One of the ways that Jeff and the S-Team instilled operational excellence at Amazon was through disciplined, data-based decision-making. Most CXOs don’t have a method to ensure their organizations make high-quality decisions. Below is my take on a set of principles and processes to operationalize good decision-making:
1. Timely – “Last Responsible Moment” (LRM):
The concept of LRM emphasizes understanding the latest date by which each decision must be made to keep a project on track. Early decisions can lead to mistakes, and late decisions make it harder to meet operating goals. Forcing the organization to determine the last responsible moment improves its understanding of the decision, and it also spreads out the time between decisions.
2. Differentiated – One-Way vs. Two-Way Doors:
The idea is simple: a two-way door decision is one where, if you walk through the door and don’t like what you see, you simply turn around and go back through. Two-way door decisions are reversible and can be made quickly without extensive analysis, enabling greater operational agility. One-way door decisions, on the other hand, are either irreversible or very expensive to reverse. These should be made slowly and with great care.
3. Informed Truth Seeking:
Decisions should be made after a period of dedicated data gathering, analysis, and truth seeking supported by a clear and concise business narrative. High-quality analysis includes objectively exploring multiple courses of action and recommendations based on costs and benefits.
4. Debate:
In the words of Peter Drucker, a decision is a judgement, not a choice between right and wrong. To understand an issue, a robust debate between high-judgement leaders offering different viewpoints is required. Corporate cultures that encourage open, data-based debate excel at this.
5. Consistent Forum:
Decisions of consequence (one-way doors) should be made in the consistent forum. At Amazon, this meant reading a narrative at a meeting with Jeff and the S-team. The decision(s) would be made in the meeting with all of the relevant people present. The decision wouldn’t be reversed by a subsequent conversation with the CEO.
6. Detailed:
The details of any decision matter a lot. The documentation used to make a decision should include all relevant implications and details: costs, personnel, timeline, and detailed features. This enables alignment with the CEO and allows teams to move fast once a decision has been made.
7. Experienced Leaders:
The only way to get good at decisions is to make lots of them and to be held responsible for the consequences. We all learn more from mistakes than from success. This requires an organizational structure and culture of ownership (not an ambiguous matrix), as well as a willingness to fail.
Leaders – what are your thoughts on my list? What would you edit, add, or subtract??
