The Jeff Bezos Rule for Making Decisions - THINKERS Notebook

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The Jeff Bezos Rule for Making Decisions

You might have heard: Jeff Bezos made some news this week.

The Amazon founder announced he is stepping aside as CEO later this year. He will remain with the company as "executive chairman."

As for what that role will entail, The Financial Times notes that, "Amazon insisted that Mr Bezos, as executive chairman, would only be involved in what it described as 'one-way door' decisions, from which there is no turning back."

This is no accidental turn of phrase.

It's how Bezos views decisions.

Reversible or Irreversible?

As Bezos explained years ago in a letter to Amazon shareholders, he uses a simple heuristic to help him, and his company, make better decisions.

 
  • Is the decision reversible? Then it can be made quickly and with imperfect or limited information.
  • Is the decision irreversible? Then it must be carefully considered and methodically researched.


I found myself thinking about this a lot over the past few months while my wife and I sold our house and bought a new one. Both decisions were irreversible. They were one-way doors, as opposed to two-way doors that we could walk back and forth through. 

Once we sold our house, it was gone. We had to be ready to move out by the date on the contract. There was no going back.

And once we bought our new house, it was ours the moment we signed the final papers at closing -- all of its wonderful elements and any issues lurking beneath the surface. Sure, we can always put it back on the market if we want to, but gaining ownership of it was irreversible.

Each of those decisions required an incredible amount of discussion, debate, research, and reflection. 

Contrast that with the decision I made today at Lowe's to buy a replacement faucet for my bathroom.

Keep it simple, stupid (when you can)

I don't remember physical details very well, so when I was at the store I couldn't remember exactly what style the shower head and towel rack were. In other words, I didn't have all the information I needed to make a smart decision.

I made it anyway though, because it was an easily reversible decision. If I chose wrong, I could return it the next time I was at Lowe's and get the right one.

So I decided.

Wrongly. ;-)

But it's fine. I'll return it at Lowe's, and I already ordered a replacement faucet (on Amazon, of course).

Yes, I'm out a little bit of time, but the mistake otherwise didn't cost me much. Oftentimes, such decisions will be correct, and I'll have saved a lot of time and wasted thought arriving at what is ultimately a pretty inconsequential decision.

I'd rather save the deep thinking for the stuff that matters.

So the next time you have a decision, stop and ask yourself this simple question first: is it reversible or irreversible?

If it's the former, don't stress too much about it. The cumulative cost of over-thinking reversible decisions is probably far more than whatever might be gained from extra rumination.

But if it's the latter, if it's truly irreversible, then make sure you stop and take enough time to give it the thorough consideration it warrants. You don't want to get on the other side of the one-way door and realize you've made a regrettable and avoidable mistake.

Hey, it's what Jeff Bezos would do.

In this week's THINKERS Roundup, you'll find three more links that describe Bezos' simple but incredibly useful decision-making heuristic.

Making fast decisions is a competitive advantage

Excerpt:


"The ability to make decisions fast is a competitive advantage. One major advantage that start-ups have is that they can move with velocity, whereas established incumbents typically move with speed. The difference between the two is meaningful and often means the difference between success and failure."


Read: Reversible and Irreversible Decisions (Shane Parrish)

More decisions are reversible than you may think

Excerpt:


"But, Bezos added, "most decisions aren't like that - they are changeable, reversible - they're two-way doors.

"He wrote: "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.

"He said these decisions "can and should be made quickly by high judgment individuals or small groups."


Watch: A Jeff Bezos Letter From 1997 About 'Reversible Decisions' Sheds Some Light on the Shock Amazon HQ2 U-Turn (Entrepreneur)

Different approaches for different decision types

Excerpt:


"Ideally, spend up to 10% of your work week on Type 1 decisions. These are draining and time-consuming, but they demand your attention.

"Don’t make Type 1 decisions while feeling angry, hungry, lonely or because you’re tired of the process. For example, it’s probably not a good idea to quit your job because you feel despondent on a Monday morning.

"Make Type 2 decisions relatively quickly by batching them, delegating to a team member or outsourcing to a contractor.

"Again, rather than letting emotions overwhelm you, learn what you can about the problem."


Read: Jeff Bezos Says Successful People Make These Two Types Of Decisions (Mission.org)

Quote of the week

“If you can make a decision with analysis, you should do so. But it turns out in life that your most important decisions are always made with instinct and intuition, taste, heart.” 

-- Jeff Bezos

Image Attribution

Seattle City Council from Seattle - https://www.flickr.com/photos/seattlecitycouncil/39074799225/

 

  • CC BY 2.0
  • File:Jeff Bezos at Amazon Spheres Grand Opening in Seattle - 2018 (39074799225) (cropped2).jpg
  • Created: 29 January 2018
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