How to Handle Conflict: Disagree and Commit [Lessons from Amazon & ‘The Bezos Way’]

How Amazon’s Jeff Bezos Propels Innovation

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos Amazon’s founder and CEO Jeff Bezos once remarked that it takes five to seven years before the innovation seeds that Amazon plants flourish enough to have a significant impact on the economics of the business.

Since its founding in 1994, Amazon has made endless investments in expanding its business models. It has successfully used its money-making ventures to bankroll explorations into peripheral lines of business. Many of its capital allocation decisions haven’t yielded strong profits; yet, Amazon has flourished beyond everyone’s expectations and its growth potential is undeniable.

Central to this innovation strategy has been Bezos and his leadership team’s foresight, early commitment, and stubborn confidence in the prospect of R&D. Under Bezos’s direction and long-term focus, Amazon still operates as a founder-driven start-up in several major areas.

Bezos has a compelling cultural influence and has institutionalized his distinctive entrepreneurial mindset across the company. His core values are codified as Amazon’s 14 Leadership Principles, one of which is “Have Backbone; Disagree and Commit”:

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

“Disagree and Commit”

Jeff Bezos’s latest short-but-compelling annual letter to his shareholders contains pearls of wisdom on leadership, management, and teamwork. Read the letter; it won’t take long.

Speaking about high-velocity decision making in an ingenious culture, Bezos says he encourages Amazon’s leaders and employees to use the phrase “disagree and commit” to disagree respectfully and experiment with ideas:

Use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with “I disagree and commit and hope it becomes the most watched thing we’ve ever made.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.

Note what this example is not: it’s not me thinking to myself “well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars, I’m just glad they let me in the room at all!

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos: Disagree and Commit Bezos’s “fail-and-learn” refrain echoes what he wrote on risk-taking in Amazon’s first annual shareholder letter in 1997: “Given a 10 percent chance of a 100-times payout, you should take that bet every time … Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” That letter has become Amazon’s manifesto on the benefits and methods to long-term thinking and Bezos quotes that letter in every year’s annual letter.

To “disagree and commit” compels people to step out of their comfort zones and to sincerely commit to a project’s success. There is no room for sabotage and disruption—neither can people wait in the wings to exclaim “I told you so.” To “disagree and commit” is to be willing to take prudent risks by acknowledging that others may have diverse beliefs, approaches, ideas, and styles.

Idea for Impact: Embrace Failure because it Leads to Innovation

Many people want to be curious, creative, and experimental—they like to take initiative and investigate new products and solutions. But, when facing difficult choices, they’re naturally afraid of what they don’t know. Self-doubt sets in. They resort to safe and predictable processes. This mindset stifles the very inventive approach they want to apply and foster.

Fear of failure and self-doubt are not usually rooted in facts. They’re emotional. Don’t let this emotion make you play it safe. Don’t overthink your way out of challenges. Understand the types and amounts of risks that are acceptable to you. When facing the prospect of failure, you’re more likely to get unstuck by trying low-risk actions. Experiment. Fail. Learn. Innovate.

Success may instill confidence, but failure imparts wisdom.

How to Conquer Cynicism at Your Workplace

How to Conquer Cynicism at Your Workplace

Enthusiasm rubs off on others

A few weeks ago, I met a friend at Chick-fil-A. When it was my turn to order, I told the woman taking our orders that I am vegetarian and couldn’t eat much of the offerings on her menu. The woman asked me, “How about a milkshake? I make the best strawberry milkshake!” I could not misjudge her sincerity and pride. It’s not often that one is asked anything like that at any service-business, let alone at a fast food chain restaurant.

In a world of work that’s so rampant with cynicism, there’s nothing more refreshing than encountering employees who are engaged, cheerful, and take pride in what they do.

