Amazon CEO Jeff Bezos certainly knows what it takes to succeed in the world of business. In his new shareholder letter, Bezos writes that focusing on customer outcomes and making quick decisions are key to avoid slumping within companies.
Bezos compares companies that were only beginning to realize their potential — “Day 1” companies — with “Day 2” companies.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
The key, Bezos says, to remaining a Day 1 company, is “obsessive customer focus.”
“Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great,” he writes. “Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.
“Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”
Bezos says entrepreneurs need to embrace trends and not fight the future.
“The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind,” Bezos writes.
Also within the letter, Bezos says companies need to make high-quality, high-velocity decisions, to maintain the energy and dynamism of Day 1. He says quick decision making is something large organizations struggle with, and stressed the necessity of speediness in business.
“First, 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. 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%, 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.
Third, use the phrase “disagree and commit.” This phrase will save 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. …
Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. 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. … “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.”
Check out the full letter on Amazon.
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