Sales Management Assignment

Shirin Istekhar Ahmed Shaikh | Roll No: 020 | Registration No: 2101921020

Areeb Ahmad Nasir Hussain Narkar | Roll No: 037 | Registration No: 2101921037

Akib Shaikh | Roll No: 068 | Registration No: 2101921068

TOPIC: DECISION MAKING PROCESS WITH EXAMPLE (AMAZON)

Decision making is the process to select a course of action from a number of alternatives. Like
planning, decision making is also all-pervasive and like forecasting, decision-making is also an
important part of planning. For any organization, policy documents help in taking managerial
decisions.
But these are decisions of routine nature, which we also call operational decisions. Strategic or
important decisions are obviously taken after considering different alternatives. In order to be a
successful manager, one has to necessarily develop decision-making skills.
7 Steps of the Decision-Making Process:

 Identify the decision.

 Gather relevant info.
 Identify the alternatives.
 Weigh the evidence.
 Choose among the alternatives.
 Take action.
 Review your decision.
Robert Frost wrote, “Two roads diverged in a wood, and I took the one less travelled by, and that has
made all the difference.” But unfortunately, not every decision is as simple as “Let’s just take this
path and see where it goes,” especially when you’re making a decision related to your business.
Whether you manage a small team or are at the head of a large corporation, your success and the
success of your company depend on you making the right decisions—and learning from the wrong
decisions.
Use these decision-making process steps to help you make more profitable decisions. You'll be able to
better prevent hasty decision-making and make more educated decisions when you put a formal
decision-making process in place.
 Decision-Making Process Overview

Defining the business decision-making process

The business decision-making process is a step-by-step process allowing professionals to solve
problems by weighing evidence, examining alternatives, and choosing a path from there. This defined
process also provides an opportunity, at the end, to review whether the decision was the right one.

7 decision-making process steps

Though there are many slight variations of the decision-making framework floating around on the
Internet, in business textbooks, and in leadership presentations, professionals most commonly use
these seven steps.:
1. Identify the decision
To make a decision, you must first identify the problem you need to solve or the question you need to
answer. Clearly define your decision. If you misidentify the problem to solve, or if the problem
you’ve chosen is too broad, you’ll knock the decision train off the track before it even leaves the
station.
If you need to achieve a specific goal from your decision, make it measurable and timely so you know
for certain that you met the goal at the end of the process.
2. Gather relevant information
Once you have identified your decision, it’s time to gather the information relevant to that choice. Do
an internal assessment, seeing where your organization has succeeded and failed in areas related to
your decision. Also, seek information from external sources, including studies, market research, and,
in some cases, evaluation from paid consultants.
Beware: you can easily become bogged down by too much information—facts and statistics that seem
applicable to your situation might only complicate the process.

3. Identify the alternatives

With relevant information now at your fingertips, identify possible solutions to your problem. There is
usually more than one option to consider when trying to meet a goal—for example, if your company
is trying to gain more engagement on social media, your alternatives could include paid social
advertisements, a change in your organic social media strategy, or a combination of the two.

4. Weigh the evidence

Once you have identified multiple alternatives, weigh the evidence for or against said alternatives. See
what companies have done in the past to succeed in these areas, and take a good hard look at your
own organization’s wins and losses. Identify potential pitfalls for each of your alternatives, and weigh
those against the possible rewards.

5. Choose among alternatives

Here is the part of the decision-making process where you, you know, make the decision. Hopefully,
you’ve identified and clarified what decision needs to be made, gathered all relevant information, and
developed and considered the potential paths to take. You are perfectly prepared to choose.

6. Take action
Once you’ve made your decision, act on it! Develop a plan to make your decision tangible and
achievable. Develop a project plan related to your decision, and then set the team loose on their tasks
once the plan is in place.

7. Review your decision

After a predetermined amount of time which you defined in step one of the decision-making process
—take an honest look back at your decision. Did you solve the problem? Did you answer the
question? Did you meet your goals?

If so, take note of what worked for future reference. If not, learn from your mistakes as you begin the
decision-making process again.
Tools for better decision-making
Depending on the decision, you might want to weigh evidence using a decision tree. The example
below shows a company trying to determine whether to perform market testing before a product
launch. The different branches record the probability of success and estimated pay-out so the
company can see which option will bring in more revenue.

