Speed vs. quality. It’s the age-old data debate. And for global organizations and product teams trying to adapt to rapidly changing markets, the choice between high-quality decision making and high velocity decision making is a huge challenge.
Nowhere is this discrepancy in approach more apparent than at Day 1 and Day 2 organizations, two corporate operating models that Amazon’s CEO, Jeff Bezos, distinguished between in a letter to shareholders.
Day 1’s approach requires an organization to be customer-obsessed, ignoring all other constraints. Day 2, the more traditional approach, appeases a broad range of stakeholders, and relies on existing processes and resources when making decisions.
A number of differences cascade from those themes, but the distinction that has garnered the most attention is Bezos’ assessment that Day 2 organizations embrace high-quality decisions while Day 1 organizations focus on high velocity decision making.
High-Quality Decisions vs. High Velocity Decision Making
The power struggle between speed and quality is nothing new. Of course, Bezos does not leave us guessing as to his opinion of which approach is better.
“Most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”
If Bezos is correct, companies who embrace high velocity decision making will thrive, while companies who don’t will fail.
How Can a “Day 2” Organization Adopt a High Velocity Decision Making Approach?
To answer that question, we hosted a dinner and discussion with a diverse panel of experts and practitioners to share their insights. Our featured speakers included:
- Carrie Jaquith, Vice President, Digital Product Manager at Lazard
- Etugo Nwokah, Senior Vice President, Product Management at Zipari. Formerly Chief Product Officer of WellMatch + iTriage (an Aetna business)
- Eric Feige, Managing Director, VShift. Formerly Head of Fintech Services at Magenic and former digital leader at J.P. Morgan, Prudential, KPMG and Deloitte
- Benzi Ronen, CEO of Indose. Formerly Founder and CEO of Farmigo and former Vice President of Product Management at SAP
Each panelist drew on his or her experiences to explain how product teams can balance quality and velocity. Below are the four main takeaways.
1. Take the best of both worlds
Panelists immediately challenged the premise that an organization can be easily categorized as Day 1 or Day 2. Jaquith explained how forward-thinking organizations have a Day 2 infrastructure with “pockets of Day 1” sprinkled throughout.
This structure enables companies to maintain and grow existing business units and customer bases, while simultaneously experimenting with new opportunities. Panelists discuss several models that have worked with varying levels of success, such as skunkworks, innovation labs, and giving product teams dedicated time and resources to test new ideas.
Make an effort to understand risk thresholds for both the organization and your specific role, and realize that Day 1 and Day 2 aren’t necessarily mutually exclusive.
2. Apply a cost-benefit analysis
Not all decisions carry the same weight, Ronen explained, so make costs an explicit conversation. Talk with stakeholders, leadership, and junior employees about the ramifications of a wrong decision. If consequences are trivial or contained, then consider a high velocity decision making approach. If the potential fallout is enormous, then proceed with caution.
Ronen believes that without explicit cost-benefit analysis, product teams quickly default to the status quo, which is often an unnecessary abundance of caution. Of course, costs are only one side of the ‘cost-benefit’ equation. To successfully achieve high velocity decision making, it’s important for product leaders to also advocate for its benefits.
To that end, the most common mistake product managers make is quickly aligning with overzealous sponsors, Feige explained. To adopt Day 1 practices or, perhaps more importantly, to avoid them being shut down, you need to actively identify and engage “backchanneling naysayers,” he says. These are the executives who won’t make their skepticism obvious but who nevertheless need your convincing before they’re on board.
3. Use fear as a great call-to-action
Sometimes, no amount of data or positivity can convince wary executives that it’s time for things to change, especially if the company’s stock price or revenues have yet to peak. In these cases, don’t be afraid to leverage fear, Ronen argued.
By now, you should know and be able to cite the figures. Since 2000, 52% of Fortune 500 companies no longer exist. Only about 10% of companies – 52, to be exact – that were on the Fortune 500 list in 1955 are still on the list in 2019. Companies that don’t constantly stay one step ahead are by definition already one step behind.
In fact, striking fear is right out of Bezos’ playbook, as one shareholder letter clearly indicates: “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.”
The picture is likely not as bleak or black and white as Bezos put it, but nevertheless, you should consider making fear a part of your argument for Day 1 practices.
4. Be prepared for the long haul
At the end of the day, a Fortune 500 organization is not a startup, and you shouldn’t have expectations that the two share much in common. So buckle up for the long haul, Nwokah urged, and pace yourself.
When asked about one lesson from driving a Day 1 mindset that he’ll take with him for the rest of his career, Nwokah said simply: get energized. Large organizations can be slow to change, and some legacy systems can require months, if not years, to change. It’s critical not to burn yourself out, and to understand that this is a marathon and not a sprint, he explained.
As Alpha powers product experimentation for dozens of the world’s largest organizations, we frequently find ourselves at the intersection of Day 1 and Day 2. We’ll continue to explore the strategies and experimentation practices that successful product teams adopt.