Jeff Bezos on Day 1 vs Day 2

I love this letter from Jeff Bezos and wanted to quote it at length. The full letter is at Recode.

 2016 Letter to Shareholders

April 12, 2017

“Jeff, what does Day 2 look like?”

That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.

True Customer Obsession

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.

Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.

Resist Proxies

As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.

A common example is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.

…Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.

Embrace External Trends

The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.

These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence.

High-Velocity Decision Making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too. We don’t know all the answers, but here are some thoughts.

First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong?

Second, 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. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

Third, use the phrase “disagree and commit.” This phrase will save a lot of time. 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.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time.

…Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.

“You’ve worn me down” is an awful decision-making process. It’s slow and de-energizing. Go for quick escalation instead – it’s better.

So, have you settled only for decision quality, or are you mindful of decision velocity too? Are the world’s trends tailwinds for you? Are you falling prey to proxies, or do they serve you? And most important of all, are you delighting customers? 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.

The Russel Conjugation

Eric R. Weinstein on The Russel Conjugation:

The basic principle of Russell Conjugation is that the human mind is constantly looking ahead well beyond what is true or false to ask “What is the social consequence of accepting the facts as they are?”  While this line of thinking is obviously self-serving, we are descended from social creatures who could not safely form opinions around pure facts so much as around how those facts are presented to us by those we ape, trust or fear. Thus, as listeners and readers our minds generally mirror the emotional state of the source, while in our roles as authoritative narrators presenting the facts, we maintain an arsenal of language to subliminally instruct our listeners and readers on how we expect them to color their perceptions. Russell discussed this by putting three such presentations of a common underlying fact in the form in which a verb is typically conjugated:

  • I am firm. [Positive empathy]
  • You are obstinate. [Neutral to mildly negative empathy]
  • He/She/It is pigheaded.  [Very negative empathy]

In all three cases, Russell was describing people who did not readily change their minds. Yet by putting these descriptions so close together and without further factual information to separate the individual cases, we were forced to confront the fact that most of us feel positively towards the steadfast narrator and negatively towards the pigheaded fool, all without any basis in fact.

…If we accept that Russell Conjugation keeps us from even seeing that we do not hold consistent opinions on facts, we see a possible new answer to a puzzle that dates from the birth of the web: “If the internet democratized information, why has its social impact been so much slower than many of us expected?” Assuming that our actions are based not on what we know but upon how we feel about what we know, we see that traditional media has all but lost control of gate-keeping our information, but not yet how it is emotively shaded. In fact, it is relatively simple to write a computer program to crawl factually accurate news stories against a look-up table of Russell conjugates to see the exact bias of every supposedly objective story.

Thus the answer to the puzzle of our inaction it seems may be that we built an information superhighway for all, but neglected to build an empathy network alongside it to democratize what we feel.”

https://www.edge.org/response-detail/27181

Information Graphics by Jeff McNeill

This is another presentation from Jeff McNeill (who brought you the Drucker and Goldratt Concept map).

This one is an introduction to Information Graphics, a topic I that has fascinated me ever since coming across Edward Tufte and recently stimulated by Dan Roam’s superb Back of the Napkin series of books on Visual Thinking.

Problem Solving 101

 

This little book is getting rave reviews, most notably from “Back of the Napkin” author Dan Roam who writes:

“A truly wonderful book has just hit the stands: Ken Watanabe’s Problem Solving 101. If you like The Back of the Napkin’s approach to looking at the world, you owe it to yourself to get this book.”

Problem Solving 101 – Official site

“Problem Solving 101” by Ken Watanabe – Amazon.com

How Social Networks Network Best

“One of the most important group decisions made by a bee colony is where to locate the hive. Bees use a kind of “idea market” to guide their discovery: The colony sends out a small number of scouts to survey the environment. Returning scouts that have found promising sites signal their discoveries with a vigorous dance, thus recruiting more scouts to the better sites. The cycle of exploration and signalling continues until so many scouts are signaling in favor of the best site that a tipping point is reached.

The bees’ decision making highlights both information discovery and information integration, two processes that are crucial to every organization but that have different requirements. A centralized structure works well for discovery, because the individual’s role is to find information and report it back. In contrast, a richly connected network works best for integration and decision making, because it allows the individual to hear everyone else’s opinion about the expected return from each of the alternatives. The bees’ process suggests that organizations that alternate as needed between the centralized structure and the richly connected network can shape information fl ow to optimize both discovery and integration.”

