Making Decisions and Business Cases the Amazon Way

AmazonWhen I work with leadership teams, one of the most common perceived barriers to greater agility is the way in which the business makes decisions. In many larger companies this is typically characterised by one-size-fits-all decision-making and lengthy business case documentation or powerpoint presentations filled with extensive projections based on very little. It’s a painful, broken process.

Somehow we feel more comfortable with a powerpoint presentation that sets out a linear progression for the project with set stage gates and forecast outcomes at every stage, even when those forecasts are based on contexts that are highly likely to change, or projections extrapolated from past data that is already out of date. It’s false certainty, and simply creates more work in justifying why you’ve moved away from those forecasts as the project progresses.

Far better surely to acknowledge when contexts are likely to shift, to set a directional course and a vision for the project outcome, but then be more fluid and adaptive in how you achieve that vision. Tracking progress towards a goal is important, but we need to be more adaptive than a linear set of rigid targets set out at the start allows for and instead be smarter about how we fund projects and track leading indicators.

The Jeff Bezos approach to decision-making at Amazon is instructive here. Executives in many of the organisations I deal with often complain about slow decision-making in the business. In his most recent shareholders letter Bezos describes how many larger, well-established enterprises make high quality decisions, but make them slowly, adopting a a one-size-fits-all approach to decision-making which is typically characterised by waiting until you have 90% of the information you need before making your choice. In many cases, he says, many less complex or easily adapted decisions can be made with around 70% of the information you wish you had. But it’s more advantageous to make the decision and course-correct if necessary than it is to slow everything down.

Similarly, a culture of consensus-driven decision-making where all stakeholders need to be aligned before you move forwards with something can also slow the company down. Amazon use a phrase “disagree and commit” as a useful way of acknowledging disagreement whist enabling the project to progress rapidly. High-velocity decision-making enables larger companies to act and behave like much smaller ones.

The Amazon approach to business case generation and approval is also instructive. Bezos famously banned powerpoint (as long ago as 2004) as a way of presenting a case, saying:

‘The traditional kind of corporate meeting starts with a presentation. Somebody gets up in front of the room and presents with a PowerPoint presentation, some type of slide show. In our view you get very little information, you get bullet points. This is easy for the presenter, but difficult for the audience.’ 

Instead, Amazon meetings are structured around a 6 page explanatory ‘narrative’ pitch (shortened for less in depth decisions). The first 20 minutes of a team meeting is spent in silence reading the pitch, after which the presenter fields questions and a decision is made. Says Bezos:

‘The reason writing a 4 page memo is harder than “writing” a 20 page powerpoint is because the narrative structure of a good memo forces better thought and better understanding of what’s more important than what, and how things are related.’

The data-rich six page narratives follow the same structure:

  1. The context or question.
  2. Approaches to answer the question – by whom, by which method, and their conclusions
  3. How is your attempt at answering the question different or the same from previous approaches
  4. Now what? – that is, what’s in it for the customer, the company, and how does the answer to the question enable innovation on behalf of the customer?

The approach allows for deeper thinking, better decision-making, better use of time, and also reduces the role and influence of politics in the process. Many large businesses that I deal with are choked with powerpoint presentations. The ‘narrative’ approach is a simple way to make better decisions faster.

When it comes to making decisions about product development, Amazon famously use a ‘working backwards’ approach that seeks to work back from the customer rather than starting with a product idea and trying to find a justification in a customer need. The product manager typically begins be writing an internal press release (with the end users as the imagined audience) about the finished new product, that describes the customer problem and how the new solution will be a marked improvement on the existing one. An example outline (quoted from here) to the press release may look like this:

  • Heading – Name the product in a way the reader (i.e. your target customers) will understand.
  • Sub-Heading – Describe who the market for the product is and what benefit they get. One sentence only underneath the title.
  • Summary – Give a summary of the product and the benefit. Assume the reader will not read anything else so make this paragraph good.
  • Problem – Describe the problem your product solves.
  • Solution – Describe how your product elegantly solves the problem.
  • Quote from You – A quote from a spokesperson in your company.
  • How to Get Started – Describe how easy it is to get started.
  • Customer Quote – Provide a quote from a hypothetical customer that describes how they experienced the benefit.
  • Closing and Call to Action – Wrap it up and give pointers where the reader should go next.

Taking this approach tests whether the solution and the benefits are exciting enough. If they’re not it doesn’t get built. The product manager has to iterate the release to capture benefits that are more interesting but iterating on a press release is a lot cheaper and more efficient than iterating on the product itself.

This may sound like a relatively minor element in supporting business change but is fundamental. Decision-making processes in many large businesses are no longer fit-for-purpose. The process for business case generation and approval is broken. It really is time for a better way.

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.

Image source


Also published on Medium.