Are retail CEOs ready to ‘disagree and commit’ like Jeff Bezos?

Discussion
Photo: Wikipedia
Apr 13, 2017
George Anderson

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.”

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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"Size makes a significant difference in if or how Bezos’ doctrine can be applied."

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27 Comments on "Are retail CEOs ready to ‘disagree and commit’ like Jeff Bezos?"


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Dick Seesel
BrainTrust

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.

Max Goldberg
Guest

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.

Sterling Hawkins
BrainTrust

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.

Bob Amster
BrainTrust

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.

Charles Dimov
BrainTrust

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.”

Mark Ryski
BrainTrust

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.

Lyle Bunn (Ph.D. Hon)
Guest

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.

Stefan Weitz
Guest
Ugh — as a guy who was part of Microsoft’s growth for 17 years, I can attest to the power of this type of thinking but also can tell you that many retailers simply don’t have a.) the permission from their owners or investors to take a flyer on 70 percent confidence projects or b.) have the skills necessary to pull off said projects in-house. I was recently speaking to one of the former heads of finance at Amazon and he was recounting to me a story about how Jeff greenlit a project with an eight-year payback and a high beta. I don’t know of any retailer or brand that has that sort of time horizon. What Jeff did correctly 20 years ago was telling investors and The Street that it was going to be a bumpy ride and that he wasn’t always going to make decisions that made immediate financial sense and, if you didn’t like that, you shouldn’t buy Amazon stock. There is no single retailer or brand today that has that leverage.… Read more »
Lesley Everett
Guest

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.

Anna Tolmach
Guest
Instituting a culture like this is nearly impossible at large, consensus-driven organizations. That being said, I love Bezos’ approach. At other companies I’ve worked for they’ve attempted to solve analysis paralysis by delineating who had input on an issue vs. who had final decision making power. Those who had input had to “disagree and commit” if they disagreed with the final decision. The issue was that consensus was so ingrained that it never actually ever worked out this way. The company circled forever on the most basic decisions. There’s always more data you can get, but I think it’s important for decision makers to hear things like, “The analysis you’re asking for will take another two months, do you feel comfortable holding up our decision by nearly a quarter?” When it’s put into stark perspective, most decision makers would probably choose to go with what they have. In business school, our professors would always ask, who wants more information (about a case)? Almost the entire class would raise their hand and the inevitable response was,… Read more »
Anne Howe
BrainTrust

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.

Paula Rosenblum
BrainTrust

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.

Lee Peterson
BrainTrust

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.

Tony Orlando
BrainTrust

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.

Dave Nixon
BrainTrust
Dave Nixon
Data Analytics Solutions Executive, Teradata
2 years 1 month ago

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.

Kai Clarke
BrainTrust

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.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
2 years 1 month ago
The Amazon leadership model is difficult to replicate in established companies with distance from their original founder mentality. Being a manager and leader in any organization requires that you make decisions with insufficient information. By the time you have collected or generated the ideal set of data, you would have lost any inherent business advantage at best, or at worst end up playing perpetual catch-up as you descend into “irrelevance … painful decline… and death.” Legacy organizational structures and systems can become anchored to past successes unless you have the constant pounding and reminding from the likes of Intel’s late leader Mr. Grove urging that “only the paranoid survive,” or Mr. Bezos on being a “Day 1” company. Retailers are not immune to this phenomenon. As a former co-founder of a startup company, we projected our own vision of available data to create a future vision and act with speed that challenged legacy players’ existing investments and organizational structures. As long as you encourage challenging the status quo and building a culture of open experimentation… Read more »
Richard J. George, Ph.D.
BrainTrust

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.

Tom Erskine
BrainTrust
2 years 1 month ago

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.

Lee Kent
BrainTrust

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.

Jon Polin
BrainTrust

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.

Adrian Weidmann
BrainTrust

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.

Craig Sundstrom
Guest

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.

Harley Feldman
BrainTrust
This is not just a retail issue. The over analyzation of where to take a company next is endemic to all large companies, retailers included. Bezos has grown Amazon dramatically by continually investing in new ideas that are mostly not completely baked. He has discarded many ideas as not being feasible or provide enough value after trying them, but at least he tested them. Investors used to question his not focusing on the Amazon profit, but in the meantime, he has built the juggernaut of online retailing and taking business away from store only or slower moving retailers. My experience in the retail technology market is there is a hesitancy to try new ideas. The process of involving many functions and the number of people it takes to get consensus makes trying new ideas very difficult. I have never heard the term R&D with retailers; they always want to know full implementation cost which is a difficult discussion when a trial or pilot would be useful in having the right context for the business decision.… Read more »
Ken Morris
BrainTrust

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.”

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
2 years 1 month ago

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.

Ricardo Belmar
BrainTrust

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.

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