A good decision rule to
follow is that there are no simple rules for complex problems, but we can learn
from others on how to improve our decision-making.
Jeff Bezos of Amazon fame
has diligently worked on the Amazon decision-making process. As determined by
interviews and his shareholder letters, it can be boiled down to two key rules:
1. Make a decision if you
have 70% of the information you think you need. You will never have all of the
information you think you need so just accept it. Find an acceptable
information level of what you think is necessary to make a decision and then
act. This makes perfect sense in an uncertainty world. We will never have all
the facts. A corollary rule is to "disagree and commit". You don't
have to get 100% agreement on a decision but the organization has to commit to
action.
2. Get comfortable with
uncertainty through flexibility. Don't fret about decisions that can be
reversed. Have an exit strategy in case something goes wrongs. Allow for
flexibility because you may need it. Make sure you know what decisions can be
easily reversed. Don't avoid making decisions. Focus on fixing it, if it
is wrong.
Bezos also has strong views on powerpoint. He likes
written memos, six pages that can be read before a meeting begins. "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," Bezos wrote.
"PowerPoint-style presentations somehow give permission to gloss over
ideas, flatten out any sense of relative importance, and ignore the
interconnectedness of ideas."
A good trader will be comfortable in a Bezos world.
Accept you won't have all of the information you need and be flexible with a
reversal strategy.
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