Decision Tree With Formulas

 Decision Matrix Example
A decision matrix is another tool that can help you evaluate your options and make better decisions.
Learn how to make a decision matrix and get started quickly with the template below.
You can also create a classic pros-and-cons list, and clearly highlight whether your options meet
necessary criteria or whether they pose too high of a risk.
 Pros and Cons Marketing

DECISION MAKING PROCESS OF AMAZON

How Amazon Does It: Decision Making Inside The World’s Most Daring Digital Company
Amazon’s Jeff Bezos focused on the oldest of old business principles extraordinary customer
obsession to the level that each customer is treated individually and turned it into the ultimate
business purpose of his company. As everyone knows, digitization was the engine that enabled the
company to treat each one of its more than 100 million customers as if they were shopping at a corner
store in a small town. But the true magic in how Amazon built this system isn’t just technological it’s
organizational. It’s all about making better decisions and making them fast. Here’s how they do it and
how you can, too.

High-Quality, High-Velocity Decision-Making

Five rules can guide you toward high-velocity decision-making:

1. Recognize there are two types of decisions.

To achieve high velocity, Bezos empowers his organization and categorizes all decisions into two
types. Type 1 decisions “are consequential and irreversible or nearly irreversible one-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,” Bezos wrote in a 2016 shareholder letter. Such decisions should go through a “heavyweight”
process being made slowly and methodically with great deliberations and consultation to ensure a
high-quality decision. Taking type 1 decisions too lightly is a potentially fatal mistake.
Type 2 decisions refer to those that “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,” wrote Bezos. These decisions “can and should be made
quickly by high-judgment individuals or small groups.” As CEO, you should identify the Type 2
decisions and delegate.
The distinction between two different types of decisions and, thus, two different types of decision-
making mechanisms must be crystal clear. It beats bureaucracy, analysis paralysis and improves, over
time, people’s judgement in decision-making.

2. Don’t make all decisions by yourself.

No matter how hard-working you and your top team are, there are only 24 hours in a day. As your
business continues to grow, if decision-making remains concentrated at the top, sooner or later, you
and your top executives will become the biggest impediment to rapid growth.

3. Don’t wait for all the information.

As Bezos wrote in his 2016 shareholder letter, “most decisions should probably be made with
somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, 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.”

4. Don’t require approvals that are lengthy and must go through large numbers of hierarchical
layers.
When multiple functions actually need to be involved in approving a Type 2 decision, you can
transform the traditional sequential process into a simultaneous dialogue for high-velocity, high-
quality decision-making. For example, Amazon project teams are free to choose between internal
services and external vendors. In the traditional sequential selection and approval process described
earlier, this could take two to three months and often result in poor quality because distortion and
information flow take place.
Amazon is a continuous invention machine. It has developed the fastest invention process. It involves
a clear, written definition of the product to be developed in excruciating detail both in terms of
outputs and inputs. The senior people select a leader, and the leader selects an integrated cross-
functional team—they call it a separable, single-threaded team—whose full-time job is to deliver the
project. They do nothing else. They think and act on the project continuously until it is delivered and
operational. I have personally observed putting this methodology in one, large company. They
developed a new idea in eight weeks, and they changed the intensity of competition in their industry.
This methodology has done wonders for velocity and shortening the cycle time of decision-making.

5. Don’t wait for everyone to agree.

Everyone has experienced postponed decision-making due to one or a few people’s objection or
absence. In some cases, in a drive to have consensus, one person can exercise veto power. Sometimes
a decision is made and then reopened in the third meeting, which is very frustrating, energy-draining
and time-consuming—and the quality of decision, by definition, is poor.

To solve this deadlock, “disagree and commit.” Bezos did that when his team wanted to greenlight an
Amazon Original show that he felt should be dropped, responding, “I disagree and commit and hope it
becomes the most watched thing we’ve ever made.” Just imagine how long that call would have taken
if the team had to educate, persuade and finally earn commitment from him.
After all the facts are considered and all thoughts are expressed, as Bezos wrote in a shareholder
letter, “if you have a 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 is a two-way, rather than a one-way, approach. Leaders can use it for high-velocity decision-
making, and leaders should also be prepared to practice this principle themselves, as Bezos did in
greenlighting that Amazon Studios original program.

Controlling for Quality

Now that you’re making high-velocity decisions, how do you make sure they’re high-
quality?

1. Find the best truth.

In traditional companies, due to the inevitable delay, distortion and manipulation as information is
relayed through layers from bottom to the top and the fact that data resides in silos, many decisions
are made far from the truth, the whole truth and nothing but the truth.

