Are retail CEOs ready to ‘disagree and commit’ like Jeff Bezos?
Amazon.com CEO Jeff Bezos published his latest letter to shareholders yesterday on what it takes to keep the business operating as a vital “Day 1” company rather than a “Day 2” business suspended in stasis, which falls into “irrelevance,” followed by “excruciating painful decline” and “death.”
In his letter, Mr. Bezos discussed, among other things, Amazon’s customer-centric approach and the need for speed in making business decisions.
On the latter point, Amazon’s CEO said that a major difference between Day 1 and 2 companies is not the quality of the business decisions they make, but the speed with which they make them.
“Most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow,” he wrote.
Another key to speedy decision making, according to Mr. Bezos, is a practice Amazon calls “disagree and commit.”
Mr. Bezos wrote, “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.”
In his letter, he offered an example in which he practiced his “disagree and commit” preaching. In one instance, the Amazon Studios team wanted to greenlight a project. While he didn’t agree on its merits, he responded quickly that he would commit to it with the “hope it becomes the most watched thing we’ve ever made.” It would have taken considerably longer to move on the project if others had to convince him.
“Note what this example is not,” he wrote. “It’s not me thinking to myself ‘well, these guys are wrong and missing the point, but this isn’t worth me chasing,’ It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way.”
- Bezos shareholder letter: Don’t let the world push you into becoming a ‘Day 2’ company – CNBC
- Amazon’s Jeff Bezos constantly reminds his workers about the biggest enemy: ‘Irrelevance. Followed by excruciating, painful decline.’ – Business Insider
- Bezos Says Artificial Intelligence to Fuel Amazon’s Success – Bloomberg
DISCUSSION QUESTIONS: Do you agree with Jeff Bezos that, to focus on speed, companies should make decisions with less information than they would like to? Is Amazon’s “disagree and commit” management practice common in retailing circles? If not, should it be?
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27 Comments on "Are retail CEOs ready to ‘disagree and commit’ like Jeff Bezos?"
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Principal, Retailing In Focus LLC
Amazon is in the rare position of being able to take risks quickly without disrupting its overall business model. In fact, you can argue that trying new things (only some of which will stick to the wall) is central to Amazon’s brand image. But there are other recent examples of “shoot first, ask questions later” — most famously, JCP’s moves in 2012 that backfired badly because of inadequate market testing.
That being said, I do agree with Mr. Bezos that there is plenty of room for risk-taking and decision by instinct (not just data) in retailing, if senior management creates a fast-moving culture where it can happen.
President, Max Goldberg & Associates
Most companies have enough information but are still afraid to commit. They want more data or more time to analyze the data they have. Or they are focused on quarterly profits rather than taking a long-term view on their business. These reasons and more are why Amazon is beating the competition and is a beacon for retail innovation.
Co-founder, CART
Paralysis by analysis. It’s rampant in much of retail today, usually stemming from a desire to be predictable (and not wrong) vs. taking risks to create something new. Incrementally adding new technologies without willing to risk anything in place today leaves traditional retail without much room for change. I’m very much supportive of the approach Amazon is taking and the results speak for themselves.
Principal, Retail Technology Group
I seriously doubt that many companies practice “disagree and commit.” The company culture has to be one in which, if “disagree and commit” is allowed, and even encouraged, top management doesn’t come back after a failure and fire those associated with the original idea. Nobody is going to want to take chances under those conditions.
Vice President of Marketing, OrderDynamics
I agree with you Bob. Culture is key to this approach. Most companies like the idea. Most will still focus on wanting 70 to 90 percent of the information before making a decision. By that point, the decision is probably no longer important. It all starts with the culture of risk tolerance and learning from failures rather than “failure firing.”
Founder, CEO & Author, HeadCount Corporation
Yes, I agree with Bezos on this. As the CEO of a smaller business, I’m faced with decisions that need to be made but where information is missing, will take too long to acquire or simply doesn’t exist. The majority of the very important decisions I make reside in a grey zone. In my experience, making a considered but faster decision without all the information has generally delivered better outcomes than when deliberations and information gathering dragged on. I do subscribe to the idea of “disagree and commit” and I do rely on the input from my senior leadership team, however this is far easier to do as a smaller company than it would be in the multinational corporations at which I have worked in the past — so size makes a significant difference in if or how Bezos’ doctrine can be applied.
