Today marks the 27th anniversary of the founding of Amazon. Jeff Bezos is handing the reigns to Andy Jassy, who was previously CEO of AWS at Amazon.
From 1997 to 2020, Jeff Bezos wrote an annual shareholder letter to Amazon shareholders every April. Reading through these, I noticed a common theme: ensuring that Amazon can continue to make high-velocity decisions as it grew. High-velocity decision-making is something that we all can benefit from - in our personal lives as well as our professional work. So I've extracted four ideas from his letters on how to make high-velocity decisions within an organization.
- Never use a one-size-fits-all decision-making process. There are two types of decisions. First, some decisions are irreversible and consequential. These decisions are Type 1 decisions or one-way doors. They must be done slowly and methodically. But most decisions aren't Type-1 - they are changeable and reversible Type-2 decisions or two-way doors. Type-2 decisions can be made quickly by a small group or individual. Unfortunately, as companies grow, they tend to use the same process for both types of decisions. This adds unnecessarily slowness and risk aversion to decisions that should favor experimentation and invention.
- Most decisions should be made with around 70% of the information you wish you had. Waiting for more information is likely to slow down decisions too much. If you risk-adjust for the Type-2 decisions, being wrong is usually less costly than you predict, whereas slow decision-making is expensive regardless.
- Disagree and commit. When there is a genuine disagreement of opinion, hear it out, incorporate the feedback, and make a quick but sincere decision.
- Recognize real misalignment issues, and escalate them immediately. Sometimes, teams and organizations will have fundamentally different values and objectives that are at odds. No amount of collaboration can fix these misalignment issues.