real estate agent: if you want to build wealth, invest and build your business.

I can’t really recommend Rich Dad Poor Dad because I know too much about how Kiyosaki has tried to take the simple concept from the book and turn it into one of those financial coaching businesses that’s more exploitative than enriching.  And there’s certainly a lot of smoke about whether he has made up most of the story.  All that said, though, there’s a powerful and simple message in the book, which makes it a reasonable read if you’re willing to go elsewhere (and to more reliable sources) for your specifics.

David Bach, The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich (2004)

David Bach has created a cottage industry out of conventional financial planning wisdom artfully packaged.  The Automatic Millionaire is the core of that pursuit, a practical, simple, conventional guide to financial planning wrapped around the concept of “automaticity.”  Essentially, Bach points out that you can become a millionaire by incorporating automatic deductions from your income into savings and 401k accounts, which, by the magic of compound interest, will grow over your lifetime into a decent nest egg.

How do you accomplish this? Well, Bach makes it seem easy, but essentially you need to adopt frugality as your core value: save instead of spend, and do without.  It’s not exciting, but it’s obviously effective so long as you don’t read the book after already running up $25,000 in credit card debt.  The key points of the book are as follows:

  • It doesn’t take a lot of money to be rich, just a little money saved every week for a looooong period of time.
  • Pay yourself first, the familiar advice that you need the discipline (Bach downplays the difficulty of this) to take a portion of your income and direct it to savings.  The automatic aspect of this is Bach’s focus, the idea that it is easier to do this if you set up automatic diversions of a portion of your bi-weekly paycheck to your savings or investment accounts.  He argues that you’ll get used to the diversion, and learn to live within the means of what you have left.
  • Own your own house, and pay down the mortgage as quickly as possible to free up more money to eventually save (he advocates paying your mortgage every two weeks rather than once a month, to get an extra payment in every year).
  • Incorporate the “Latte Factor” (a registered trademark, no less!) into your life, the idea that going without a $4 coffee every day can ultimately be a huge financial savings (i.e., $4 a day, times 365 days a year, is $1500 a year saved, over 30 years with compound interest is something like a gazillion dollars…).

The key insight, and main focus, of the book is the need for an automatic system of taking money out of your paycheck into your investment or savings account before you can touch it.  Bach argues that you don’t need discipline to save if the money is taken out of your paycheck automatically.  He further persuasively argued that time spent on budgeting is a waste, because most people can’t stick to it.  Rather than budget, set up a system so you never get your sweaty, greedy hands on your own money, but instead have it diverted to savings or investment to build your retirement accounts.  As Bach says, “Automation plus compound interest equals serious wealth.”

Another helpful part of the book is the explanation of the “rainy day fund,” the amount of money you put away to cover monthly expenses in the event that your family has no income coming in for an extended period.  Bach advocates figuring the amount you’re comfortable with on your own, by figuring out how much you need every month to maintain your lifestyle, and then figuring out how much you need in a money market reserve account to cover at least three, and preferably as much as twelve, months of expenses.

Bach’s book is a very good articulation of the “frugality” approach to financial planning, wrapped around the appealing notion of automaticity.  It’s also a good introduction to the various retirement savings vehicles that are available (IRAs, etc.), and the extent to which a reader is a novice to financial planning the book helpfully demystifies a lot of the concepts and provides phone numbers and links to other resources.

Takeaway

Real estate agents are not generally good budgeters or financial planners, and this is a great book for providing a foundation of sound financial planning.  The basic idea: don’t set a budget, but keep some of your money from getting to you so that you don’t spend it.  The other basic idea: buy a house, live it in for a long time, and pay it off.  That’s a pretty good message for us, and our clients.

Book Review: Thomas J. Stanley and William D. Danko, The Millionaire Next Door

The Millionaire Next Door is an insightful study of millionaires in America and the characteristics they share in common.  The book is based on a set of research surveys conducted by the authors combined with interviews and other research.  The findings of the studies, and the book, are counter-intuitive insofar as they point out that most millionaires do not live in the fashion that we would normally associate with great wealth – indeed, the point of the book is that living below your means is the essential ingredient in amassing great wealth.

