Understanding the decision -making approach of Amazon

By Arun Dahal Khatri

To understand the ability and success of the business we need to sharpen our slight in the decision-making approach of business. Amazon, one of the world's most valued companies has various types of decision-making approaches which leads companies to achieve fabulous success over the past 20 years. Bezos the founder of Amazon believes that the decision-making approaches can change the company formation and also lead to the increment and decrements of the company.

Bezos has been continuously writing and focusing on the decision-making approaches because the current position of Amazon is the result of the critical and logical decision-making approaches used by the team of Amazon.

 Bezos once wrote in his letter of 2016“the senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business-plus a high -velocity high-velocity decision-making environment is more fun too”

Actually, Bezos is always optimistic and farsighted along with the fact that he believes speed matters in the business. While taking the different decisions of the business. Amazone team always thinks about the types of decisions. often businesses face two types of decision-making tactics.

1- Decision having the reversal direction

2- Decision cannot be changed or reversed

Most of the decisions made by the team of Amazon bear a huge cost because of the wrong way and low logical facts. That's why Amazon always tries to cut off the obstacles by formatting a creative decision-making group where they analyze the patterns of the decision and its impact on the business in the long term.

Interestingly, In Amazon, if you're in the decision-making team then you are required to create a six-page memo before the decision-making meeting. Every decision is circulated through the Memo. The six-page memo is like an interesting story about business and innovative ideas and it's a first step for the investigation process of any new decision.

Bezos in his letter of 2015 “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.”

Amazon often follows the creative path by addressing all the possible consequences after making the decision. Alternatively, most of the decisions are irreversible so Bezos tries to make sure that the team needs to travel carefully and logically. Every decision need to be 

addressed and evaluate mindfully because that makes a huge difference in business in the long term.

Bezos also encourages his team to make decisions quickly by recognizing the decision can be changed and improved.

In his letter 0f 2016, he says ” First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two ways doors. This decision can use a lightweight process. For those, so what if you’re wrong?

“Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, Ii n most cases you are 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 a conviction on a particular direction even though there is 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”

From his letter, he wants to address that never wait for the perfect time but make the time perfect. He suggests that the team needs to decide the decision if the information is 70% correct. Using the amazon decision-making approaches is helpful for most of the growing companies and business organizations because the decision-making approaches of amazon are creatively designed and logically helpful.

#Note: Reference taken from the "Success Secrets of Amazone" by Steve Anderson