Bezos’s Decision Framework: One-Way and Two-Way Doors

This morning I heard Keji Daodu introduce Amazon and Bezos. If interested, see the link in the first comment. There are also many discussions of Bezos’s retirement—a chance to revisit how the world’s richest person makes decisions and sees things. ---- Over the past 27 years, words such as boundless, innovative, and disruptive have described not just Amazon but Bezos himself. At its February 9 earnings call for Q4 2020, Amazon also announced that founder and CEO Bezos would step down in this year’s third quarter, handing the role to cloud-computing leader Andy Jassy. In an open letter to employees, Bezos said: This journey began about 27 years ago, when Amazon was only an idea. The question I was asked most often was, “What is the internet?” Fortunately, I have not had to explain that for a long time. Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely considered one of the world’s most successful companies. Invention is the root of our success. I do not know another company with an invention record comparable to Amazon’s. ---- Bezos divides decisions into two types. In his 2015 shareholder letter, he wrote: There are two kinds of decisions. Type 1 decisions are mission-critical and highly consequential, affecting broader strategy. Type 2 decisions carry less risk and can be reversed if necessary. A Type 1 decision is a door you walk through and cannot return from. Bezos emphasizes: “These decisions must be made methodically, carefully, slowly, with deliberation and consultation. If you walk through and dislike what you see on the other side, you cannot return to where you were.” Type 2 decisions are reversible choices made by individuals or small groups. They are two-way doors. Bezos considered founding Amazon reversible. He realized that if it failed, he could return to his previous work. He would still have learned a great deal and would not regret trying, so he took the risk. Bezos says: “If you make a suboptimal Type 2 decision, you do not have to live with the consequences for long. You can reopen the door and go back.” But a reversible decision is not an excuse for recklessness or failing to understand the situation. It is a conviction. #Decision-making is a conviction Bezos says: “If I make three good decisions a day, that is enough.” 1. How do you make the best decisions? Ideally, Type 1 irreversible decisions occupy 10% of your working time. They consume time and energy but genuinely require your attention. Do not make Type 1 decisions when angry, hungry, lonely, or tired of the process. Type 2 reversible decisions can be delegated to team members and made relatively quickly. Again, do not let emotion overwhelm you. Learn as much as possible about the problem. Consulting experts with different views can also help you settle a major decision. ---- ~To be continued