In the same vein, in The HP Way (see my summary & review), author David Packard and co-founder recalls an engaged worker at Hewlett-Packard:

I recall the time, many years ago, when I was walking around a machine shop, accompanied by the shop’s manager. We stopped briefly to watch a machinist making a polished plastic mold die. He had spent a long time polishing it and was taking a final cut at it. Without thinking, I reached down and wiped it with my finger. The machinist said, “Get your finger off my die!” The manager quickly asked him, “Do you know who this is?” To which the machinist replied, “I don’t care!” He was right and I told him so. He had an important job and was proud of his work.

Conquer Cynicism and Negativity in a Workplace

How to conquer cynicism and negativity in a workplace

Cynicism is an upshot of distrust in the workplace. Cynics have misgivings about their managers’ and leaders’ motives. Cynics are further aggravated by the comparatively lofty salaries commanded by corporate leaders. The once-presumed social contract between employers and employees has dissolved, and cynics believe that given the chance, their employers will exploit their contributions.

The damage of cynicism is evident in lower levels of commitment, distrust, blame, criticism, politicking, divisiveness, pessimism, negativity, and sarcasm. Moreover, cynicism worsens with employees’ age and tenure.

Here’s how to conquer cynicism:

  • Firstly, don’t be cynical yourself. If you display even a hint of pessimism, you’re likely to feed into your team’s cynicism, especially if you’re a manager.
  • Try to love—at least show some passion—what you do and whom you work with. Passion for your work brings a remarkable sense of meaning and attracts opportunities for growth.
  • Recognize that people bring their entire selves to their jobs; they don’t turn off their hearts and souls when they come to work. Today’s demanding and competitive workplace requires of employees not only stamina to work exceptionally hard but also their hearts-and-minds’ commitment to bring creativity and insight to their efforts.
  • Care for people and understand what drives them. Money is not as powerful a motivator for most people than when they truly don’t have enough of it. Beyond a threshold, people are more motivated at work by the opportunity to learn, grow in responsibilities, contribute to a cause, and get recognition for their achievements.
  • Encourage two-way flow of information, identify and change stress-provoking work patterns, clarify their roles, convey clear and concise objectives, coach and give regular feedback.

Idea for Impact: Employees who are engaged are more productive. Determine what makes your employees most engaged in their work. Ask what parts of their jobs they like the best and what you could do to decrease their job pressures. Engage them by tapping into their natural talents and strengths.

Make Decisions Using Bill Hewlett’s “Hat-Wearing Process”

“Reasons pro and con are not present at the same time”

My previous article about Ben Franklin’s T-Chart method in making difficult decisions quoted him mentioning this as a key challenge of fact-collecting and decision-making:

When difficult cases occur, they are difficult chiefly because while we have them under consideration all the reasons pro and con are not present to the mind at the same time; but sometimes one set present themselves, and at other times another, the first being out of sight. Hence the various purposes or inclinations that alternately prevail, and the uncertainty that perplexes us.

Bill Hewlett’s “Hat-Wearing Process”

Bill Hewlett's Bill Hewlett, co-founder of Hewlett-Packard (HP,) developed an effective “hat-wearing process” in his decision-making. When confronted with a challenge, Hewlett used a three-pronged approach to take the time to reflect, collect input from others, and develop a sound judgment about the matter at hand.

  1. Whenever an HP employee approached Hewlett with an innovative idea, he put on his “enthusiasm” hat. He listened, expressed enthusiasm, appreciated the creative process, and asked wide-ranging but not-too-pointed questions about the idea.
  2. A few days later, Hewlett wore his “inquisition” hat and met the inventor. Hewlett asked many pointed questions and meticulously examined the facts and the virtues. He critically examined the idea, but adjourned without a final decision.
  3. A few days later, Hewlett wore his “decision” hat and met with the inventor. Hewlett discussed his opinions and conveyed his decision with logic and sensitivity.

