Jeff Bezos Says This Is the Difference Between Good and Great Leaders

In his 2015 shareholder letter, Amazon’s CEO Jeff Bezos proposed two types of decisions that entrepreneurs and executives regularly face:

Type 1 Decisions.

Decisions that are irreversible and like one-way doors — if you make a decision and walk through one way, then you can never go back to the room you were in before.

Because of the irreversible nature of these decisions, Bezos has said that they should be made methodically, carefully, and with great deliberation and consultation. On the other hand, Bezos has also discussed ‘Type 2’ decisions:

Type 2 Decisions.

Decisions that are reversible and like two-way doors — if you make a wrong choice, then you don’t have to live with the consequences of that decision for too long. Instead, you can simply reopen the door and choose another way out.

Given the inherent flexibility and low risk of these decisions, Bezos has suggested they should be made quickly by high judgment individuals or small groups.

The Difference Between Good and Great leaders

The issue Bezos sees is that as organizations get larger, there is often a tendency for leaders to continue using Type 1 decision-making processes on most decisions, where a Type 2 decision process could be used instead.

This means that many high-level leaders are using their time on making decisions that are of a relatively low level of importance, and could most likely be effectively made by other employees.

If a leader is not able to discern between these 2 types of decisions and then act accordingly, Bezos believes that it can be a quick road to stagnation and risk aversion.

On the contrary, great leaders know the difference between these 2 types of decisions and are willing to give up control and delegate as much as appropriate.

This does not only free the leader of time for other essential tasks, but it also builds trust and elevates the skills of other employees in the organisation.