From: The HBR List 2009 – How Social Networks Network Best

Getting your head around charts

This week LifeHacker linked to a wonderful free PDF published by the Extreme Presentation Method that helps one choose what chart to use depending on the information you want to present.

The Chart Chooser [PDF 89Kb]

The chart chooser is step 7 in the 10-step Extreme Presentation method for designing presentations that drive action.

For more on this methodology see their blog on the Extreme Presentation site, and in Advanced Presentations by Design

AnyChart

Another chart related service I cam eacross this week was recommended by 3Tera: AnyChart.

From their website:

“AnyChart is a flexible Flash based solution that allows you to create interactive and great looking flash charts. It is a cross-browser and cross-platform charting solution intended for everybody who deals with creation of dashboard, reporting, analytics, statistical, financial or any other data visualization solutions.

Right Visualization helps you to turn your data into Right Decisions! If you need advanced, award winning charts and graphs, then AnyChart is the perfect solution for you.”

FlowingData

During a discussion about the grandmaster of Information and data visualization – Edward Tufte – a colleague recommended I check out FlowingData :

“FlowingData explores how designers, statisticians, and computer scientists are using data to understand ourselves better – mainly through data visualization. Money spent, reps at the gym, time you waste, and personal information you enter online are all forms of data. How can we understand these data flows? Data visualization lets non-experts make sense of it all. “

If you like data visualization, then FlowingData’s feed is definately worth subscribing to.

See also:

CaseOrganic’s Data Visualizations Flickr Collection

[Update: Make sure you check out Dr Simon Raybould’s concept of the “Golden Duck” , an entirely unnecessary graphic that draws attention to itself but contains no information. I finally have a name for my graphic pain! Thanks Simon.]

http://www.curved-vision.co.uk/presentation-skills-blog/2008/06/30/dont-duck/

Tinkering

Joe and Parse 2 has a brilliant post entitled “11 Things I Learned While Trying to Figure Out the Financial Crisis“.

I particularly like his last two:

  1. Cognitive errors. Megan McCardle of The Atlantic has compiled a useful list of cognitive errors that seem to have played a role in the crisis – both in creating the conditions that led to it and in compounding it…
  2. The Black Swan. Nassim Nicholas Taleb is my kind of economist. The basis of his philosophy is that, “The world we live in is vastly different from the world we think we live in.” He advocates “tinkering” as our best mean to change the world – and his theory of the markets take into account many of the previous points. While he was running his own hedge fund in the 1990s, he turned his own knowledge of his lack of knowledge – and others’ lack of knowledge – into enormous profits. It came at the expense of losing a little money 364 days of the year – but making enormous profits in that one remaining day. He would bet on market volatility – which he understood financial firms repeatedly underestimated. Taleb’s key insight is that we know very little of the world itself – and will be more often fundamentally wrong than right…

At the “Tinkering” link above, he explains Taleb’s idea by quoting from Brain Appleyard in The Times:

Taleb believes in tinkering – it was to be the title of his next book. Trial and error will save us from ourselves because they capture benign black swans. Look at the three big inventions of our time: lasers, computers and the internet. They were all produced by tinkering and none of them ended up doing what their inventors intended them to do. All were black swans. The big hope for the world is that, as we tinker, we have a capacity for choosing the best outcomes.

“We have the ability to identify our mistakes eventually better than average; that’s what saves us.” We choose the iPod over the Walkman. Medicine improved exponentially when the tinkering barber surgeons took over from the high theorists. They just went with what worked, irrespective of why it worked. Our sense of the good tinker is not infallible, but it might be just enough to turn away from the apocalypse that now threatens Extremistan.

If some of the words in the excerpt seem a bit odd, it is because Taleb is creating an entire new glossary for his ideas.

10 Skills You Need to Succeed at Almost Anything

Stepcase Lifehack has a great list of skills one needs to succeed at almost anything:. Here is the short version, they go into detail at the post:

1. Public Speaking
2. Writing
3. Self-Management
4. Networking
5. Critical Thinking
6. Decision-Making
7. Math
8. Research
9. Relaxation
10. Basic Accounting

[From 10 Skills You Need to Succeed at Almost Anything – Stepcase Lifehack]

Notice how many of these map to this blog’s categories?