
Jeff Bezos explains the perfect way to make risky business decisions - bookbild
http://www.businessinsider.com/jeff-bezos-explains-the-perfect-way-to-make-risky-business-decisions-2017-4
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kitrose
The lede really stuck out to me:

"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"

At what point is the information you have available for a key decision enough?
You always want more.

This exactly mirrors a MAJOR decision-making framework taught in the Marine
Corps--we actually call it the "70% solution."

All of our warfighting doctrine is built around the principle of rapid and
decisive action, but the problem is you're in an uncertain, rapidly changing
world where there are opposing actors operating around you and you never have
all the answers. They emphasize in officer training that a key limiter is
being paralyzed with uncertainty and wanting to wait until more information is
available, and that you must actively counter this feeling. Indecision is a
decision (and often the worst one).

I have personally found this one of the most difficult and perpetual factors
I've encountered in both military and civilian careers. It's interesting that
Bezos espouses this principle.

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hxta98596
Nice comparison. I'm also familiar with "70% solution". One thing to add:
officers, and hopefully business leaders, are taught how to build a
theoretical list of what approximately 100% of the information, questions and
answers might be...That way you know what 70% is in reference to. This is
taught and one can easily memorize the checklists of decision making questions
(it's a mnemonic device).

To see why this matters imagine: Are we looking for 70% out of 5 questions? or
70% of 10 questions we have? If you think you only need to answer 5 questions
before making a decision and answer 4. That's 80% and you would go...But if
there are 10 questions to ideally check off before deciding and you only
answer 4, that's way too low and dangerous. This is dangerous in the military
and in startup land. _Knowing the full list of questions to ask is more
important than knowing the answers._

Lastly, both Amazon and the military have huge structures, plans and support
teams in place to encourage 70% as an OK threshold. Imagine if you have air
support you can call in the marines should things go wrong, or you have your
parents couch to crash on if your startup fails, those things would help a
person be comfortable going on only 70% of the information.

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JacobJans
> Imagine if you have air support you can call in the marines should things go
> wrong, or you have your parents couch to crash on if your startup fails,
> those things would help a person be comfortable going on only 70% of the
> information.

I would extend this to say that 50% of the knowledge needed for making a
decision is understanding the downsides / risks of moving forward. For
example, if you know you'll be OK if your fail, it is much easier to say yes
to a big choice. However, if you're risking homelessnes, then it's probably
better to find a different option.

Even in less extreme scenarios, minor decisions I make are often based on
understanding the risks, more than understanding the upsides. Maybe it is too
conservative of an approach, but it is (unfortunately) based on experience.

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cwyers
Given how much of success is luck, I try and play a game whenever I see
successful people asked "how to be successful" where I try and 'spot the
overfitting.' Is this really what made you successful? Or is this just what
you wanted to do, and because you were successful, you think it has to be why
you succeeded because of _course_ your success was earned?

~~~
WalterBright
When the odds of success are favorable if you keep playing, eventually you
will win, even if each individual event is luck.

For example, is it luck that the Vegas casinos make money on gambling? Nope,
even though the outcome of each individual hand is luck.

Many people who are successful went through repeated failures to get there.
They never gave up.

~~~
FfejL
I find that a very weak analogy. The house wins in Vegas over the long haul
because the odds have been tilted in their favor. Any one hand of blackjack is
luck, but the house winning over the course of a million is a mathematically
certainty. It has nothing to do with 'not giving up.'

What are the odds of becoming a billionaire? And how does someone tilt those
odds in their favor?

Perhaps more to the point, Amazon was the first company Bezos founded.
MicroSoft was Gates' first, and Michael Dell founded Dell while still at
school. In what sense did these men go through repeated failures?

That's not to say these aren't exceptional men. Of course they are. But luck
played a huge role in their success.

~~~
WalterBright
It isn't clear just what Bezos did before Amazon, but he engaged in a number
of different occupations.

Traf-O-Data was Gates' first company. There's a reason nobody has heard of it
:-)

Ray Kroc failed for 30 years before founding McDonalds. Colonel Sanders tried
many things, and did not succeed until he was 62. T. Edison failed constantly.

Most musicians wander the desert for years before becoming "overnight"
successes.

Mark Cuban had many attempts at business, including being a disco dance
instructor (!).

~~~
sshumaker
Can we say survivorship bias? There are millions of hardworking and talented
individuals who try repeatedly and end up with at most moderate success.

The number of breakouts is so small that there isn't any statistical
significance to what those individuals did differently. Mostly, they happened
to execute well - but nailed the timing perfectly. Bill's success with MS-DOS
(on the eve of the PC revolution), the rise of car culture and suburbia for
McDonald's. And Cuban got really lucky at the height of the bubble.

