Bezos distinguishes two kinds of decisionmaking that affect how he thinks about risks .
Type I decisions are strategic decisions that are not reversible and in taking a decision , reasonable care must be taken .
Type II decisions are decisions that if we find we have made a wrong call , we can reverse . He uses the analogy of a swinging door - if you don ’ t like the decision , you can always go back .
Why he pointed this out is that as organizations get larger , there is a tendency to use the heavy-weight type I decisions for most decisions resulting in slow speeds , failure to experiment , diminished innovation and a great aversion to risk taking .
In making Type I decisions in Amazon , a detailed 6-page document is prepared . This document is reviewed in a meeting scheduled by key stakeholders . 30 minutes is allowed at the beginning to afford everyone the opportunity to read the document . Then feedback is shared and discussed before a conclusion is reached . This process ensures that big decisions are debated , and inputs allowed from relevant parties . Preparation of the 6-page document requires time to get right hence increasing the quality of discussions and decision making .
In making Type II decisions employees across the organization are empowered to make a call . Have you ever bought something from a shop and reached home and found that they gave you the wrong item ? Then on returning to the shop you are told by the person who sold it to you to wait for the manager who is away and returns after a week ; and even then , you have to fill forms to get an exchange or refund . The process is frustrating . But imagine if the salesperson is empowered to make an exchange or a refund and does so swiftly . This results in employee satisfaction and great experience for the customer . This also builds the capacity for decision making across the organization .
Sustaining Faster Decision
McKinsey , in an article published in 2020 , reviews how organizations made decisions pre-covid . Their research showed three characteristics that lead to better and faster decision making . These are : high quality debate , well understood processes and
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Slow decision-making processes lead to employee dissatisfaction , low productivity , low performance and in extreme situations , losses and closure of businesses .
a culture of empowerment . To facilitate action of these decision , organizations needed to align decisions to strategy , make decisions at the right level and commit to execution .
As companies seek to be more responsive to customer needs and to delivering excellent service , organizations have had to shift how they are organized and how they work to facilitate faster decision making . Many organizations have adopted an agile way of working where layers of hierarchy are flattened to allow for faster feedback from customers and decision making .
To sustain the speed of decision making , McKinsey recommends that organizations should :
• Focus on game changing decisions that will help the organization propel and deliver on its mission .
• Convene only necessary meetings with specific outcomes - routine meetings , after sometime become a formality . People being busy but not productive .
• Clarify who has the D - the decision . Many a time , members who are only to provide input take over decisions and stall outcomes . It is important to understand who have the role of giving input and who carries accountability for the final decision .
• Empower employees to make decisions and tolerate mistakes as this builds confidence and provides an environment of learning .
A wise person once told me , aim for progress and learning and not perfection . By making decisions with speed and by being vulnerable to learn as we go , we will grow our leadership capability and empower the teams that we lead .
Fawzia Ali-Kimanthi is the Mobile Data Lead , Safaricom Plc . You can commune with her on this or related matters vide email at : Fawziakimanthi @ gmail . com .