Rick Dalzell, former Amazon CIO and Bezos’ right-hand man, has written that Bezos “tries to find
the best truth all the time.” This may sound self-evident, but it is a big challenge for traditional
organizations usually characterized by strict hierarchy, managing by fear and a command-and-control
modus operandi. As a devotee of customer service, he seems to have learned from Toyota’s culture of
seeking the root cause of any defect. He actually recruited a high-level guy who was an expert at
Toyota in making sure that everyone can detect any defect and take action.

At Amazon, each metric is owned by a human being. If the owner finds a significant anomaly, even if
it comes from only one customer, the owner is required to search through to the root cause of that
anomaly. That means looking all the way back to the beginning of the process through to the actual
customer experience.

Bezos does this himself, personally looking at data, seeking out any defects, then asking people to
diagnose the root cause, which could be a root cause across a system in the company. For example,
when the topic of lengthy hold times for customer calls came up during an executive meeting, he
picked up the phone and called customer service himself to demonstrate the discrepancy between
what he was being told that one-minute hold times were typical and the reality his hold time on that
call was over four minutes.

2. Imagine the possible change.

In addition to the best truth in a static sense, Bezos takes it one step further, i.e., always using future-
back perspective, thinking about how things will change going forward. For example, back in 2005,
most Amazon executives were against Bezos regarding launching Prime, i.e., $79 membership per
year to enjoy two-day shipping for free. The objection was well-founded. Given an $8 logistics cost
per order, assuming 20 orders a year on average by each Prime member, shipping would cost $160 a
year more than the $79 membership fee. Diego Piacentini, an ex-Apple executive, reported that “…
every single financial analysis said we were completely crazy to give two-day shipping for free.”

What gave Bezos the unwavering conviction despite the siege from all?
The key factor was his undying devotion to customer obsession and having the conviction that it
would be made fiscally prudent. Bezos took a future-back perspective, asking the obvious but
commonly neglected question: How will the shipping cost change?

He believed it would drop. Why? Because when customers spend more, Amazon’s volume will
increase, and that increased scale would help Amazon negotiate lower prices from shipping vendors
and decrease the amount of fixed-cost allocation of each shipment. In addition, with continuous
system upgrades, Amazon’s logistics system would continue to “drive down Amazon’s transportation
costs by double-digit percentages each year.” In addition, the frequency of customer interaction will
provide more data, and data is equity.

3. Combat group thinking.

Bezos places huge emphasis on fighting conformity, avoiding group thinking and resisting the
conventional thinking that achieving harmony is desirable. He expects people to challenge him. He
demands a quality discussion with people bringing in new ideas, different perspectives and, even
better, disruptive thinking. He “believes that truth springs forth when ideas and perspectives are
banged against each other, sometimes violently,” writes Stone.

Amazon’s Leadership Principles state that leaders are “obligated to respectfully challenge decisions
when they disagree, even when doing so is uncomfortable or exhausting; they do not compromise for
the sake of social cohesion.” Amazon employees well understand their obligation, not only to the
company but also to the customer and to the shareholder. Also, as John Rossman, former director of
enterprise services at Amazon, writes in The Amazon Way, employees have learned that disagreeing
with senior executives is actually beneficial to their careers at Amazon.
I personally observed Ray Dalio, founder and co-chairman of the world’s largest hedge firm,
Bridgewater Associates, in his meetings for one full year and saw him very effectively seek opposing
viewpoints. Also, he made it easier for people to disagree with him when he often said, “Here is my
view, and I could be wrong.” He developed a mobile app that he would use several times in a meeting
to get honest input from participants anonymously. Each person in the meeting votes yes or no on a
decision and explains why. Every word of the “why” is recorded. Later, all that information is
analysed.

This process was implemented at the investment firm Matrix Capital. After Matrix founder and CEO
David Goel implemented the dialogue process, I observed several sessions where the company’s
executive team members logged their candid opinion about whether or not to approve a deal and the
underlying detailed logic behind their decisions in the mobile app. The data collected during those
sessions was analysed on a longitudinal basis, which yielded biases analysis, conviction analysis,
assumptions analysis and logic analysis, and the process improved the judgment quotient of the whole
team.

4. Test through the experiment.

When people have genuine disagreements or when the future is murky, rather than endless debates,
fuming arguments and efforts to persuade one another, Bezos opts for an experiment. Brad Stone,
author of The Everything Store, vividly captured such a scenario back in 2001. “As usual, Bezos
battled his marketing executives. They argued that Amazon had to be on the airwaves to reach new
customers. As Amazon’s losses mounted, Bezos’s opposition hardened.”

