Decision-Making Methods

The Wise Leader Know What Decision Can Lead Him and His Team to Success

Over the past decade, Amazon's stock has grown 1588%, with its market cap increase from $88.1 billion to $1.7 trillion. With each time Amazon's stock grows, behind that are the decisive decisions Jeff Bezos has made. Most decisions were made quick, but still remain precise and smart. Bezos emphasizes in a letter he wrote in 2016 to shareholders, when dealing with a problem, he classifies a decision as type 1 and type 2. While type 1 is irreversible and consequential, type 2 is reversible and has less consequentiality. You want to make decision slowly, carefully and methodically with type 1, and act fast, very fast with type 2. This is because speed matters in business, some actions and decisions are reversible therefore risking decision can be taken. Bezos also emphasized that he values calculated risk-taking.

In an interview at the Economic Club Washing D.C. in 2018, when Bezos was asked what is the best decision that he has made, his answer to the question "All of my best decisions in business and in life have been made with heart, intuition, guts - not with analysis.", when Bezos starts Amazon, there is no information, or proof that he will be as successful as he is right now. It all starts with instinct, heart and guts to believe that e-commerce has potential, and Bezos, took that opportunity and was paid off.

The company had sold books in all 50 states and in 45 countries within the first month, with the profit up to $80,00 a month after 2 month of operation. During the time, many analysts predicted that new startup company soon will be shouldered by big retailers such as Barnes & Noble or Borders, they also predict that Amazon will destroy itself because it was burning through its cash too quickly to develop and expand, to this, Bezos strongly said "We're going to be unprofitable for a long time. And that's out strategy". Fact have proven that that decision of Bezos was correct, Amazon continued to operate and in 2003, it has the first full-year profit. By 2008, the company's revenue had reached up to $4 billion.

Bezos is An Effective Leader

With this success, it already tells how good Bezos was as a decision-maker, however it's not only because of that, but also because he is a wise leader. As a leader, Bezos succeeds for obtaining these 4 attributes:

Honesty:

When Bezos said that Amazon is going to be unprofitable for a long time, he kept his promise on "Amazon will succeed", his employees believed in their leader and choose to continue supporting him.

Forward-Looking:

Bezos has enthusiastic sense of future; he has a big vision and excitement for the future of Amazon. When he started the company, Bezos knew that E-commerce is the future, and it is the opportunity not only for him but also for his followers. As the first person to put the step in the new field, of course there will be obstacles in front of him, Bezos got over it.

Inspiring

In the first month of operation, Bezos and his followers were said to work for 60 hours a week. After the corporation has run smoothly, Jeff Bezos once revealed in his book Invent and Wander that although he can have more time to rest, he still usually works around 50-60 hours a week, as he believed his action has inspired his employees.

Competent

Bezos understands his position and his employees' position well, it results the strong development of Amazon.

These are the reason that make Bezos not only a good decision-maker, but also an effective leader. However, throughout his career, it would be a bias to say that Bezos made no mistake in his decision. Like how Bezos realized the ineffectiveness in Amazon's team management and created two-pizza teams as a solution. Bezos has summed up his failures for all the bad decisions he had made and created a decision-making method called High-Velocity Decision-Making, which can help anyone to make high quality and high velocity decisions.

References

Vega, N. (2021, May 27). Amazon bought MGM for $8.5 billion. here's how much you'd have if you invested $1,000 in the Tech Giant in 2011. CNBC. Retrieved February 5, 2023, from https://www.cnbc.com/2021/05/27/how-much-amazons-stock-value-has-grown-since-2011.html

Collins, B. (2019, May 28). Jeff Bezos says successful people make these two types of decisions. Medium. Retrieved February 5, 2023, from https://medium.com/the-mission/jeff-bezos-says-successful-people-make-these-two-types-of-decisions-

2016 letter to shareholders. US About Amazon. Retrieved February 5, 2023, from https://www.aboutamazon.com/news/company-news/2016-letter-to-shareholders

Mindset, P. (2022, January 2). Bezos decision making framework. Bezos Decision Making Framework. Retrieved February 5, 2023, from https://productmindset.substack.com/p/bezos-decision-making

Spiro, J. (n.d.). The Great Leaders Series: Jeff Bezos, founder of Amazon.com. Retrieved March 4, 2023, from https://www.inc.com/30years/articles/jeff-bezos.html

Foer, F. (2022, January 3). Jeff Bezos's master plan. The Atlantic. Retrieved March 3, 2023, from https://www.theatlantic.com/magazine/archive/2019/11/what-jeff-bezos-wants/598363/

Ajay, S. M. (2022, April 8). Jeff Bezos' daily routine, Workout & Diet. Dr Workout. Retrieved March 3, 2023, from https://www.drworkout.fitness/jeff-bezos-daily-routine/

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