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Jeff Bezos explains the perfect way to make risky business decisions

April 13,2017 08:07

"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," Jeff Bezos advised in his annual shareholder's letter released on Wednesday.and more »



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"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," Jeff Bezos advised in his
annual shareholder's
letter released on Wednesday.

Bezos was explaining how he goes about running the absolutely
massive company Amazon has become — 341,000 employees — like
a startup.

That's a concept he calls Day 1. The Day 1 mantra is so top of
mind for him that the building he works in is named Day 1,
"and when I moved buildings, I took the name with me."

One of the tenets of the Day 1 mentality is to make faster
decisions, he writes.

But it's not just about speed. Anyone can pick things fast, willy
nilly. "You have to somehow make high-quality, high-velocity
decisions. Easy for start-ups and very challenging for large
organizations," he writes.

So he outlined a couple of steps for that.

1. Learn to work with just enough data, aiming for most of
what you need (70%) instead of gunning for near
certainty (90%).

2. Get comfortable with uncertainty by
staying flexible after the
decision is made. "Many decisions are reversible, two-way doors,"
he writes. And for those decisions that can be easily undone
use "a light-weight process." You can tell if it's a
light-weight decision by answering the question: "So what if
you’re wrong?" he writes.

3. Instead of focusing on avoiding mistakes by making perfect
decisions, become a master of "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."

4. Finally, for the biggies, those decisions that are not
reversible or that have a big impact on customers, employees
or partners, turn the traditional idea of buy-in/approval on
its head. Go with "disagree and commit."

"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?'" Bezos writes.
This is one of Amazon's core values and
we've previously reported on it's used to
decide which new products to pursue, including Alexa and the
Echo. 

Bezos adds that this concept applies to bosses, including
himself:  "If you’re the boss, you should do this too. I
disagree and commit all the time. We recently greenlit a
particular Amazon Studios original. I told the team my view:
debatable whether it would be interesting enough, complicated to
produce, the business terms aren’t that good, and we have lots of
other opportunities. They had a completely different opinion and
wanted to go ahead. I wrote back right away with 'I disagree and
commit and hope it becomes the most watched thing we’ve ever
made.'"

And, he notes, when you disagree and commit, it's not about
holding an "I-told-you-so" over other people's heads. It's a
chance for people to hear an opposing point of view but to move
ahead with action, and everyone's full support, even if the
holdouts never really changed their mind.

In other words: "'You’ve worn me down' is an awful
decision-making process. It’s slow and de-energizing," Bezos
explains. but "a high-velocity decision making environment
is more fun."

SEE ALSO: The 25 highest-paying tech companies in America in 2017

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