In a discussion about the corporate culture of enthusiasm and creativity that the founders engendered at Hewlett-Packard, cofounder David Packard recalls in The HP Way (see my review / summary) that even if the decision went against the inventor, Bill Hewlett’s “Hat-Wearing Process” provided the inventor with a sense of satisfaction that Hewlett had carefully considered the ideas.

Idea for Impact: Make Considered Decisions

Use the “hat-wearing process” to listen to and mull over facts about a decision to be made, collect input from others, develop perspective that comes only with time, and make sound, thoughtful decisions.

Compliment with Edward de Bono’s ‘Six Thinking Hats’ thought process to stimulate creativity.

To Inspire, Pay Attention to People: The Hawthorne Effect

The Hawthorne Effect: When managers pay attention to people, better morale and productivity ensue

The Hawthorne Experiments

Sociologist Elton Mayo’s Hawthorne Experiments marked a sea change in industrial and organizational psychology. In the late 1920s and early 1930s, Mayo led this famous series of experiments on workers’ productivity at a Western Electric factory in the Chicago suburb of Hawthorne.

The experiments’ initial purpose was to study the effects of workers’ physical conditions on their productivity. The lighting in the work area for one group of workers was dramatically improved while another group’s lighting remained unchanged. The productivity of the workers with the better lighting increased.

The experimenters found similar productivity improvements when they improved other working conditions, viz., work hours, meal and rest breaks, etc. Surprisingly, the workers’ productivity increased even when the lights were dimmed again. In fact, even when everything about the workplace was restored to the way it was before the experiments had begun, the factory’s productivity was at its highest level.

Recognition and even simple acknowledgment can give people a boost

When Elton Mayo discussed his findings with the workers, he learned that the interest Mayo and his experimenters had shown in the workers made them feel more valued. They were accustomed to being ignored by management.

Mayo concluded that the workers’ productivity and morale had not improved because of the changes in physical conditions, but rather from a motivational effect—the workers felt encouraged when someone was actually concerned about their workplace conditions.

'The Social Problems of an Industrial Civilisation' by Elton Mayo (ISBN 0415436842) The Hawthorne Experiments understood the individual worker in a social context. The resulting insight was that employees’ performance was influenced not only by their own innate abilities but also by their work environment and the people they work with. Mayo wrote in The Social Problems of an Industrial Civilisation, “The desire to stand well with one’s fellows, the so-called human instinct of association, easily outweighs the merely individual interest and the logic of reasoning upon which so many spurious principles of management are based.”

Over the decades, the methodology and conclusions of the Hawthorne experiments have been widely debated. Yet the key takeaway is profound: when managers pay attention to people, better morale and productivity ensue.

Idea for Impact: Employee engagement is the very heart of effective management

Inspire your employees by asking them how they are doing. Let them in on the plans for your organization, seek their opinions, recognize them, appreciate their work, and coach and give them feedback.

Even a little appreciation and praise can go a long way to boost employee morale. The desire for recognition is a basic human need; and managers can easily fulfill this need with the aim of bringing out the best in people.

Use Zero-Base Budgeting to Build a Culture of Cost Management

Zero-Base Budgeting

Traditional Incremental Budgeting

As part of the traditional budgeting process, managers tend to roll their budget over from one year to the next. In addition to accounting for any strategic initiatives or headcount changes, they simply add to every line-item in the previous year’s budget a certain percentage “and then some” to account for cost inflation. They assume that the ‘baseline’ is automatically approved, so they justify just the variances versus prior years.

The drawback of this budgeting process is that nobody questions the underlying ‘baseline’ costs. Further, these cost increases are carried from year to year.

Zero-Base Budgeting

'Zero-base Budgeting' by Peter A Pyhrr (ISBN 047170234X) In the 1970s, Peter Pyhrr, a Texas Instruments accountant, formally developed zero-base budgeting. In his influential Harvard Business Review article and a book titled Zero-base Budgeting, Pyhrr advocated that a prior year’s budget should not be used as a benchmark for the next year’s budgeted costs.

