A lesson from Van Halen on how to decide in advance for bad times
A common mistake is that a decision once taken is done and dusted.
A decision is a bet on a set of conditions. When those conditions change, it is time to review the decision. But we often set no triggers to alert us when things go off track. We pump money into marketing a new product without a limit on the drop-off rate, we place an order for a trade without a trigger price, and so on.
How can we change course before reaching a dead-end?
We can learn from Van Halen, a rock band from the 70s and 80s who were also operations gurus.
A Van Halen concert was unlike any other in scale. In his memoir Crazy from the Heat, lead singer David Lee Roth talks about how their gear would be carted in nine trucks when the standard was three. The production design was high end; the prep work, back-breaking. The band lived in fear of a screw-up by venue stagehands that would cause serious injury on stage.
Because the band was always touring (just in 1984 they did over 100 concerts), they had no time to run thorough checks at each new venue. So they came up with an ingenious way to ensure things went smoothly.
Van Halen set up a 𝐭𝐫𝐢𝐩𝐰𝐢𝐫𝐞.
The band demanded a bowl of M&M’s backstage, with all the brown ones removed. ‘There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.’ They hid this clause inside an encyclopedia-fat contract.
Upon arriving at a new venue, the band would go for the M&M bowl. Any sign of brown meant a line check of the entire production. If the organizers missed the clause, it was likely they missed other things more important.
A tripwire is an alarm that goes off when things change beyond what is acceptable to you. It is designed to limit exposure to risk.
A tripwire hardcodes sensible behavior in advance by setting two parameters: metric and time (‘get to X point in Y time’ = ‘if we see a brown M&M before a concert’)
We can set a tripwire for a variety of scenarios: lose an important business opportunity, attrition touches a number, or we see a certain number of patients with the same undiagnosed condition (The trigger that led to the announcement of the AIDS epidemic was a spate of five similar cases clustered between January and April 1981 in Los Angeles).
In a changing environment autopilot is our worst enemy. A tripwire is our insurance against the worst-case scenario.