As of April 12, 2023, the market was valuing Amazon at a whopping $1.022T.
T stands for a trillion.
That's 1 followed by 12 zeroes.
That's a lot of zeroes.
You don't become the CEO of a company like Amazon without knowing how to make tough decisions, and Jeff Bezos has definitely mastered that art.
In his now legendary 1997 Letter To Shareholders, he shares his decision-making process.
All Bezos letters to shareholders are a masterclass in clarity.
Jeff is typing now:
“Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.1 We’ll have to figure out how to fight that tendency.”
Each time there is a decision to be made, rate it as Type 1 or Type 2. If Type 2, allow one of your reports to be the D (Decision-Maker in the RAPID process). The decision will be made faster, your report will get the chance to exercise their decision-making muscle, and you will have the chance to gain confidence in your reports’ ability to make decisions well.
Why does it matter?
It matters because once you are faced with a decision, the question is whether you should make it fast or slow.
Do you get as much information as possible, knowing it'll slow you down?
Or do you make it fast with imperfect information and recalibrate later?
It's a tradeoff.
Big companies are less tolerant of failure because they have more to lose.
But it’s a mistake to take the overly cautious approach.
All decisions fall somewhere on the continuum from totally reversible to totally irreversible.
To figure out where a decision lies on that scale, think about how hard it would be to undo it.
The harder it would be to go back, the more irreversible it is.
By identifying which decisions are Type 1 and Type 2, you can avoid getting bogged down in trivial matters and focus on what really matters.
PS. Do you struggle to set yourself apart from your competitors? Does your tone of voice lack a little personality? Either way, get in touch and I’ll help you become remarkable. Or get more communication advice that doesn't suck here.
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