Wherever you see a successful business, someone once made a courageous decision — Peter Drucker
How do you make a major life decision? In the summer of 2016, we faced one as a family. We had the option to move from Seattle, Washington to Southern California. My son AJ was then between his sophomore and junior year in high school. He plays water polo and he saw the potential that having better every day coaching, competition and exposure would have for his college athletic ambitions, but he did not want to leave his friends or school.
It was a big decision. A simple list of pros and cons was not going to help make a good decision.
[Subscribe to The Digital Leader Newsletter — For Free (which is a very good price!)]
The Regret Minimization Framework
Instead of the typical “list” approach for a decision, I told AJ about how Jeff Bezos decided to leave a lucrative job at the hedge fund D.E. Shaw and move to Seattle to start Amazon in 1994.
Bezos was 26 when he arrived at D.E. Shaw. Despite bouncing around from job to job before joining Shaw, Bezos became Vice President in just four years. In this role, he researched business opportunities on the then-nascent but exponentially growing Internet. Someone just needed to figure out a business plan that would work.
Bezos created a list of twenty products one could sell online, and he decided books were the most viable option. The problem? D.E. Shaw, his boss, disagreed. He didn’t think it would work. When Bezos insisted on leaving, Shaw advised him to think about it for 48 hours before making a final decision. That’s what he did. And faced with this big decision, young Bezos turned to a process he dubbed his “regret minimization framework”. Years later, he would explain it in an interview:
I wanted to project myself forward to age 80 and say, “OK, now I’m looking back on my life. I want to have minimized the number of regrets I have.” I knew that when I was 80, I was not going to regret having tried this. I was not going to regret trying to participate in this thing call the Internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew that the one think I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way, it was an incredibly easy decision. If you can project yourself out to age 80 and sort of think, “What will I think at that time?” it gets you away from some of the daily pieces of confusion. You know, I left this Wall Street firm in the middle of the year. When you do that, you walk away form your annual bonus. That’s the kind of thing that in the short term can confuse you, but if you think about the long term, then you can really make good life decisions that you won’t later regret.1
It’s classic Bezos. Think long-term. Forget the thrill of depositing your Wall Street bonus in your bank account. How are you going to feel about it in 50 years? Once he established Amazon, Bezos would extrapolate this even further, considering the ramification no just in decades, but even centuries and millennia in the future. When it comes to forward-thinking, Bezos does not mess around.
This framework may be helpful for some big decisions in life, such as quitting a great job, moving, and launching a risky startup, but how about everyday business decisions?
Watch the Door
One of the advantages small organizations have over large enterprises is the speed at which they can make decisions. Indeed, decisions are not only made faster but their effects on the business are more impactful. As Amazon grows by leaps and bounds, Bezos has devoted a great deal of time and energy to ensure that his leaders make good, fast decisions as they try to not lose this advantage and act like a large enterprise.
To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions,” Bezos has said. “Easy for startups 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.2
Amazon’s leaders are expected to be right, a lot. In fact, it’s one of the core leadership principles. They must possess strong judgment and they must actively work to disconfirm their beliefs to avoid the pitfall of “confirmation bias”. Humans seek out data and evidence that confirm their initial opinion. However, if we actively work to find alternative perspectives and data, we are more open to ideas and make better decisions.
How can you make balanced, unbiased, good decisions fast? To maintain a high decision-making velocity, you must first consider the implications of the decision. Can the result of the decision be tested and reversed, or is it permanent, and thus, untestable? At Amazon, we used the binary analogy of “one-way versus two-way doors.”
We think about one-way doors and two-way doors. A one-way door is a place with a decision if you walk through, and if you don’t like what you see on the other side, you can’t get back. You can’t get back to the initial state,” explained Jeff Wilke, now retired former CEO of the Amazon Worldwide Consumer Business. “A two-way door, you walk through and can see what you find, and if you don’t like it, you can walk right back through the door and return to the state that you had before. We think those two-way-door decisions are reversible, and we want to encourage employees to make them. Why would we need anything more than the lightest weight approval process for those two-way doors?3
Underlying these two examples of a decision-making framework is the core understanding that how you make decisions is a skill and a corporate strategy. Figuring out what can be done quickly versus decisions requiring more debate and careful discussion — must be a core aspect of your skills and how your business operates. Do it with purpose, and talk about how you make a decision and how that approach could be used in other circumstances. If you practice enough, you’ll develop the right tools, experiences, and tempo for your organization.
Innovation puts a premium on making faster decisions, so evaluate how to incorporate faster decision-making as part of your innovation journey.
About The Digital Leader Newsletter
This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session with a focus on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, better solutions — but most of all to think and communicate better.
Jeff Bezos, Regret Minimization Framework, YouTube video, uploaded December 20, 2008,https://www.youtube.com/watch?v=jwG_qR6XmDQ.
Jeff Bezos, “2016 Letter to Shareholders,” Amazon day one blog, https://blog.aboutamazon.com/working-at- amazon/2016-letter-to-shareholders
John Cook, “The Peculiar Traits of Great Amazon Leaders: Frugal, Innovative and Body Odor That Doesn’t Smell Like Perfume,” GeekWire, May 13, 2015