The authors distill the findings of the book in the introduction, identifying seven common denominators among people who successfully build wealth:

  • They live well below their means.  The authors advocate frugality as the cornerstone of building wealth, pointing out that most millionaires don’t spend on depreciating assets like clothes, cars, watches, and that in fact most of them live in homes that are less expensive than they can afford.  The authors present a rule of thumb that if you are not yet wealthy you should purchase a home that requires a mortgage note that is less than twice your total annual realized income (that is, if you make $100,000 a year, you should never take out more than a $200,000 loan to buy a house).
  • They allocate their time, energy, and money efficiently, in ways conducive to building wealth. The authors note a strong correlation between investment planning and wealth accumulation: people that plan their financial future are going to do a better job of accumulating wealth, particularly if they start early.
  • They believe that financial independence is more important than displaying high social status.  They don’t spend money to show off, and indeed might seem to make far less than they actually do.
  • Their parents did not support them financially in their adulthood, so they became self-reliant.  People who get gifts from their parents tend to spend them, rather than save them, and get locked into a spiral of consumption.
  • Their adult children are economically self-sufficient.  The section on raising financially independent children is a great primer for wealthy parents, with the following guidelines: never tell children that their parents are wealthy, always teach children discipline and frugality, minimize discussions about inheritance, never give cash or other gifts as part of a negotiation/coercion, etc.
  • They are proficient in targeting market opportunities.  In this section, the authors discuss industries and occupations that are likely to be profitable in the next century.
  • They chose the right occupation.  The authors note that a disproportionate number of millionaires are small business owners, although they counsel that this fact can be deceiving: in fact, most small businesses fail, and few small business owners become wealthy. That is, a disproportionate number of millionaires are small business owners, but that doesn’t mean that owning a small business is a guarantee of wealth-building.  (Part of the reason, the authors point out, is that small business owners start accumulating wealth at an earlier age than graduate school professionals.)  The authors also point out the value of going into a “dull” industry that elicits little strong competition.

The author’s also present an interesting insight about how you calculate your net worth, and how much of your net worth you pay each year in taxes.  The key point: once you’re in a high-income bracket, it matters less how much more you make than what you do with what you already have; try to limit your realized income, and allow your wealth to grow without incurring taxes.

Takeaway

This book is not a terribly easy read, but it is a terrific eye-opener for most people in a consumpionist culture.  The book presents the irresistible premise that you can incorporate its principles into your life, and act more like a real millionaire than a perceived one.

Book Review: Stephen C. Lundin, FISH!: A Remarkable Way to Boost Morale and Improve Results (2000).

Stephen Lundin’s Fish!: A Remarkable Way to Boost Morale and Improve Results quickly became a revered text in modern management styles after its publication a decade ago, particularly well-known for its promotion of “fun” in the workplace to motivate employees.  There’s actually a lot more in the book, though, than just its “fun”-orientation, particularly in its zen-like endorsement of “choose your attitude” and “being present” in the moment.

The lessons imparted in Fish are very simple and provocatively empowering.  The authors assert that employees in the workplace have the power to change their own attitudes about their work, creating a positive environment that will not only be more productive but happier in their lives.

Clearly, these are not novel ideas, but what gives them power is that Fish! uses as an example of this management technique the Pike Place fish market in Seattle, which is known for its lively fishmongers tossing fish to and fro.  The idea is that if these workers, who have very difficult jobs that are not particularly lucrative, can maintain an amazingly motivated attitude about their work, then so can anyone.

The four elements of the Fish! philosophy break down as follows:

1.  Choose your attitude

This is probably the simplest and yet most powerful of the ideas generated in the book.  As the authors state: “there is always a choice about the way you do your work, even if there is not a choice about the work itself.”  Workers choose the attitudes they bring to work: they’re either going to be miserable, or they’re going to be motivated.  If they choose to be motivated, and get in the habit of making that choice, they will be happier and more productive.  If you have to be at work, why not be great at it rather than ordinary?

2.  Play

The second, and more celebrated, element of the Fish! philosophy is to incorporate “play” into the workplace.  The idea is that you can be serious about your business and still have fun with the way you conduct business.  It shows that you’re not taking yourself so seriously, and that you understand the importance of good humor even in stressful situations.  The benefits of play are as follows: happy people treat each other well, fun leads to creativity, the time passes quickly, having a good time is healthy, and work becomes a reward and not just a way to rewards.

3.  Make their day

This is the core service concept of the Fish! philosophy: approach customer service with the goal that you’re going to make someone’s day.  Go out of your way to give someone a memorable experience working with you.

4.  Be present

The Fish! philosophy also incorporates an element of Zen-like attention to being present in the moment.  The authors point out that people in service professions tend to “zone out” in their work.  Because they’re so unhappy, just clock-watching and waiting for their shift to end, they don’t really pay attention to their clients or customers.  They’re not fully engaged in their work.  In the Fish! philosophy, you need to concentrate on being present in the moment, and being focused on the needs of your client.

Takeaways

This is a great book, and one that every successful real estate agent should read.  The simplest advice I’ve ever heard about maintaining a positive approach to business is this: “choose your attitude.” That’s it.  You have control over the attitude you bring to work every day.  If you choose to be positive, you’ll find that it becomes easier every day to become the kind of professional, and person, that you want to be.

Really, all four lessons from Fish! are worth remembering, including everything that Lundin has to say about great customer service.  This is a must read.