With zero-base budgeting, managers prepare a fresh budget every year without reference to the past. Consequently, they start every line-item in the budget from a zero-base even if the amount didn’t increase from the previous year. They are thus forced to justify all claims on their organization’s financial resources as if they were entirely new claims for entirely new projects.

Advantages and Disadvantages of Zero-Base Budgeting

Zero-base budgeting advocates say that it detects inflated budgets and unearths cost savings by focusing on priorities rather than simply relying on the precedent. Managers secure a tighter focus on operations by justifying each line-item in their budgets, thereby reducing the money they allocate to the lowest level possible. Managers can also contrast competing claims on their ever-scarce financial resources and therefore shift funds to more impactful projects.

Zero-base budgeting critics call attention to the many practical difficulties of implementing this time-consuming tool. More importantly, since zero-base involves give-and-take, the budgeting process is susceptible to favoritism, cronyism, and political influence.

3G Capital’s Success with Zero-Base Budgeting

'The 3G Way: An introduction to the management style of the trio' by Francisco S. Homem de Mello (ISBN B00MKKWZME) Zero-base budgeting has garnered much attention in the last few years as the centerpiece of an aggressive cost-cutting recipe used by 3G Capital, a thriving Brazilian buyout firm that’s renowned for its parsimonious operations. 3G’s predominant investment strategy is to acquire and then squeeze value out of companies, particularly in the food and restaurant industries.

At Anheuser-Busch, InBev, Tim Hortons, Burger King, Heinz, Kraft, and other acquired companies, 3G’s hard-nosed managers have used zero-base budgeting to initiate sweeping cost cuts. They’ve shut down factories, laid off thousands of factory workers, eliminated hundreds of management jobs, sold off corporate jets, forced executives to fly coach, restricted employees’ office supplies to $15 a month, and even asked employees to seek permission to take color printouts.

'Dream Big' by Cristiane Correa (ISBN 8543100836) Inspired by 3G, many other companies have adapted zero-base budgeting to root out bloat. Some have even gotten carried away—for example, Pilgrim’s Pride (an American meat-processing company) used zero-base budgeting to measure how much soap employees use to wash their hands and how much Gatorade hourly employees consume during breaks.

Idea for Impact: Zero-Base Budgeting Is an Effective Cost-Management Tool

Cutting operating costs is an ever-bigger priority at many organizations. For each line-item in your budget, ask “Should this be done at all?” and “Is this the most efficient and effective use of our resources?”

Consider zero-base budgeting to rigorously find cost-effective ways to improve your operations. It can bring about cost discipline, force your operations to become lean, and ultimately boost your bottom line.

Suggested Reading

How to Promote Employees

How to Promote Employees

Job Promotions Can Be Stressful

A job promotion is generally cause for celebration and gratification. However, it can be a source of deep anxiety for many employees: they tend to suffer additional mental strain and are less likely to find time to go to the doctor. Research at the University of Warwick found that “the mental health of managers typically deteriorates after a job promotion, and in a way that goes beyond merely a short-term change.”

Promote Employees Who’ve Shown Some Evidence of Success

Before you decide to promote an employee, ask yourself the following six questions about the candidate. The more affirmative answers to these questions, the better the chances for the promotion to succeed. Examine and resolve any “no” answers before considering the employee for other job transitions.

  • Is the candidate performing her current duties well enough to justify a promotion?
  • Can she hand over her current responsibilities to a new person?
  • Does she possess a sound understanding of the fundamentals of a business and have the requisite operating experience?
  • Is she keen to take on a new job? Is she familiar with the responsibilities and priorities of the new job? Is she willing to make decisions and be accountable for results?
  • Is she qualified and experienced enough to do at least part of the new job? Is she adequately trained or ready to be trained in the new job’s requirements?
  • Are her interpersonal skills adequate to work with employees, customers, suppliers, peers, and bosses in the new job?

