How to Decide Like a Bajillionaire

Last week I wrote about Jeff Bezos’ annual letter to shareholders. Most of us in business look forward to reading this missive from the 4th richest person in the world (at last count). He reiterated his philosophy of Day 1 vs. Day 2 thinking, which so far has served him very well. Last week I discussed his principles of customer obsession.

According to Bezos, another antidote to Day 2 irrelevance is high-velocity decision making. This is very much in line with what we teach in Doubledare Academy—and not for nothing, the U.S. Marine Corps happens to agree.

He admonishes us to never use the one-size-fits-all decision-making process. He means there are basically two kinds of decisions:

  1. Reversible, two-way-door decisions that require a lighter weight decision-making process. The key ingredients are to be able to quickly identify mistakes and quickly pivot to make corrections. I see this as a position of humility versus a position of egocentrism.
  2. Irreversible, one-way-door decisions are relatively rare, but a lot of companies use fear of this as an excuse for very slow decision-making processes, which are often immune to finding mistakes. This extreme caution is dangerous, and it’s inherent in the Day 2 philosophy where the company becomes increasingly distant from customer delight and becomes more and more focused on defending its own decisions.

As we teach at Doubledare, a bad decision is not failure. However, defending mistakes and being unwilling to assume responsibility and make course corrections can be fatal. Bezos says that because most decisions are reversible, then most decisions should be made using a lightweight process based on 70% of the information that we wish we had—which is about as much information as anybody can or should attempt to get. (Obviously, we wish we had 100% of all information at all times, but one, it’s not possible, and two, getting to 90% of information is too slow.)

This assumes companies need to be good at identifying mistakes and making fast course corrections, because being wrong can cost a lot less if you are humble. On the other hand, if every decision looks like a heavyweight, irreversible choice, the cost of being wrong can be very expensive.

Sometimes it’s really not possible to know for sure what the correct answer is. Even with 70% of the information, it’s really a guess or a gut decision. Bezos suggests a way around the inevitable battle of ideas in any robust company. Instead of being paralyzed, Bezos suggest a disagree and commit technique. If there were two sides in a given argument within the company, he would say, “Look, I know we disagree but will you gamble with me? Disagree and commit.” In other words, take action. By taking action of some kind, we are unparalyzing the company and we’re allowing ourselves to get quicker feedback, make quicker corrections, and make better decisions.

Generally speaking, Bezos’ focus is always on which of these decisions is most likely to delight the customer. But if we really can’t know for sure, then it’s better to agree to disagree and commit to taking action so that we can get the data that comes with making that decision. If we’ve made a mistake, we can make quick corrections, which lead to better decisions, which lead more quickly to customer delight.high-velocity

As Bezos always says, delighting the customer should be our true obsession. As long as we stay focused on that, our chances for capturing market share and growing our companies in a positive direction is significantly better. Our chances for sliding—unconsciously, in most cases—into irrelevance and ultimate decline is prevented.
photo credit: perzonseowebbyra Businessman standing in his office via photopin (license)