Strategy Architect – Digital Place-based Media
I am a big fan of the big picture and information-based decision-making on which Bezos based his comments and that are the basis of Amazon advancement. Every executive wants investment validation — it’s the basis of strong decisions — and every executive always wants more information for fine tune decisions. But advancement is always based on actions and the sooner these can can be taken in support of a broad sweep of intentions, the better. As to every action there is a reaction leading to refinement and optimization; action with structures for fulfillment is the operative process.
Executive Vice President, Technology, Radial
CEO and President, Walking TALL Training & Consulting, Inc.
As a small business owner for the past 20 years, I know that opportunities can be lost while trying to ensure minimum risk and having all the facts. While Amazon is arguably in a fortunate position to be able to to take more risks than some businesses, the stakes are still high if they get it wrong. In a world that is fast-moving and where an idea can be out-of-date before it even leaves the drawing room this is a refreshing attitude to take. It is great to see a CEO empowering, trusting and leading people in this way.
CEO, Fuse Inventory
Principal, Anne Howe Associates
I agree that this practice can be very tricky but, hey, the CEO makes the big bucks and has the power to be innovative and be nimble or lag behind. Most take the low-risk behavior and that’s why guys like Bezos can stay ahead. Retail as a sector needs fewer laggards and more risk takers, especially in an era of rapid change.
Co-founder, RSR Research
Interesting question. In the case of a pure merchant who thinks he has his finger on the pulse of customer taste, I agree.
But there are other bad examples for operators, and the one that mostly comes to mind is Ron Johnson at J.C. Penney. By most accounts, he ignored data and went with his gut. That led the company down an awful path.
I’m used to “my way or the highway” guys, which is the other way of saying “disagree and commit.” Sometimes they’re successful. Sometimes they’re not.
Bezos did something brilliant. But he gets a ridiculous pass from his investors and he owns a disproportionate share of his company, so someone like Carl Icahn isn’t going to come along and say “The company should be broken up into its component parts for the good of the shareholders.”
But do I think anyone else in the real world should follow the Bezos doctrine? Beyond the notion of getting faster (but WITH, not without information), my answer is an emphatic no.
EVP Thought Leadership, Marketing, WD Partners
I think Bezos nailed it. What he’s saying is what most retailers are NOT doing. That release is about staying fresh, trying things even if you think it won’t work and moving fast. I absolutely love the day-one thinking as it applies to retail because it’s true now more than ever. When you come to work, be prepared to think that what you thought was great yesterday is not longer even a good idea, whether it’s merchandise, marketing, stores, web, customer base, whatever — you have to be prepared for the new.
Thinking like that is clearly what has them so far ahead of other retailers and poised to be a trillion dollar company. They put over five million branded AI kits in people’s houses before a single retailer turned their head. I rest my case, your honor.
Owner, Tony O's Supermarket and Catering
As a small business owner, I do this all the time. If I fail, I move on, but doing nothing is a sure sign that failure is in your future. The business climate on the street has never been this stressful, as small business is struggling to figure out how they can stay in the black and also grow, which is incredibly difficult in rural America. Staying innovative and always finding ways to improve customer service is the key for my business, as well as many others, and doing things the way your father did in the ’60s will simply not work — with few exceptions.
Amazon is able to take chances in a big way and they know it, so Bezos is in a position to be bold and still keep the business growing, as e-commerce is still growing in double digits.
Retail Solutions Executive, Teradata
Most execs aren’t going to commit like this because many are scared to go with their gut because of the REPERCUSSIONS, instead of the REWARDS. Bezos (and Jobs) is famous for knowing that moving quickly with limited information trumps analysis paralysis.
Moving forward without all the data (usually used simply to CYA) puts your job at risk, but performance makes sure your job is never at risk.
CEO, President- American Retail Consultants
Yes, executives all need to sometimes take chances and disagree with their subordinates, but agree to disagree to move to the next level. Waiting for total agreement is waiting to perish and no business can survive this. Disruptive thinking starts with disagreement, and this has proven to be the best way to move forward in today’s environment.
Independent Board Member, Investor and Startup Advisor
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
One of the hallmarks of great leaders is their ability to make bold decisions in the absence of complete information. We have all experienced situations in which we have suffered from analysis paralysis. What also separates Bezos and Amazon from the rest of the pack is the company’s refusal to become complacent about its success.
