2005 – Data, Guts and decision making

I have always been intrigued by the letters sent to shareholders by both Warren Buffet and Jeff Bezos. They are inspiring and, for wannabes like yours, indeed a source of motivation and hope. So I am creating a series of articles on what learnings I took away from the letters of Jeff Bezos. This is the ninth letter in the series.

You can check out the complete series here: https://alphonserajdavid.com/category/book-reviews/non-fiction/jeff-bezos-stakeholder-letters/

Learning #1: Incremental decisions are made with data

Data does the heavy lifting in terms of many routine business expansion decisions. Where to place the fulfillment centers? Where and when to stock goods etc. But what to do when we have no historical data to derive decisions from?

Learning #2: Bold decisions are based on guts and value systems

Sometimes the best decisions are not backed by data; heck, data might work against it completely. Jeff cites the example of Amazon prime as an example.

Learning #3: Focus on long-term profitability

Always focus on executing decisions that will create long-term sustainable profitability whilst providing improving value to your customers.

Learning #4: Customer experience is the end game

When wanting to make decisions with significant investments and when data is not backing you up but your gut is, see which way the customer experience falls. If the investment leads to increased customer experience go for it.

Most importantly though, Jeff says “Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy —it would also significantly limit innovation and long-term value creation.”

Learning #5: Go be wild. Make bold decisions