How to make a decision when two viewpoints are so opposite? Bezos asked the marketing department
to run TV commercials in two cities, Minneapolis and Portland, and then measure the additional local
purchases they helped generate.

The test went on, the result came back, and the conclusion was clear, “not enough to justify the
investment.” Based on this powerful test, Bezos decided not only to cancel all TV advertising, but
also to make drastic changes to the marketing department. Today, by any measure, Amazon is the
number-one brand in the world—and this was achieved through very little mass advertisement or
traditional marketing effort. That is because having a customer experience on an individualized basis
that is second to none earns customer admiration for the company.

Experimenting is a natural habit in Amazon. When they do their operating plan, they provide a
narrative of learning from the previous year.

5. What if a decision goes wrong?

“We will make bold rather than timid investment decisions where we see a sufficient probability of
gaining market leadership advantages,” Bezos stated in a 1997 shareholder letter. “Some of these
investments will pay off, others will not, and we will have learned another valuable lesson in either
case.”
What’s unique about Amazon’s way of learning? The secret weapon is mid-course adjustment. They
ask questions such as what factors should have been considered but did not, what assumptions had
been made and why some of them were not reasonable, what critical technology breakthrough was bet
on and why it did not happen as expected, and the list could go on. Among all the inputs, the most
important one is probably people. Even when you make the right decision in the business sense, if you
put the wrong person in charge, the endeavour will probably fail.

Amazon management emphasizes and measures input metrics all the way through. The reason is that
if the inputs are right in terms of timing, quality and quantity, the goals will be achieved. This is deep
in the culture.

Scaling High-Velocity Decision-Making

In essence, decision-making is about making choices. Tough decisions force us to choose between
two goods or weigh two evils. There is no perfect solution, and everything has two sides—the upside
and the downside.
In a commencement speech at Princeton University, Bezos asked, “Will you choose a life of ease, or a
life of service and adventure?”, “Will you wilt under criticism, or will you follow your convictions?”
and “Will you be clear at the expense of others, or will you be kind?”
Of course, Bezos didn’t expect every audience member that day and every future reader of the speech
to choose paths like service over ease and clarity over diplomacy, but for people in Amazon, he
demands that everyone follow the same principles and methodologies that deliver good decision-
making.

Now for the $1 billion question: How to scale high-velocity and high-quality decision-making as
your company grows?

1. Crystalize the consistent principles.

In his first shareholder letter back in 1997, Bezos explicitly set forth the decision-making principles of
Amazon (see sidebar, right): Why go through what was surely an onerous and taxing effort? The
obvious answer is so shareholders can make informed investment decisions regarding Amazon. It’s
also so customers can be more willing to build a trust-based, long-term relationship with Amazon.
But, much more importantly, it is for all current and future people working in Amazon, so that every
single one of them can clearly understand the decision-making logic and is able to make the right
choice when duty calls.

2. Specify the consistent methodology, standard operating procedure (SOP).

On June 9, 2004, we witnessed a brilliant innovation in human management practices. From that day
on, Amazon embarked a crusade against PowerPoint presentations and bullet points, and a journey
toward what evolved into “Six-Page Narratives.”
If you doubt this methodology’s significance, you are not alone. PowerPoint has become the second
language of business. Some companies have a stand-alone functional department devoted entirely to
producing PowerPoint presentations.

But Bezos’s was not a capricious whim, but a well-thought-through decision to embrace the value of
narrative memos that were often time-intensive endeavours involving multiple iterations. Many
Amazonians recalled this practice vividly even after they left the company. In The Amazon Way,
Rossman wrote, “I can’t tell you how many of my weekends were consumed by this writing and
editing process.”

In my teaching at North-western University, I required my students to write in two pages, clearly,

concisely and to the point, their case analysis. The purpose was to train their brains to sort out what
matters from what does not matter and to write that in a way that a teenager could understand it. And I
read each paper and made comments.

Why the huge investment of people’s time and efforts? And why do Amazonians present and past
revere it so highly?

