Useful ideas from Bezos

Of the many unlocks that the internet has enabled, its ability to broadcast how the mavericks think and approach problems is perhaps the most net-positive outcome.

Among them, I find Bezos to be the most astute, tactical and common sensical thinker of our times. His ideas are simple. He expresses them succinctly. It is hard to not internalise them once you listen to him.

Following are five of the most useful ideas that I have found in his shareholders’ letters and public interviews:

1. Long-term thinking: Develop a long-term perspective, even if it comes at the expense of short-term gains.

   In his letters, he often emphasises the idea of sacrificing immediate profits for long-term potential. This perspective allows Amazon to invest in areas that do not have immediate payoffs, such as customer experience enhancements, technology infrastructure, and new product categories like Amazon Web Services, which required substantial upfront investment but greatly contributed to Amazon’s market dominance.

2. Regret minimisation framework: Whenever faced with a difficult decision between two or more options, choose the one which has a higher potential of minimising your total number of regrets at the age of 80.

   Bezos described this decision-making process in a famous interview. This framework led him to leave a stable hedge fund job and start Amazon, believing that not trying would be a greater regret than failing.

3. Reversible and irreversible decisions: Decisions are of two types: reversible (two-way doors) and irreversible (one-way doors). Reversible decisions can be made quickly and are easy to undo if they prove to be incorrect. In contrast, irreversible decisions, require more careful consideration and thorough analysis.

   Recognising the type of decision at hand can help in improving agility—moving quickly when the cost of being wrong is low and slowing down when the decision has profound long-term implications.

4. Writing for clarity: Documentation helps in thinking better. Everyone should learn to think in writing.

   At Amazon, writing detailed narratives for meetings replaced PowerPoint presentations because Bezos believes writing prose promotes clearer thinking and communication. This method forces the author to clarify thoughts and ideas thoroughly, ensuring that all participants fully understand the proposal without the ambiguity that often accompanies verbal explanations. Moreover, at the start of every meeting, the participants individually read through the printed documentation of the agenda, take notes and form their viewpoints. This fosters efficient decision-making.

5. On making tough calls:

   1. Compromise is bad when it is a knowable truth: When objective facts or truths are clear, compromising can be detrimental. In situations where data and analysis can clearly guide decision-making, you should not settle for a middle ground that might dilute effectiveness or correctness. Instead, you should rely on the available evidence to make the most informed decision possible.

   2. Disagree and commit: Tough decisions should be escalated. Disagreements should be voiced with well-constructed logical arguments. However, once a decision is made by the concerned party, even if you disagree, you should commit wholly to its execution. This approach prevents lingering dissent from undermining projects and helps maintain momentum.

Further reading: Bezos on high standards, 1997 shareholder letter