“I’ll never look at doors the same way again! Some doors only open one way—big decisions you can’t undo, so tread carefully. But others? They swing both ways. Make your move, and if it’s not right, step back and adjust. The key is knowing the difference and acting fast!”
In the late 90s, as Amazon was on its way to becoming a household name, Jeff Bezos shared a powerful insight in his shareholder letter. He explained that businesses face two types of decisions:
- Type 1 decisions are like one-way doors—consequential and irreversible. These require careful consideration because you can’t simply go back once you step through.
- Type 2 decisions are like two-way doors—reversible and flexible. You can act quickly, gather feedback, and course-correct if needed.
Bezos warned that as companies grow, they tend to treat all decisions like one-way doors, leading to slow decision-making, risk aversion, and ultimately, stifled innovation.
So how can business leaders avoid this trap?
Amazon’s Own Example – The Launch of Amazon Prime
When Amazon launched Amazon Prime, it was a risky move—a true Type 1 decision. Committing to free two-day shipping was a bold strategy that would deeply affect the company’s operations, finances, and brand. It wasn’t something they could easily reverse.
However, Amazon approached the program with caution, testing and perfecting the logistics before fully committing. Once launched, it became a game-changer for the business!
My Experience at Fermata
In my own venture, Career + Business Solutions, my co-founder and I faced a pivotal decision: should we expand our service offerings?
Initially, we deliberated endlessly, overanalyzed every option, and weighed all possible outcomes. Needless to say, it cost us valuable time, and the space of indecision was frustrating! We treated it like a Type 1 decision—a one-way door.
It was only when we let go of our fear of making the wrong choice that we acted quickly. This was actually a Type 2 decision—one we could adjust later if needed! We launched the new services, collected feedback from clients, and iterated as we went. This flexibility allowed us to grow faster and improve our offering without being paralyzed by over-analysis.
Quick Wins for Smart Decision-Making
- Identify the Type of Decision You’re Making
Before diving into a decision, ask yourself: Is this a one-way door or a two-way door?
If it’s a Type 1 decision, take the time to analyze and consult with your team. If it’s a Type 2 decision, don’t overthink—move quickly, gather data, and make adjustments as needed. - Create a Decision-Making Framework
For Type 2 decisions, empower small teams or individuals to act quickly. Jeff Bezos encouraged high-judgment individuals to make Type 2 decisions without getting bogged down in excessive analysis.
A similar framework worked for us at Fermata. We created clear guidelines around who could make what types of decisions. This reduced bottlenecks and encouraged fresh ideas to flow. - Experimentation Is Key
Businesses that thrive are often those willing to experiment and adapt. Type 2 decisions are perfect for testing new ideas. Encourage a culture where teams can experiment with products, strategies, or processes, knowing they can pivot if things don’t go as planned.
Data to Back It Up
Research from McKinsey & Company suggests that businesses with faster decision-making processes outperform their peers. In fact, companies that make decisions quickly are twice as likely to make high-quality decisions and see a 20% increase in overall performance.
Recognizing which decisions are reversible can help your business gain a competitive edge by avoiding the delays that come with over-analyzing every choice.
So, are you overthinking decisions that could be reversed?
What’s one decision you could treat as a two-way door and act on today?
Share your thoughts in the comments below!