As Bezos noted in a 2012 interview with Charlie Rose, “When you have to write your ideas out in
complete sentences and complete paragraphs, it forces a deeper clarity of thinking.” Authors are
forced to run complete analyses, distinguish between subtle nuances, articulate their logic, prioritize
various ideas and take full accountability for specific proposals. There is no wiggle room, no hiding
place or no safe haven. Everyone has skin in the game and is held accountable.
Another cultural shock for newcomers to Amazon is that nearly every meeting starts with attendees
sitting in silence and reading the narratives for 15-30 minutes. This is because business meeting
attendees typically begin interrupting presentations on the very first slide, without an understanding of
the full picture the presenter has in mind, and the discussion begins to deteriote.
As Bezos noted in the same interview with Rose, “Executives are very good at interrupting….” So
reading memos together is a very effective way to ensure that everyone is well-equipped for a high-
quality discussion afterwards. As a result, Amazon’s meetings rarely end without clear decisions or
specific actions. As ex-Amazonian Samir Lakhani put it, “Bezos has given all employees a standard
SOP for ensuring the basics get done well.”

3. Reinforce the consistent approach in every decision.

One of Bezos’s most conspicuous traits is consistency. He actually attached the 1997 shareholder
letter to every single letter afterwards, probably both as a constant reminder to himself, and as a
powerful proof to the customers, shareholders and all employees at Amazon.
In 2010, Bezos noted that “customers who browsed—but didn’t buy—in the lubricant section of
Amazon’s sexual-wellness category were receiving personalized emails promoting a variety of gels
and other intimacy facilitators.” He “believed the marketing department’s emails caused customers
embarrassment and should not have been sent” and called for a meeting, reported Stone.
In the meeting, executives “argued that lubricants were available in grocery stores and drugstores and
were not, technically, that embarrassing. They also pointed out that Amazon generated a significant
volume of sales with such emails. Bezos didn’t care; no amount of revenue was worth jeopardizing
customer trust. It was a revealing—and confirming—moment. He was willing to sacrifice a profitable
aspect of his business rather than test Amazon’s bond with its customers.
It is such defining moments that convince others of what is important to you and how you will make
decisions in tough situations. As Rossman wrote in The Amazon Way, Amazon’s “principles aren’t
slogans printed on wall posters and coffee mugs. They are lived and breathed every day by
Amazonians from the CEO on down.” We have cross-checked this with the employees and ex-
employees who admire this practice.
Ex-Amazon manager: Jeff Bezos is ‘obsessed’ with this decision-making style ‘it’s his key to success’
Success at work and in life requires exceptional decision-making skills, especially when time is a
factor.
But this isn’t an easy skill to master. There never seems to be enough time, resources, or attention at
our disposal to make smart decisions, so we jump to conclusions based on what we have, and then
move ahead. We use biases to turn stories into decisions in the moment.
There’s a major downside to this tendency, however, because the quick reactions and decisions we
jump to can often be unfair, self-serving and counterproductive.
At Amazon, speed matters
Amazon founder and CEO Jeff Bezos is famous for giving unconventional, controversial, and yet
somehow extremely practical advice. He’s particularly obsessed with constraints on time and
resources as they relate to decision-making.
At Amazon, where I previously worked at for more than nine years, a “bias for action” is listed as one
of the e-commerce giant’s 14 principles of leadership.
The company defines this principle on its website: ” Speed matters in business. Many decisions and
actions are reversible and do not need extensive study. We value calculated risk-taking.”
In his 2016 annual letter to shareholders, Bezos expanded on this idea by elaborating on the
operational differences between “Day 1 companies” (his name for companies that are always
operating with a beginner’s mindset, which is his preference) and “Day 2 companies” (companies that
think they’ve already figured everything out).

“I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me,”
he wrote. “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline.
Followed by death. And that is why it is always Day 1 [at Amazon].”

This kind of thinking is key to Bezos’ success and it’s what makes Amazon so unstoppable.

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 (and stave off Day 2), Bezos makes high-quality, high-velocity
decisions.
Here are the billionaire’s rules for making high-quality, high-velocity decisions:

 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.
 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. If you’re good
at course correcting, being wrong may be less costly than you think, whereas being slow is
going to be expensive.
 Using the phrase “disagree and commit” will save you 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.
 Recognize true misalignment issues early and escalate them immediately. Teams sometimes
have different objectives and fundamentally different views. They simply aren’t aligned —
and 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.
 ‘Move fast and break things’
 As I stressed earlier, there’s never enough time to consider all information and to convince
every person of every decision, so don’t even try.

When you’re a large company like Amazon and hiring tens of thousands of people every year (which
works out to hundreds per day), the time constraint is real and should be considered.

Facebook’s motto during its early days was, “Move fast and break things.” Another common motto in
Silicon Valley is “Fake it till you make it.” Yet another is “Fail fast.”

