Commentary

3 Ways Amazon CEO Jeff Bezos Makes Tough Decisions Without Being 100% Sure

May 11, 2017

Amazon CEO Jeff Bezos recently released his 20th annual letter to shareholders. This one wasn’t just a reminder of how to run a thriving business, but how to run a thriving career. For anyone who wants to speed things up in their business or their life, Bezos’s section on “high-velocity decisions” offers three themes that you can use.

Theme 1: Any decision can be undone

Bezos argues that there are two types of decisions - those that are reversible, and those that aren’t. Referencing last year’s letter, he asserts that most decisions are reversible. They are “two-way doors”:

“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.”

In the past, I treated two-way door decisions like one-way door decisions. When I finally told my wife that I wanted to move to Silicon Valley and start my own company, her response was “Now?” It was a fair question. I had waited many years because I was afraid that if I took the plunge and failed, I’d lose my spot in line.

But then I started to notice a pattern. People I knew who had started companies and failed were returning to their previous roles. One friend, for example, wound down his startup after two years and returned to a prestigious consulting firm, albeit without the promotions he might have otherwise received.

At first, he felt a bit down about the whole thing. “I feel like I lost two years,” he once told me over the phone. But when we recently grabbed dinner, he shared that he just made partner - on roughly the same timeline as before he left to embark on a startup. His story may not sound like startup success, but for milder risk-takers like me, it delivers a point that is often made in the startup world: while the consequences of failure are not zero, they are often more temporary than we might expect.

Perhaps what truly emboldens people isn’t the audacity of walking through a one-way door, but the awareness that it’s actually a two-way door. Had Facebook imploded, worst case CEO Mark Zuckerberg could have returned to Harvard and gotten a great job. Had Amazon not worked out, Jeff Bezos could likely have returned to a high-paying job on Wall Street. If SpaceX doesn’t work out, Elon Musk has Tesla, Hyperloop, Neuralink, and other businesses in the mix. Most actions we disguise as bold are two-way doors disguised as one-way doors.

Theme 2: Disagree and commit with yourself

Getting people to agree with your point of view can be difficult, and time-consuming. Instead of trying to convince people that we are right, Bezos says we should ask them to take a gamble:

“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?”

Convincing yourself can be just as hard as convincing others. When we’re faced with tough decisions, such as a career move, the voices inside tend to lobby in opposing directions. And when you finally choose a path, the opposing voice doesn’t quiet down. It can get even louder, or wait to pounce at the first piece of evidence that you made a mistake.

You can’t ignore this voice, but you can ask it to take a gamble. You can ask it to disagree and commit. As Bezos points out, this is different than trying to convince yourself that the path you took was obvious. Instead, you accept that the decision was not obvious, then commit to increase the likelihood of success.

“Disagree and commit” works best for me when I give the gamble a timeframe.

Reid Hoffman, co-founder of LinkedIn and a mentor of mine, introduced the concept of a workplace “tour of duty” - a specific mission with a specific time horizon - as a way to align employers and employees. A tour of duty is also a great way to align the voices inside. When I left a comfortable-salary job to create a zero-salary startup, part of me was pumped and the other part was livid. But I got the two sides to agree on a nine-month timeframe to validate the idea and raise funding. If I couldn’t get there in nine months, I’d get a job. After I raised funding, I gave myself another 18 months to reach the next critical milestone. Every gamble I make with myself comes with a timeframe, which makes it easier for the opposing voices to disagree and commit.

Theme 3: Act with 70% information

Tough decisions, particularly personal ones, rarely come with a complete set of data. The tricky thing is knowing when you have enough information. Bezos addresses this directly:

“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. Plus, either way, you need to be good at 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."

Acting with 70% information has almost always led me to the right answer sooner because by simply acting, I was able to uncover information. Decisions lead to data.

All too often, I come across people who are afraid to make a change, because doing so means admitting their past choices weren’t perfect. Predicting what we’ll truly want in the future is like trying to hit a fast-moving target. The market is changing, and we’re changing with it. Years from now, you might discover a passion for something that isn’t on your radar today. Bezos’s 70% approach frees us to make decisions while staying flexible, knowing that our future self may choose to course-correct.

This 20th letter to shareholders was unique, but it carries forward a theme Bezos has shared from the beginning. That decisions are meant to be made quickly, with imperfect information, and the freedom to change course. It’s a message to us as shareholders, and as individuals.

Suneel Gupta is an Entrepreneur-in-Residence at Kleiner Perkins Caufield & Byers and a Visiting Scholar at Harvard University. Gupta is not an investor in Amazon or the companies referenced in this article.

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