I'm not saying they weren't smart or talented. But to perfectly nail timing
requires the ability to predict the future. And if you read "The Road Ahead,
1st ed.", it's obvious even the talented BillG isn't much better at this than
anyone else.

Which leaves us with luck.

~~~
WalterBright
The people who quit before they start fail 100% of the time.

~~~
flukus
>95% of people that use this quote end up with a lot less time and money than
those who quit.

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seibelj
Love the "disagree and commit" part. Perfectly encapsulates the situation
where "I'm convinced this is a bad idea, but I'm going to trust you and
support you."

~~~
ams6110
_he [Bezos] notes, when you disagree and commit, it 's not about holding an
"I-told-you-so" over other people's heads. It's a chance for people to hear an
opposing point of view but to move ahead with action_

I actually can't see it as anything other than a (potential) "I-told-you-so."
Why are you specifically highlighting that you disagree, if you are then
giving the go-ahead? You are the boss. If you approve something, ultimately
it's your responsibility.

If you really trusted the person you would give them full authority on the
decision without dropping your own agreement or disagreement into the mix.

~~~
donavanm
No, it works both ways. Ive personally been in the room where my VP and ~2
others favor product/feature A. The other ~6 people favor product/feature B.
_Everyone_ reports in to the VPs org. A round of discussion and it ends with
"Ok, I dont understand/agree with points B.1 B.2 & B.3 but the room is clear.
Lets move ahead with B, and make sure to follow up on answering those points
early."

Much more commonly it's applied in the context of group decision making.
Imagine Alice presents design Alpha for implementing a sprint story. Bob asks
some pertinent questions, outlines an alternative, Bravo, and explains his
reasoning. A round of discussion with Carol and Dan commences. Whether the
group decides on Alph or Bravo doesnt really matter. Everyone has had the
opportunity to ask, and answer, relevant questions. Everyone (hopefully) has
greater context and understanding of the context, risks, and intended outcome.
Everyone, including both Alice and Bob, is expected to stick with the decision
and move forward with that single implementation.

When IC's play "I told you so" theyre poisoning team morale and
disincentivizing others from speaking up. When managers resort to "just do it"
they're fundamentally failing to communicate context the team lacks, or
failing to understand the knowledge they're missing. Neither is an acceptable
pattern.

PS: six years at amazon as an IC

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tbirrell
I read about all the crap Amazon employees have to deal with. So it's hard to
view anything this guy does in a good light. IMO, anyway. I wonder how much
this philosophy contributes to the horror stories we hear out here.

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AndrewUnmuted
The horror stories don't resemble anything that I experienced during my five
years at Amazon. I think they're largely propagated by NYT and friends because
Amazon out-competed them in their own space.

Amazon is the best run company I ever worked for. By far.

~~~
Terr_
Any particular litmus-test items to distinguish good Amazon teams from bad
ones?

~~~
vaidhy
Ask them for the ticket count metrics - number of tickets, severity and age of
open ones. Overly ambitious managers tend to build unstable systems that will
break under load.

I am going through my second stint at Amazon and I enjoy working there.
However, it is not the best place for everyone.

~~~
donavanm
That's one (important) aspect. When looking at a team or individual I check
wiki contributions, design documents, commits, code review feedback provided
to others, ticket queue depth/volume, "cm" volume, customer forums, broadcast
sessions, and org role/level/tenure blend. Also for teams get a referral or
just send a "cold" email to have coffee with an IC on the team. I'd hazard
that most of those data sources work for most of the teams at Amazon.

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tellingya
Bezos might have got this from Colin Powell's 40/70 decision rule.
[http://integratedleader.com/articles/40-70rule.pdf](http://integratedleader.com/articles/40-70rule.pdf)

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rrggrr
The % of information missing versus the importance of the missing
information... between the two I've learned the hard way that you wait for the
right information. Perhaps Bezos way works well for capital rich companies, or
it could be my instincts aren't great. I only know that every time I rush into
a decision I pay more that I should and often have regrets.

~~~
matwood
I don't see waiting for 70% rushing at all. The point is that there is
_always_ another piece of information, so if you're waiting for the impossible
100% you'll never get anything done.

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vermontdevil
I thought of OODA Loop (Observe, Orient, Decide, and Act)

[https://en.wikipedia.org/wiki/OODA_loop](https://en.wikipedia.org/wiki/OODA_loop)

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squozzer
In principle, the ideas sound great. In practice, the biggest decisions seem
to have high switching costs (e.g. home purchase), by design, to reduce
flexibility.

So it might prove useful to pursue courses of action that provide maximum
flexibility.

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dmitripopov
The big problem is that the majority of people with 70% of information will go
into f*ckup 100% certain. You need to have a talent of some sorts to make
right decisions or at least reversible ones.

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bronz
this is some self-help guru type of bullshit.

