Decision-Making: Reversibility and Speed

I read an old Amazon shareholder letter recently. In it, Jeff Bezos outlined how he thinks about decision-making. He broke it down into two categories:

Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

This framework simplifies how to think about decisions in a way that most can easily grasp.

I agree with most of Jeff’s thinking, except around speed. I think the appropriate speed for type 1 decision-making depends on the stage of the company. Jeff says type 1 decisions should be made slowly. That’s not a great approach for early-stage founders, who should be careful and thoughtful about their type 1 decisions but shouldn’t aim to make them slowly. They should try to get to 70% to 80% confidence as quickly as possible and decide. If the decision is wrong, you learn and improve your decision-making going forward. If you never make a decision or decide too slowly, you could be dealing your company a death blow.

I’m going to start think about my own decisions as type 1 or type 2 and aim to improve how quickly I make type 1 decisions.