Jeff Bezos on Making High-Quality, High-Velocity Decisions
Jeff Bezos wrote a public letter last week that opens, “What does Day 2 look like?” as part of an SEC filing. The question is related to how he strives to keep Amazon’s best days ahead of it. This letter has been widely shared in my LinkedIn and Twitter feeds. When the founder/CEO of one of the largest companies in the world speaks (which isn’t often for Bezos), it’s worth paying note for just curiosity. But after reading the letter, there are some clear take-aways for those of us running for simpler, earlier stage businesses.
The letter highlights how Bezos has instilled a perpetually fast-moving culture at Amazon, and at the same time calls out that a slower moving Amazon as the point at which the AMZN starts to decline (perhaps throwing shade at all of Amazon’s retail competitors).
The letter starts:
“Jeff, what does Day 2 look like?”
That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
As a startup manager, I’m appreciative of Bezos’. I know the primary audience for this letter is his own company, the beneficiaries are far wider.
Operating speed is part of our company culture. It should be for most start-up companies (because “leverage” and “scale” are generally non-existent). How a company makes decisions, and more tellingly, how individuals within a company are designated to make decisions, is a key determinant to how quickly a company can move.
There are some wonderful take-aways that I summarize below:
On process
Process is there to serve an outcome. If the outcome isn’t best served by the process, it’s OK and probably right to re-examine the process. (Note: I’m a huge 76ers basketball fan, and I believe the outcome our team is gunning for is still on target, so in that context, I “Trust the Process”. So it still fits within the Bezos paradigm.)
It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us?
On making decisions
There isn’t a one size fits all decision framework.
Many decisions are reversible, two-way doors. Those decisions can use a light-weight process.
He highlights that he decisions based on 70% of the information.
Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
He reiterates to measure both the quality and the velocity of the decisions. Speed matters.
Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions.
Disagree and Commit: Particularly for leadership positions, you don’t need consensus on everything. Nor as a leader should you demand hierarchical approval for decisions you disagree with. Of course, there are caveats: amount you’re risking, whether it’s in line with company goals and vision, does it put your company at risk if it goes wrong. As a founder/leader, I take away still that you are responsible for staying off potentially derailing decisions. But for things outside of those boundaries, if a team shows high conviction on something you disagree with, it might be appropriate to “disagree and commit”.
Use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.
Escalate misalignment issues within teams as early as they are identified.
No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.
If you lead a business team, read the Bezos letter. Your life will be better for it.
