FrameworkDecision principleLeadershipDecision-makingProduct
Day 2 begins when a company manages to proxies and treats decisions as one-way doors
Jeff Bezos · Amazon's 2016 letter to shareholders (Day 1) · 2017
The idea
The 2016 letter asks how a large organisation keeps a start-up's vitality, and defines Day 2 as stasis followed by decline. Four defences are named. Customer obsession rather than competitor obsession. Scepticism of proxies: a process, a survey score or a metric starts as a stand-in for the goal and becomes the goal, and a company that is managing the proxy has stopped managing the thing. Embracing external trends quickly. And high-velocity decisions: most decisions are two-way doors that can be walked back, and deserve a light process, while the few that cannot deserve a heavy one. Treating every decision as irreversible is how a large company slows down.
Check whether the metric is still the goal or has become the goal, and reserve the heavy process for decisions that cannot be undone.
When it works
Product and leadership questions, assessing a large company's culture, and deciding how much process a decision deserves.
When it may fail
Fast decisions on two-way doors still compound into a direction, and a company can walk through many reversible doors into a corner. The frame is about the cost of process, not the quality of judgement.
How to use it
For a decision in front of you, ask whether it can be undone in a month at modest cost. If yes, decide with seventy percent of the information you would like. If no, slow down. Say which kind it is before saying what you would do.
Where it came from
Letter Amazon's 2016 letter to shareholders (Day 1) · Jeff Bezos
What the source says. Bezos defines Day 2 as stasis leading to decline, warns against managing to proxies such as treating process or survey scores as the goal, urges embracing external trends, and separates reversible two-way-door decisions from harder-to-reverse ones.
Connected ideas
Says something similar
Shipping is an output. Nobody is paying for outputsMeasure what changed for the customer, not what was shipped; a team given an outcome behaves differently from one given a list.
Says something similar
A system optimises the objective you wrote, not the one you meantWhatever you can measure and reward will be maximised literally, including the gaps between the measure and the goal.
Worth knowing first
Given a choice between flattering earnings and future cash flows, take the cash flowsTell investors in advance that you will optimise long-term cash flows over reported earnings, then do it, so the market can price the choice rather than be surprised by it.
Says something similar
A metrics question is a structured hunt: north star, guardrails, then the segmentClarify the metric, protect the guardrails, then decompose the drop by segment until it is isolated; show the process, not a guess.
Worth knowing first
The world pulls every company towards typical, and staying distinctive has a priceBeing distinctive is not a state but a cost paid continuously; stop paying it and the drift to typical begins.
Concepts
Put it to work on L3VLUP
More like this
- TechniqueProductBook
Ask about what people already did, never about what they would do
Evidence about demand comes from what people have already done and paid for, not from what they say they would do.
From The Mom Test · Rob Fitzpatrick
- Post-mortemLeadershipLetter
The mistake was how quickly we moved, not where: a chief executive locates the error
In a post-mortem, separate the direction from the pace and the explanation, and say which one failed.
From Netflix's third-quarter 2011 letter to shareholders · Reed Hastings and David Wells
- Decision principleDecision-makingBook
Weight an opinion by the record of the person holding it
In a disagreement, weight each view by that person's track record on the question, not by their rank or confidence.
From Principles · Ray Dalio
- Post-mortemFounders and companiesDocumentary
A board that accepts a narrative has stopped doing diligence
A compelling story is a claim to test, and the test for a technology is watching it work.
From The Inventor: Out for Blood in Silicon Valley · 2019