High-Velocity Decision Making

High-Velocity Decision-Making

Why is high-velocity, or speed so important in business? Your speed to market determines how quickly you'll get product to customers and whether your company be faster than your opponents. Bezos, apparently, understand this well. By being faster than everyone in E-commerce, he has achieved more success than anyone else. Nowadays there could be a lot of e-commerce companies, the big name such as eBay, Kroger, Apple, Walmart, ... but the name that impresses people the most is still Amazon.

But what is High-velocity decision? High-velocity decisions involve quickly acting on reversible decisions, these decisions usually are made by experiences, small amount of data, instinct and heart. Bezos stated that if you can make a decision with analysis, you should do so. However, if you can make decisions with that data, your opponents will also be able to do the same thing, and if that happens, you're too late. That's the reason why most important decisions are always made with guts. 

But of course, it is not encouraged that everyone should always make quick decisions like this. Bezos classifies decisions into type 1 and 2, while you can take more time to consider before making decision on type 1, type 2 has less consequences if you decision is wrong. 

Here are Bezos's rules for making high quality and high velocity decision:

1. Never use a one-size-fits-all decision-making process

As we have stated above, there are type 1 and type 2 decision, each will have different mechanisms and processes to go through. Understand which method should be used for each type will can prevent analysis paralysis and ambiguity.

2. Don't wait for all the information

At Amazon, speed matters. As Bezos wrote in his letter, he pointed out that most decisions should be made with somewhere around 70% of the information you wish you had. Being wrong could cost less than you think but being slow is expensive.

3. Disagree and Commit rule

Debating in a group meeting can waste a lot of time, as it keep going more opinions will occur and result in stagnancy. However, by saying "Disagree and commit", it could help people express their disagreement and promise to look at the direction they disagree at the same time. Most of the time you'll probably get a "yes" and move on. This tool can help you make decisions faster as a group.

4. Recognize true misalignment issues early and escalate them immediately

Amazon is a huge, very huge company, having over 1.5 millions employees as of October 2022, which also leads to a high number of teams. For each team, they will sometime have different objectives and views, and simply there's no connection to each other. They are not aligned, no amount of discussion or number of meetings will resolve this deep misalighment. This will resut in slow and de-energizing in team functioning. An escalation can help everyone unite as one big group.

References

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

Ex-99.1. (n.d.). Retrieved March 4, 2023, from https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm

Scotch. (n.d.). High-velocity decisions. ModelThinkers. Retrieved March 4, 2023, from https://modelthinkers.com/mental-model/high-velocity-decisions#:~:text=High%2Dvelocity%20Decisions%20involve%20quickly,anyway%3B%20and%20rapidly%20escalating%20misalignment.

Indeed Editorial Team. (n.d.). What is speed to market and why is it important? | indeed.com. Retrieved March 5, 2023, from https://www.indeed.com/career-advice/career-development/speed-to-market

Mendoza, J. (2023, January 18). Amazon begins next round of layoffs, as tech giant cuts total of more than 18,000 jobs. USA Today. Retrieved March 4, 2023, from https://www.usatoday.com/story/money/2023/01/18/amazon-layoffs-18000-employees/11076820002/