There are times when companies move too swiftly into a decision that hurts them. There are also occasions when they’re too slow and they fail. Jeff Bezos lives by a rule that addresses that problem.
In a 2016 annual shareholder letter, Bezos talked about his approach to decision making. He suggested that while it’s always nice to have access to all of the information someone wants, in the vast majority of cases, waiting until you know everything you should know is a problem.
“Most decisions should probably be made with somewhere around 70 percent of the information you wish you had,” Bezos wrote in the letter. “If you wait for 90 percent, in most cases, you're probably being slow.”
That’s a framework that every business owner should adopt.
But how do you know you have 70 percent of the information? Unfortunately, it’s hard to say--and Bezos doesn’t have a tried-and-true method for knowing. Indeed, it may take time and experience to know when it’s time to move and when it’s time to wait.
But generally speaking, consider knowing 70 percent of the information on hand when you’ve talked to advisers. Have you analyzed the market opportunity and digested the impact (both good and bad) a decision could have on your business? Even with all that, you may not know for sure if the move you’re about to make is good or bad. And there’s a chance that you’ll be wrong. If you know with absolutely certainty it’s the right decision, you’re probably too late.
Making sound decisions is critical to running a business, but so is knowing how to make a decision. Jeff Bezos has figured that out. Now you can, too.