Big Red Car here with the skies clear and the sun shining. Let’s see how long that holds. We need to dry out here in the ATX and the Texas Hill Country.
So, your Big Red Car has always been keen on the science of making decisions. This is a topic first explored when in the Army and watching the decisionmaking techniques and practices of battalions, brigades, and divisions. Only once was I exposed to how a corps (3-5 divisions) makes decisions.
Today, we discuss the wisdom of the Bezos Style of Decisionmaking. He is a wildly successful founder and executive, so we should pay attention to how he suggests things might be done.
Jeff Bezos has strong and “different” views on the subject.
Jeff Bezos on decisionmaking
Here are some of his views on how decisions should be made.
1. No Power Point – I wanted to put that out there first because it is the foundation for other things. [I don’t hate Power Point, but I can see his point. I sort of like Power Point, actually.]
2. Make decisions quickly and be prepared to make subsequent course corrections. He is willing to allow a bit of imperfection as a trade for speed. He wants the organization to become good at course correction because he thinks that is necessary whether the decisions are made slowly or quickly.
The Big Red Car is on record as saying, “Don’t make good enough the enemy of perfect.”
3. Bezos preaches that every day is Day 1 – meaning that every day should be approached as if it is the first day of a startup’s life. The building he operates out of is called “Day One.”
4. Bezos thinks that high-velocity decision making is the critical characteristic of Day 1.
5. This is a very strong belief as he has said that Day 2 is the beginning of an unhealthy equilibrium which he calls “stasis” meaning inactivity or stagnation. This is followed by “irrelevance,” followed by “excruciating, painful decline,” followed by “death.” Bit dramatic, but you get the idea.
So how does he do it? The Six Page Narrative Memo.
The Six Page Narrative Memo
Bezos requires several specific tools and practices:
1. Every decision is approached by the preparation of a six page narrative memo. The memo is laid out in complete sentences, complete thoughts and is a “narrative” as opposed to a summary with bullet points.
You can see where the aversion toward Power Point impacts the structural approach. Bezos dislikes the PP approach as it lends itself toward incomplete thinking — no narrative, just bullet points — and is prone to interruption, potentially driving the decision toward a distracting rabbit hole.
2. These memos are collaborative — being written, circulated, edited, re-written by a team before the finished product is presented.
3. Because these memos are collaborative, they will not be completed in a short period of time. Over that extended time period, it is possible to consider, re-consider, challenge, and research implications of the decision. This adds depth to the memo and the decision.
4. When the memo is finished, the meeting attendees assemble together and spend the first thirty minutes of the meeting reading the memo.
They read it, jot down questions, and study it. Many of the folks in attendance will have been involved in the preparation of the memo.
5. The objective of the memo, memo reading, questions approach is to ensure that everybody at the meeting has the same, current information. How many times have you been at a decisionmaking meeting and not everybody is up to speed on the subject? A lot of time and energy is consumed in getting up to speed. Worse, it is a shallow, thinly rooted knowledge.
With the Bezos six page narrative memo approach everybody has the same info before the discussion starts. It is hard to criticize that orderly structural approach.
Bezos leaves us with several other important considerations:
1. Companies have to discriminate between Type 1 and Type 2 decisions. Not all decisions are created equal.
2. Type 1 decisions are the big ones which, once made, cannot be reversed. This process is more cumbersome.
3. Type 2 decisions are the ones which can be reversed easily. This process can be speedier and more streamlined.
4. There are potentially two errors here:
a. Using a Type 1 approach on Type 2 decisions. This consumes too much time.
b. Using a Type 2 approach on Type 1 decisions. This runs a higher risk of making an irreversible mistake.
5. Bezos is keen to document decisions so that they can be measured against results and captured in the institutional memory of Amazon.
6. This last observation is very interesting — Jeff Bezos believes that Amazon has to be able to make decisions with 70% of the information he would otherwise like to have. To wait on 90% extracts a penalty, an unacceptable penalty, as to nimbleness and innovation.
This is why Bezos places so much emphasis on being able to make timely course corrections. “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.”
What happens when people genuinely disagree?
Bezos anticipates that not all decisions are unanimous. This is the real world, right?
He asks his executives who do not agree with the balance of the team to “disagree and commit” meaning that there is value in getting to “yes” as it relates to action even if not everyone is unanimously in favor of the decision.
This is no different than the military has done for years. A staff briefs the commander, provides recommendations, the CO polls subordinate unit commanders (who will have to execute the plan), and makes a decision. Once made, everybody “salutes” and “drives on” regardless of what they thought individually.
Bottom line it, Big Red Car
Jeff Bezos believes that decision velocity drives the speed at which Amazon innovates.
This requires the organization to sacrifice the amount of knowledge, consensus, and risk in order to innovate. It courts failure. Failure is often the proof that an organization is innovating.
“To invent (innovate) you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment,” says Jeff Bezos.
Bezos has driven the Day 1, Six Page Narrative Memo, Type1/2 decision, “disagree and commit” approach in order to ensure that Amazon continues to innovate like a startup.
What does a startup do better than a stodgy, larger company – make high velocity decisions?
What I want you to think about, dear reader, is WHAT IS YOUR APPROACH TO DECISIONMAKING? Is it orderly? Structured? Nimble? Time consuming?