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The contrast was what struck me. We brought a couple proposals to our SVP.
In our first proposal, we asked for a major increase in funding. Tens of millions of dollars we wanted to spend in the coming months to improve our product.
In our second proposal, we planned to make a minor name change to our product, which we felt would make more sense to our customers.
After the standard reading time, our SVP gave us his verdict.
He said the increase in funding made sense. He said the math worked, and he would just like regular updates to see how the increase resulted in changes for the business.
We were 30 seconds into talking, and we had tens of millions in additional funding.
The second proposal went another way.
Name changes are one-way doors. I want to know that you've explored every option before we consider doing this. I don't think we're there yet.
We spent the remaining 45 minutes of the meeting discussing data we needed to gather and alternative options to clarify things for our customers. We did not get a green light to make our change.
At Amazon, we spent significant effort trying to turn every door into a two-way door. Two-way doors are reversible doors. They are decisions you can undo. They are decisions you can audit, and change direction as you learn more.
When increasing investment in a business, you can change your mind at any time. While the numbers were large, the cost to Amazon was relatively low. You either get a return on investment, or you don't. Either way, you learn more about your business. Plus, moving slowly has multiple hazards associated with it.
On the other hand, changing a business name can't be undone easily. It's a one-way door. While the cost to Amazon's pocketbooks might be minimal in the short run, it can have long-term ramifications. It requires a slower, thoughtful process to examine potential risk, experiment, and check multiple times that the decision is the right one.
Jeff Bezos on one-way vs two-way doors
From his 1997 letter to shareholders.
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.
As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.
Any companies that habitually use the light-weight Type 2 decision-making process to make Type 1 decisions go extinct before they get large.
Two-way doors — moving quickly
Bias for action is a highly valued trait for leaders. Most decisions we encounter at work will be two-way doors. There are numerous advantages for moving quickly on the majority of our decisions.
- Opportunity cost — The number of decisions we make is directly related to how quickly we make them. If we spend 2 hours on every minor decision, we can only make a few decisions a day.
- First-movers advantage — It's not always about getting to market first, but agility is directly related to making decisions quickly. You can launch first and respond to customer needs faster when your decision-making process is lightweight.
- Autonomy — Businesses often discount human feelings, yet there's real value in ensuring that team members feel autonomy. If your team members can make two-way decisions independently, you are adding an essential element of Drive (Take a look at the Drive book. Fantastic read.)
To be clear if a decision is a two-way door, you can ask a few clarifying questions.
- Risk — What's the worst-case scenario? A two-way door has an acceptable worst-case scenario.
- Change — If we change our mind, how do we undo this decision? A two-way door has a clear path to change direction.
- Impact — If the impact is small, the direction of the door may not matter. You can treat a one-way door as a two-way door if the results don't matter.
When you encounter two-way doors, you want to move quickly. Verify it is a two-way door, and then let someone close to the decision make the call. Move on.