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.

William Dershowitz on Multitasking

“Multitasking, in short, is not only not thinking, it impairs your ability to think. Thinking means concentrating on one thing long enough to develop an idea about it. Not learning other people’s ideas, or memorizing a body of information, however much those may sometimes be useful. Developing your own ideas. In short, thinking for yourself. You simply cannot do that in bursts of 20 seconds at a time, constantly interrupted by Facebook messages or Twitter tweets, or fiddling with your iPod, or watching something on YouTube.

I find for myself that my first thought is never my best thought. My first thought is always someone else’s; it’s always what I’ve already heard about the subject, always the conventional wisdom. It’s only by concentrating, sticking to the question, being patient, letting all the parts of my mind come into play, that I arrive at an original idea. By giving my brain a chance to make associations, draw connections, take me by surprise. And often even that idea doesn’t turn out to be very good. I need time to think about it, too, to make mistakes and recognize them, to make false starts and correct them, to outlast my impulses, to defeat my desire to declare the job done and move on to the next thing”

https://theamericanscholar.org/solitude-and-leadership/

Ryan Holiday on High Agency People

The mathematician and economist Eric Weinstein, has a category of individual he defines as a “high agency person”.  As Eric would elaborate on Tim Ferriss’ podcast:

“When you’re told that something is impossible, is that the end of the conversation, or does that start a second dialogue in your mind, how to get around whoever it is that’s just told you that you can’t do something? So, how am I going to get past this bouncer who told me that I can’t come into this nightclub? How am I going to start a business when my credit is terrible and I have no experience?”

It was Steve Jobs who once said that, “Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you and you can change it, you can influence it, you can build your own things that other people can use.”

Once you learn this, he said, you’ll never be the same again.

People have spoken of Jobs’ “reality distortion field” and this is really what it was. He believed more in his own agency – his own power to change and affect things – than he did in conventional wisdom or other people”s opinions.

But this idea of agency is a controversial one today. Most of discourse is marked with shibboleths that reveal our doubts about agency. We speak of privileges and systemic biases. We talk of our problems as if they are intractable, overwhelming and malevolently created. Even on the extreme right, there is an obsession with biological differences between sexes and races, about whether one gender or another is naturally better at this or that. Again, these are simply averages that have nothing to do with individuals. Our focus on it all, from either side, is a way of subtly erasing agency. We emphasise where we are disempowered rather than opportunities for empowerment.

The line from Hannibal when he was told that crossing the Alps was impossible: Aut inveniam viam aut faciam. I shall either find a way or make one.

This is what high agency individuals do. This is how they respond to bad odds, to big doubts, or frustrating situations.

https://journal.thriveglobal.com/are-you-a-high-agency-person-how-to-respond-when-you-hear-no-db3cafff6b1d

Learn, Build, Share, Repeat

“In my office, on a wall converted to a massive whiteboard, I’ve written “Learn, Build, Share, Repeat” in large letters. I think of this as both a mission and as an operating manual.

Learn” means always keep pushing to understand what you don’t already know, because as Isaac Asimov wrote, past glories are poor feeding. The moment you feel like you’ve won, or that you’ve got it all figured out, you are dead.

Build” is a forcing function. Words like “write,” “create,” or “teach” work here as well. If you force yourself to transform what you’ve learned into something that is your own, then you’ve really learned. You’ve also made something that can serve others.

Share” means connection. Sharing openly and transparently creates a feedback loop which accelerates learning and improves whatever it is you are building. It also creates a community of like-minded people with similar values and curiosities.

Repeat” emphasizes that this is a game which is never complete. This isn’t about accomplishments, goals, or endpoints. It is a romance with the process itself.

Patrick O’Shaughnessy in his “Investor Field Guide” newsletter