These sayings are all attempts at reinforcing a bias for action, because it’s better than the alternative
of hesitating and thereby guaranteeing that a decision will be late — without much improving its
chances of being right.

It’s not just Amazon and Facebook that have adopted this attitude toward decision-making. It’s part of
our culture and part of our value system.
To develop honest bias when it comes to acknowledging a need to act in uncertainty, it’s best to take
Bezos’ advice and admit there’s a chance you may need to turn around and head back if you find out
your decision was wrong.

Amazon is known as a detailed, data-driven company. But CEO Jeff Bezos said the e-commerce giant
trains its staffers to understand that some decisions must be made with the gut.

“You have to realize: decision making isn’t one size fits all,” said Bezos at a gala this month held in
New York by FIRST, a global STEM education non-profit.

To know the difference, said Bezos, ask yourself two simple questions: “What are the
consequences of this decision?” and “Is this decision reversible?”

Reversible decisions
Most decisions, says Bezos, are low consequence and reversible. These decisions can be made quickly
with data and by junior teams. “If you make the wrong decision,” Bezos explained, “the cost is low.”

Big companies can become less nimble when small, reversible decisions are made using a “big
consensus process.” Even if it isn’t the best move, moving fast will still help you get a leg up on the
competition. “The cost of being slow is so much higher than the cost of getting the answer exactly
right,” he said.

Bezos has talked about his decision-making framework in past shareholder letters. In one from 2016,
he said, “most decisions should probably be made with somewhere around 70 percent of the
information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow.”

Using this framework can empower workers. Once you determine that the risk for making a certain
decision is low, “then by all means make it yourself,” said Bezos.

Irreversible decisions
Irreversible decisions require more care. These high-consequence decisions should be made by senior
leadership, single individuals or tiny teams, said Bezos.

Senior executives at Amazon often analyze irreversible, high-consequence decisions. In these

situations, it’s appropriate “to use very slow, deliberate decision-making processes,” explained Bezos.
The mogul even jokingly referred to himself as the “chief slow down officer.”
Bezos called these types of decisions “one-way doors” in a 2015 shareholder letter. He wrote, “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.”

With big, irreversible decisions, gut and intuition can play a big role. “People think of Amazon as
very data-oriented and I always tell them, look, if you can make the decision with data, make the
decision with data,” he said. “But a lot of the most important decisions simply cannot be made with
data.”

The decision to greenlight Amazon Prime was ultimately based on intuition, he said. In some cases,
the data will not provide you with a clear answer, especially when you are trying something that’s
never been done before.

“There wasn’t a single financially savvy person who supported the decision to launch Amazon Prime.
Zero. Every spreadsheet showed that it was going to be a disaster,” said Bezos. “So that had to just be
made with gut.”

“Those kinds of decisions,” added Bezos, “they cannot be made analytically, so far as I know. They
have to be made with gut.”

While big decisions will often need to be made with the gut, that gut needs to be informed by your
own principles as well. Amazon’s principles, for instance, include ideas such as putting the customer
first and inventing on behalf of the customer.
“You collect as much data as you can. You immerse yourself in that data,” said Bezos, “but then make
the decision with your heart.”

To make sure he acts quickly, he follows a set of guidelines for “high-velocity decision-making” he
laid out in his annual letter to shareholders. He urges his employees to follow them, and they contain
sound principles for any competitive organization:

Don’t wait for all the information before acting

Most decisions should be made with only about 70% of the information you need; if you wait for 90%
or more, you’re moving too slowly. A well-managed company can adjust if necessary. “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,” Bezos said.

Agree to disagree
Bezos uses the phrase “disagree and commit,” which he employs when he realizes a consensus isn’t
possible, but he trusts the judgment of the other decision makers. It means that while Bezos disagrees
with the decision, he’s committed to a successful outcome. It’s a much faster alternative than the team
having to convince him to change his mind.

Sometimes, agreement isn’t possible

In a large and complex company like Amazon, different teams will have different objectives that no
amount of discussion will resolve. Those conflicts need to brought to more senior executive to
broker. “Without escalation, the default dispute resolution mechanism for this scenario is
exhaustion…. ‘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.”

As Amazon grows even larger, and branches into more and more disparate business from cloud
hosting to movie production to smart devices it’s inevitable that conflicts will arise. And while the
company has a reputation for its sharp-elbowed culture, Bezos doesn’t want disputes to bog down
decision making. By posting the rules of the road, Bezos is setting out Amazon’s priorities: It’s OK to
make the wrong decisions; just don’t make them slowly.

Thank You.