‘ DISAGREE AND COMMIT’ JEFF BEZOS’ WORDS TO LIVE BY IN ANNUAL LETTER
It’s always Day 1 for the demanding Amazon CEO, who insists it still is all about customer service
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” Amazon CEO Jeff Bezos, above
When there’s no consensus but a lot of conviction, Amazon founder and CEO Jeff Bezos has this advice: “Disagree and commit.”
It’s one of the nuggets of wisdom he offered up in his yearly Letter to Shareholders released this week. Decision- making clearly is a major focus of Bezos, who famously instituted a rule early on that no team at the company should contain more people than could be fed by two pizzas, to speed up communication and decisions.
Amazon’s goal is to make fast, quality decisions, which often can be done when about “70% of the information you wish you had” is available, Bezos wrote. Waiting for 90% means going too slow.
He advocates for “disagree and commit” as a way to save time. His teams don’t have to persuade him to take a particular route, they just have to convince him so he’s willing to take the gamble.
“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,” he wrote.
Amazon has gone stretches without turning a profit as it reinvests its sales juggernaut into ventures such as Amazon Studios, cloud computing, enhanced logistics and its Amazon Echo. Those bets have paid off, increasing its stock price by more than 20fold the last decade.
Amazon also has come under fire at times for a hard- charging work culture that can be brutal for employees, charges Bezos has rebuffed. The company’s unflagging growth has been a draw for the insights the Amazon founder drops into his annual letters, which he has been writing to shareholders since 1997. In that first one, he said it was Day 1 for both the Internet and Amazon, a theme he has returned to again and again.
For those looking for a crystal ball into what Bezos sees as the future, it’s clearly machine learning and artificial intelligence. While not as sexy as the artificial intelligence that runs Amazon’s cloud- based AI assistant Alexa, machine learning is key to improving Amazon’s core operations, even if it’s happening beneath the surface. It “drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more,” Bezos wrote.
This year’s letter began by saying what Day 2 looks like — someplace Bezos clearly doesn’t want Amazon to go.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
He offers “a starter pack” of ways to defend against that decline. Among them, continued obsession with the customer and a skeptical view of proxies.
Proxies often show up as processes. These can be good but can sometimes become the thing itself, with the process being the proxy for the intended results. Bezos didn’t make the comparison but it’s one of the reasons things went wrong for United Airlines, following processes for customer service but not thinking about customer service.
“We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it,” Bezos wrote.