CEO, One Door
Unfortunately psychology creeps into business decision making in a way that is very dangerous for brick-and-mortar retailers.
When you’re “winning” like Amazon it is easy to try new things (regardless of your approach). If a project fails it’s OK because you can fall back on your growing core business. When you’re “losing” like some brick-and-mortar retailers, each business decision becomes harder because each decision is viewed as critical to survival.
What retailers need to understand is that regardless of approach, speed, the amount of information available, etc., when things are NOT going well is when you need to encourage innovation most.
Principal, Your Retail Authority, LLC
In these times, speed does make a difference. With that said, retailers also need a model that will allow them to try new things and succeed or fail faster. Back in the early days of Home Depot, in the days of the Bernie and Arthur show, they used to have a culture that allowed employees to come up with ideas and then actually implement them. The trick was being able to pull the project fast if it wasn’t working. I know this is a little different than making a decision to move forward with fewer facts but the bottom line here is and was always all about speed and being innovative.
For my 2 cents.
Cofounder and President, StorePower
Tech companies and startups are coming at retailers and forcing retailers to adapt to new and different cultures. Those retailers who can adapt may survive. Those who don’t will not. Bezos’ thinking is just the latest example of how traditional retail needs to change. Change comes from the top down. This is the time for retail leaders to show courage and the ability to take measured risks.
Managing Director, StoreStream Metrics, LLC
Most retailers are shackled by “paralysis by analysis.” I’ve participated in the design and measurement of in-store experiences that clearly proved their value — to all stakeholders including shoppers, brand vendors and category merchants only to see the projects “killed” because the retailer felt it was “too difficult to operationalize.” This translates to — “It would cause disruption to our status-quo processes and actually require work and commitment to implement — so it’s easier to kill the project.”
The seismic changes that are disrupting the retail landscape are happening quickly and retailers need to adapt, design, measure, optimize and iterate rapidly. Concepts need to implemented and tested within 3-4 months — no longer. Get to the “NO” as quickly as you can and then move on.
CFO, Weisner Steel
I suspect everyone who has “gambled and won” will recount stories like this. Those who gamble and lose go out of business … so we don’t hear about the downside as much.
Co-Founder and CMO, Seeonic, Inc.
Managing Partner Cambridge Retail Advisors
Jeff Bezos is spot on with his “disagree and commit” management practice. Consumers and retail practices are changing fast and retailers can’t wait to make perfect decisions. Retailers that continue to debate, discuss and ponder decisions will be the ones we read about in the news (i.e. bankruptcy announcements). We can’t let the perfect be the enemy of the good.
I like General George S. Patton, Jr’s quote for a guiding principle “A good plan, violently executed now, is better than a perfect plan next week.”
President, Protonik
Bureaucratic organizations develop a tendency to delay decision making for many reasons. Waiting for “more complete” information is one. More insidious is attempting to make everyone happy. So, Bezos’ spirit is accurate in the sense that companies need to do everything they can to encourage innovation and improvisation that leads to more effective answers.
But the theory of “decide quickly” is a proven myth. My advice is that a decision made before its time is as erroneous as a decision made too late. The book “Silence” about introverts discusses excellent research showing (a) biz school drives a culture of “faster decision” over “better decision and (b) sometimes that’s important but (c) many times it’s incredibly wrong. This is especially true for decisions that involve subtleties.
So there’s good spirit in Bezos’ comment for us to keep in mind. But he suggests it as policy. Following it as a rule will lead to as much (or more) error as it leads to good things. Perhaps this explains those major & long-lasting mistakes Amazon makes.
Retail Transformation Thought Leader, Advisor, & Strategist
This represents a truly agile approach to running a retail business. Amazon, however, has some key benefits other retailers may not have. First is a culture that not only encourages but is built on this type of behavior and attitude to making quick decisions. Most long-running retailers are saddled with the opposite culture that betrays agility. Second, they have such scale that they can afford to make multi-million dollar mistakes and not even blink despite not having a profitable retail business. They have so carefully built their brand around these ideas that wall street will not punish them for a failure because they know for every failure there may be a brilliant success. This scale allows them to take many more risks than most retailers are willing to tolerate. The combination of scale and agility allow Amazon to deliver innovation.