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Take a look inside Amazon; What is the decision-making process in the most daring company in the world?

BingMag.com <b>Take</b> a <b>look</b> <b>inside</b> <b>Amazon;</b> <b>What</b> is the <b>decision-making</b> <b>process</b> in the <b>most</b> <b>daring</b> <b>company</b> in the world?

Today's digital age requires fast and quality decisions. However, decision-making in many traditional companies continues to face obstacles such as hierarchical layers, coordination committees, and various councils, and even the survival of these organizations is at stake. Without the use of algorithms and data to make decisions, traditional companies will certainly not be able to compete with today's technology and digital giants. In 1994, Amazon began the biggest decision-making revolution with one of the cornerstones of its business success: customer obsession. In this article, we'll look at how Amazon executives try to optimize the speed and quality of Amazon's decision-making process to outperform their traditional competitors. His business - that is, the obsession with the customer, to the extent that each customer is treated individually - made it the ultimate goal of his company. As we all know, the digital age was the engine that enabled a company like Amazon to treat each of its more than 100 million customers as if they were shopping in a corner store. But the magic of building such a system by Amazon is not just technological, it is organizational. Everything is about making quick and correct decisions. In this article we will talk about decision making on Amazon.

High quality and high speed decision making

There are 5 rules that can help you make high quality and fast decision making Tip:

You should know that there are two types of decisions

To achieve high speed, Bezos equips its organization and categorizes all decisions into two main types. In 2016, Jeff Bezos wrote in a shareholder letter that the first category is "irreversible and almost irreversible." These decisions are like one-sided doors. "Once you cross it, there is no way back, even if you give up." Such decisions must be made through a "heavy" process, slowly, methodically and with much consultation in order to be of good quality. Failure to make first-class decisions can lead to fatal and irreparable mistakes.

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are second-class decisions Which Bezos describes them as follows: "They are changeable, reversible - like great double doors. If you have made a wrong or non-optimal decision of the second type, you will not have to live with the consequences for a long time. "You can open that door again and come back." As CEO, you need to identify the second type of decisions and delegate them to other managers. The difference between these two types of decisions and consequently the two decision-making mechanisms of the company must be quite clear. This transparency can defeat existing crippling bureaucracies and, over time, improve staff decision-making and analysis.

Do not make all the decisions yourself

It does not matter who you and How hard you work with your core management team. Only 24 hours a day is an opportunity and this is not enough time to make all the important decisions yourself. As your business grows, if decision-making is always focused at the highest level, sooner or later, you and your top executives will become the biggest obstacle to the rapid growth of the collection.

Don't wait for all the information

As Bezos wrote in his shareholder letter in 2016, "Most decisions should probably be made with about 70% of the information you wish you had." If you wait for 90% of the information, most of the time you probably will not make a timely decision and you are slow. In addition, in both cases, you have to be very fast to be able to distinguish right from wrong. "If you are good at correcting things, making mistakes may not cost as much as you think, while being slow will certainly be expensive."

When several different actions are required when validating type II decisions, you can turn a traditional sequential process into a simultaneous high-speed, high-quality decision-making conversation. Amazon project teams, for example, are free to choose between in-house services and outsourced vendors. It can Take up to three months to make such decisions in the traditional decision-making and selection and verification processes described earlier, and often leads to poor quality decisions. Amazon is an ongoing patent machine. The company was able to develop the fastest invention process. This includes a clear and written definition of the product that includes both inputs and outputs. The company's senior executives select a leader, and the leader selects an integrated multifunctional team, also known as an independent, multi-disciplinary team. The team's full-time job is to complete the project and do nothing else. They think and implement different designs on different projects until the project is completed and operational. Using this method to speed up and shorten the decision-making cycle in companies can have amazing effects.

BingMag.com <b>Take</b> a <b>look</b> <b>inside</b> <b>Amazon;</b> <b>What</b> is the <b>decision-making</b> <b>process</b> in the <b>most</b> <b>daring</b> <b>company</b> in the world?

Do not wait for everyone to approve

You have probably all experienced delays in decision-making due to the absence or opposition of one person. In some cases, one can exercise one's veto. Sometimes a decision is made and then discussed again in another meeting. All of these can be very tedious and time consuming and affect the quality of the decision.

Resolving this "disagree but stay committed" is not an easy task. In one of Amazon's experiments, the production team waited for Jeff Bezos' approval of a TV series, but Bezos did not believe in that series. "I'm against the idea, but I'm totally committed to it," he told his team. "I hope this collection becomes the most visited collection that Amazon has ever produced." The problem was solved so easily. Imagine how much energy and time it would Take for the team to re-investigate, find evidence to convince Bezos, and then gain his commitment and cooperation.

Bezos says, When Everyone commented, if you still have different opinions and you disagree with each other, it is good to say that I know that there is no consensus on this issue and we disagree with each other, but are you willing to bet on that? Oppose but are you committed to work? As long as you are talking about this, no one knows the outcome; So your coworker will probably answer "yes" to you.

Of course, this is a two-pronged approach. Just as team members must adhere to the group leader's opinions despite opposition, so the leader and manager sometimes have to adhere to a decision despite their opposition and support their group.

How Amazon Controls the quality of decisions?

In the previous section, we described Amazon's mechanisms for speeding up the decision-making process. But What does the company do to maintain quality in decision making?

