Amazon sent their stuff to the SEC. Jeff Bezos wrote a letter that is extremely interesting. The letter lays out the Amazon culture. There are a lot of different lessons that can be gleaned from the letter. For example, Bezos talks about being customer focused. For startups, it can be impossible to replicate what big corporates do exactly, but they can take the spirit of what they are doing and downsize it to fit.
For example, Bezos talks about being customer focused. What CEO doesn’t say they aren’t customer focused? But Amazon’s culture “requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.” The accept failure and protect saplings part is very hard to do in a lot of corporate environments.
In a startup, it should be easy to focus only on the customer and listen intently to what they want. It also should be easy to accept failure and protect saplings. Easy to type and say, but in practice it’s pretty hard. We are human.
Bezos talks about not being married to process. Often in engineering environments, the process is king. Some people can’t survive without it. But, being tightly wound into a process sometimes turns the company away from the customer. I think airlines might be a perfect example of that in action.
Customers are scary to a lot of people. They are afraid of what customers will say. They don’t want to hear anything negative, or a “no”.
Different parts of the letter will stand out to different people. There was one part that stood out to me. It was the way Amazon viewed decision making. I actually haven’t ever heard a company put this out there like this. Amazon’s tolerance for disagreement is high. That’s rare.
In many company cultures, if you go out on a limb and disagree you are gone. There are other cultures that will extend the rope to you and let you try, but if you fail, you might as well tie a hangman’s knot in the rope. At Amazon, the decision making integrates with the focus on the customer.
I pulled the Bezos quote from the letter. Here it is:
High-Velocity Decision Making
Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations.
The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too. We don’t know all the answers, but here are some thoughts.
First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong? I wrote about this in more detail in last year’s letter
Second, 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.
Third, use the phrase “disagree and commit.” This phrase will save a lot of time. 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?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.
This isn’t one way. 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.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.
Note what this example is not: it’s not me thinking to myself “well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars, I’m just glad they let me in the room at all!
Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.
I’ve seen many examples of sincere misalignment at Amazon over the years. When we decided to invite third party sellers to compete directly against us on our own product detail pages – that was a big one. Many smart, well-intentioned Amazonians were simply not at all aligned with the direction. The big decision set up hundreds of smaller decisions, many of which needed to be escalated to the senior team.
“You’ve worn me down” is an awful decision-making process. It’s slow and de-energizing. Go for quick escalation instead – it’s better.
So, have you settled only for decision quality, or are you mindful of decision velocity too? Are the world’s trends tailwinds for you? Are you falling prey to proxies, or do they serve you? And most important of all, are you delighting customers? We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it.