Book Review: Michael E. Gerber, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It

The E-Myth books are highly recommended by a lot of other business authors, and by a number of business people I have met. I found The E-Myth Revisited to be very flabby – lots of good insights throughout, but woven around a series of stories and staccato imprecations that made the book a tougher read than it should be.

Gerber’s “e-myth” is about small businesses: the myth that people who start small businesses do so for an entrepreneurial impulse, whereas he proposes that most people start small businesses because they love what they do and want to do it for themselves. The problem, according to Gerber, is that people who love, say, baking, make great bakers but poor businesspeople. To be successful in business, you have to love running a business, not baking pies. I did like this point, which I’ve paraphrased: The purpose of going into business is not to do a job, but to free yourself up to create jobs for other people — if you’re the main person working in your small business, then you don’t have a business, you have a job, and your boss is a lunatic. I thought that was well stated.

Gerber’s main passion, though, is about establishing a “prototype” for a business, such as a franchise model, which organizes and establishes the systems under which the business will run. The point is that a franchise prototype or model sets up the systems that if operated correctly will help a business succeed, avoiding the “reinventing the wheel” phenomenon inherent in running small businesses.
The core argument is that businesses succeed when we set up thorough, tested systems to run them according to a blueprint designed for efficiency, automaticity, and order. Gerber makes a great point that you want to build a system-oriented business, not a people-oriented business, so that your system leverages the abilities of the people you have rather than requires you to hire more extraordinary people. It’s easier, cheaper, and more efficient to build one model and hire 100 ordinary people than build a bad model and hire 100 extraordinary ones. He also points out that a good business has to have a documented operations manual that sets out the blueprint.

Gerber also sets out fundamental advice for business:

  • Innovate by testing new strategies for increasing efficiency or sales.
  • Quantify everything. Track all your numbers, so you know what works and what doesn’t work.
  • Orchestrate a system which eliminates choice – i.e., it eliminates opportunities for decisions to be made that are inconsistent with the master blueprint.

This was the best part of the book, and the salient theme of the book: work on your business, not in your business, and set up a prototype (operations manual) that automatically runs your business to avoid becoming too reliant on yourself or personalities.

Takeaway

One of my main passions is customer service systems, the idea that a customer experience can be consistently maintained by creating systems that automate client service. I read this book years ago, and went back to re-read it for this review, and was surprised at how much Gerber’s argument about a “prototype” had seeped into my subconscious as I built my own personal philosophy about building a great business. I can’t necessarily recommend the whole book, but the Part II section on creating that prototype is a brilliant articulation of how to build a sustainable enterprise.

Business and Financial Book Reviews Coming

Over the next week, we’ll be publishing a series of book reviews for classic business books that I’ve read over the past ten years. Essentially, when I read them I took notes for my own use of the books’ salient points, and thought that it might be helpful to pull together those notes into a “review” that is largely a synopsis of the best lessons from those books. I thought it might be helpful for agents who might have read them, as a quick refresher, and for agents who might have only heard of them and might like a quick overview that might tempt them to get the books themselves.

Most of the books are about management and motivation, which is always on point for real estate professionals. A few are about financial management, which is something I was interested in learning about a few years ago and which might be useful to more than a few agents I know….

Hope you enjoy them. We’ll be publishing one a day for about a week or so.

Book Review: Atul Gawande’s The Checklist Manifesto: How to Get Things Right — Achieving Operational Excellence in the Real Estate Industry

Atul Gawande’s The Checklist Manifesto is a  powerful book, one of the best and simplest articulations of how to achieve operational excellence that I have ever read.  Gawande’s message is simple: the world has become increasingly complex, and we need to actively create systems and processes that will simplify the tasks that we have to complete in our everyday lives.  His deceptively modest proposal: use a checklist.

Now, I know that seems almost stupid and simplistic at first glance.  We’re all familiar with checklists, and generally associate them with rote tasks, not with complicated procedures.  And we resist the idea that our professional performance could be improved by something so jejune as a checklist, almost as if a checklist would trivialize the important work we do.

As Gawande points out, though, that’s exactly the way a bunch of doctors felt the first time that a hospital administration tried to incorporate a checklist into one of the most common of medical functions — putting in a central line.  He recounts how a critical care specialist at Johns Hopkins Hospital devised a checklist to try to avoid incidences of infenctions in the placing of a central line.  Doctors all knew the basic steps for central lines: (1) wash hands with soap; (2) clean the patient’s skin for the placement; (3) put sterile drapes over the patient, (4) put on a mask, hat, sterile gown, and gloves; and (5) put a sterile line over the insertion site after placing the line.  Gawande called these steps “no-brainers,” the type of things that doctors know they are supposed to.  But the hospital found that in one third of cases, doctors were skipping at least one of the steps.