Finding the best truth

One of the most important decision principles on Amazon is finding the best truth. In traditional companies, due to the inevitable delay, distortion and manipulation of information occurs between the layers of the company and invalid information may reach the decision-making layers; So many decisions are made on the basis of misinformation.

Rick Dalsell, former Amazon CEO and right-hand man Jeff Bezos, says Bezos always tries to find the best truth. Of course, this may seem obvious and simple. But this simple fact is one of the biggest challenges for traditional organizations, with many hierarchies. Amazon tries to root out every flaw and find the root cause.

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At Amazon, an employee is responsible for each of the criteria. If this person finds an anomaly, even if it's only related to a customer, he or she has a duty to find out the root cause of the anomaly. This means that the person in charge has to re-experience the whole process from a customer's point of view and check everything.

Bezos sometimes even does it himself and checks the data. For example, in a meeting about prolonging customer waiting times, he picked up the phone himself and called Amazon to tell the difference between What he was told and the truth. In the reports, this time was mentioned as one minute, but his waiting time was more than 4 minutes!

Imagine the possible changes

In addition to trying to find the best truth, Bezos He tries to Take a step forward. That is, it always uses a future-backward perspective. That is, he imagines how things will change in the future if some changes are made. For example, in 2005, Amazon executives disagreed with Bezos' view of launching the Prime system (a one-year free shipping for $ 79). They had their reasons. Shipping costs were usually around $ 8 per order, and assuming each Prime member had about 20 orders per year, Amazon would have to spend $ 160 to ship products, while receiving only $ 79. All the data was against this decision.

But why was Bezos determined to do so? The key to Bezos' main focus was on engaging and captivating the customer. Bezos posed an important question that had previously been overlooked: "How will the cost of transportation change?" He actually had a vision for the future-backward. He believed that the cost of transportation would be reduced. This is because increasing customer purchases will increase Amazon sales and shipments, and this change in scale will allow them to negotiate further discounts with shipping companies. In addition, more sales means more interaction with the customer, which means more data is obtained from the customer, and this in itself is very valuable.

BingMag.com <b>Take</b> a <b>look</b> <b>inside</b> <b>Amazon;</b> <b>What</b> is the <b>decision-making</b> <b>process</b> in the <b>most</b> <b>daring</b> <b>company</b> in the world?

Fighting Group Thinking

Encouraging conflicting opinions is another principle of decision making on Amazon. Bezos placed great emphasis on avoiding group thinking and strongly resisted the popular belief that harmony and uniformity of opinion were desirable. He expects his employees to challenge him. He wants a quality discussion with people who come up with new ideas, different perspectives and often destructive ones. Bezos actually believes that truth only emerges when ideas and opinions are expressed against each other without compliments or fears. Oppose, challenge it with respect. "They should not praise and praise unanimously and unintentionally for the uniformity of the environment and opinions in decision-making."

They have an interesting mechanism for doing so. During some Amazon sessions, a mobile app is used for voting. Attendees may vote anonymously several times during the session to agree or disagree. All possible reasons for the registered objection will be thoroughly investigated later. This data is analyzed and possible decision biases on this basis are eliminated. Implementing this process improves the judgment of the whole team.

Examine everything through experimentation

Jeff Bezos believes that when people have real disagreements or that the future is uncertain Instead of hot and endless arguments to convince each other, it is better to try them in practice. A clear example happened in 2011 on Amazon. As usual, Jeff Bezos discussed with the company's marketing executives. They argued that Amazon should use radio and television advertising to increase its customer base.

How do we decide when their views are so conflicting? Bezos asked the marketing department to run TV commercials in two cities and then measure the growth of local purchases. The experiment was carried out and the result was clear: "There is no sufficient justification for investing in these advertisements." Using this powerful experiment, Bezos not only canceled all TV commercials, but also made fundamental changes to the company's marketing mechanism. Today, Amazon is one of the best and most famous brands in the world, thanks to its traditional marketing efforts. Their first priority is customer satisfaction. The user experience is as personalized as possible, and this will make the customer admire and repeat the purchase.

What if our decision was wrong?

Jeff Bezos wrote in a letter to shareholders: We will make bold investment decisions where we have a good chance of succeeding and gaining market leadership. Some of these decisions and investments will work and some will not. In any case, we will learn a valuable lesson.

What is unique about the learning method on Amazon? Their secret weapon is moderation. Before making a decision, they ask questions such as What factors should have been considered but not? What assumptions did we have and why some of them were not logical? What important technological advancement did we have in mind, and why did we fail to achieve it? The list of such questions could go on and on. Of all the data and inputs a decision makes, the most important are individuals and people. Even when you make the right business decision, if you put the wrong person in charge, the effort will likely fail.

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Amazon management monitors and measures various metrics along the way. The organization believes that if the inputs are right in terms of time, quality and quantity, the goals will be achieved.

Finally, you should always keep in mind that decision making is nothing more than a choice. Tough decisions force us to choose between the two good ones or to weigh the two bad ones. There is no perfect solution and everything has both positive and negative aspects. In a speech, Bezos asked his audience, "Do you choose the easy life or the service life and adventure?" "Will you be transparent, even at the cost of upsetting others, or will you be kind?" All of these examples show that our decisions have two aspects.

Of course, Bezos did not expect all of his speakers to choose paths such as service rather than easy life. But for Amazon employees, he urges everyone to follow the same principles and methods that lead to good decisions!


Source: chiefexecutive

Tags: take, look, inside, amazon;, what, decision-making, process, most, daring, company, world?

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