So the hospital initiated a simple checklist procedure to ensure that all the steps were taken.   Since the doctors were resistant to the intrusion, nurses were enlisted to ensure compliance with the checklist.  What were the results?  According to Gawande, they “were so dramatic that [the administrators] weren’t sure whether to believe them.”  The ten-day line infenction rate went from 11% to 0%.  Over a fifteen month period, the administrators projected that the checklist had prevented 43 infections and 8 deaths, saving over $2 million in hospital costs.

This was not an isolated result.  After the success at Johns Hopkins, Gawande recounts how hospitals in Michigan initiated a project to use a central-line checklist in intensive care units (ICUs) in hospitals throughout the state.  Here are the results:

Within the first three months of the project, the central line infection rate in Michigan’s ICUs decreased by 66%.  Most ICUs . . . cut their quarterly infection rate to zero.  Michigan’s infenction rates fell so low that its average ICU outperformed 90% of ICUs nationwide.  In the …. first eighteen months, the hospitals saved an estimated $175 million in costs and more than fifteen hundred lives.  The successes have been sustained for several years now — all because of a stupid little checklist.

These are among the powerful illustrations of the effect of checklists on operational performance included in The Checklist Manifesto.  In addition to the medical field, Gawande shows how pilots use checklists to ensure safe operation of aircraft (including an engaging description of how checklists impacted the famous “Sully Sullenberger” flight that landed in the Hudson River in 2009).  And he demonstrates how hedge fund investors use versions of the checklists to protect against making poor investments, including one vivid illustration of an investor turning down an opportunity when a checklist item turned up that the company’s owners had been divesting their personal holdings.

So how does this impact the real estate industry?  I think that our industry could learn a lot from The Checklist Manifesto about operational excellence.  The role of the real estate agent is significantly task driven, but those tasks can sometimes be overwhelming.  Just getting a listing on the market can require dozens of discrete operations: taking pictures, uploading pictures, writing descriptions, checking paperwork, ordering signs, inputting property data, double-checking taxes, etc.  We need to do these things every single time, but rarely do we see a company articulate a simple checklist to ensure that every listing gets that quality service.  The same holds for the far more complicated but necessary task of maintaining ongoing listings, when agents tend to get lost in the frenzy of daily activity and neglect the day-to-day communication and updating responsibilities they have to existing clients, leading to poor client experiences.

For the last year, my company has been working on identifying the “best practices” in the industry — the practices that ensure a quality client experience for both buyers and sellers,  with the idea of coordinating those practices into a series of checklists and a comprehensive  “Project Plans” that cover particular aspects of the real estate transaction.  The goals is to provide with a set of plans that can guide them through the transaction.  The point is not to limit them — people can always do more than is on the plan.  Neither is the point to demean their professionalism– it’s not that we think they’re NOT doing some of these things, but we believe that in a given case they might not be doing ALL of these things because of the overwhelming complexity of the entire task.

Most importantly, we think that these kinds of checklists make a job easier, by simplifying our lives.  Just like computers, we have only a certain amount of “RAM” in our heads.  Computers gain efficiency if they can move information from “RAM” to hard drive memory.  Similarly, most of us become more efficient if we don’t have to store tasks in our memory, but can reduce them to a hard copy that we can refer to anytime we need them.  An agent with a 30-item checklist for getting a listing on the market is going to be more efficient than an agent who has to remember all 30 tasks and whether she’s already done them.  (And it’s definitely more efficient for the agent sitting at the desk next door, who keeps getting a tap on the shoulder asking, “hey, what am I supposed to do next?”)

Finally, real estate professionals should recognize that if checklists can improve execution and performance in life-and-death situations involving surgery and airline flight, and in million or billion-dollar financial investing decisions, then they certainly can be used in the much less urgent field of real estate.  A real estate agent who feels that checklists are “beneath” her should be at least a little chagrined that pilots and doctors are using them to great effect.

Essentially, I think that The Checklist Manifesto should be required reading for real estate professionals; indeed, I would recommend the book for anyone who cares about achieving operational excellence in his or her field.  If you need proof, I’ve already purchased 50 copies of the book at my company’s expense for distribution to our management team, and have saved others as gifts for colleagues in the industry.  It’s a great book.  You should read it.

If you’re interested in some other information about the book, here are some links:

Atul Gawande’s home page for The Checklist Manifesto

144 Reviews (average 4.5 stars out of 5) on Amazon.

Steven Levitt, the author of Freakonomics

Malcolm Gladwell, author of The Tipping Point, Blink and Outlier.

New York Times review

Washington Post review.

Interview in Time Magazine.

Gawande interviewed on the Daily Show with Jon Stewart.

The Safe Surgery Checklist illustrated in a terrific clip from NBC’s ER.