Idea for Impact: If employees are not entirely prepared for new assignments, you are unintentionally setting them up for stressful transitions, bitterness, or eventual failure. Beware of the perils of promoting people too quickly.

Self-Assessment Quiz: Are You A Difficult Boss?

Self-Assessment Quiz: Are You A Difficult Boss?

If you answered “yes” to any of the following questions, you need to reflect on and adjust your management style.

  • Do you give employees more critical feedback than appreciation, compliments, and positive feedback?
  • Do you undercut praise with criticism? In other words, do you deliver criticism with praise in the form of a “feedback sandwich,” undermine the positive impact of praise, and weaken the significance of the corrective feedback?
  • Do you give unfeasible or contradictory orders? For example, do you fail to give employees enough resources, time, and direction to get a job done?
  • Do you play favorites?
  • Do you reward “yes” people?
  • Do you avoid taking responsibility for your mistakes?
  • Do you focus on assigning blame and finding fault instead of fixing a problem?
  • Do you set deadlines and forget to follow up?
  • Do you micromanage too often?
  • Do you regularly coach your employees?
  • Do you invent busy work?
  • Do you stand up for your employees?
  • Are you sometimes self-absorbed and manipulative? Are you sometimes cold or abrupt?
  • Do you fail to give productive people encouragement, autonomy, and latitude?
  • Do you expect that there’s only one way to do a job, and that’s your way?
  • Do you raise your voice unnecessarily?
  • Do your employees avoid eye contact or dread meeting with you?
  • Do you act as if your team or organization would fall apart if you were to go on a vacation for a week? Do you expect regular updates from your team even while you’re on vacation?
  • Do you withhold information from your staff because it takes too much time to fill them in?
  • Do you ignore workplace concerns (inappropriate dressing, for example) until they evolve into problems? In other words, do you let concerns fester and let problematic situations get worse?

When Should a Leader Pass Blame?

When Should a Leader Pass Blame? A leader is the “captain of the ship.” He is responsible for his organization’s every outcome—good or bad. He is wholly accountable for everything that happens under his authority.

If there is a problem caused by his mistakes or errors within his organization, a leader should not shirk responsibility. He should not abandon his team if things go wrong, nor should he pass the blame or use an employee as a scapegoat.

However, a leader cannot see and touch all his people, especially if his organization is large. He cannot be personally responsible for a rogue employee who steals information, misuses funds, or engages in unethical behavior. In such circumstances, the leader may pass blame.

Although a leader cannot police every action taken by every employee, the leader should be held accountable for not instituting and overseeing a rigorous control system to prevent problems, deter unethical actions, and to identify employees that engage in such behavior.

A leader also sets the tone for all his employees—not only in terms of goals and priorities but also in terms of proper organizational behavior. A legendary case in point are the ethical rules that investor Warren Buffett set in his company after the 1991 bond-rigging scandal at Salomon Brothers: “I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper, to be read by their spouses, children, and friends, with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them: Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.” Even now, Buffett includes this statement in his biannual letters to his managers and displays a video of this speech at every Berkshire Hathaway annual meeting.

A Majority of Formal Training Doesn’t Stick

The Majority of Formal Training Doesn't Stick Most formal corporate training programs fail because (1) they’re not extensive enough to indoctrinate a new behavior and (2) they tend to dwell more on “doing” and less on ingraining a prescribed thought process.

Corporate training programs work best if there is an immediate need for employees to use certain techniques and tools. If more than a few days pass between training and the application, employees may not recall what they’ve learned. Therefore, training programs are most effective when they are about need-to-know-now topics and relate to employees’ current problems.

When employees try repeatedly to apply a new skill and fail, they can get dispirited and revert to their old patterns of behavior.

As I mentioned in my previous article, formal training can be very effective with a good deal of follow-through reinforcement under the watchful eyes of a diligent coach, such as a Process Sherpa.

Idea for Impact: Employees will not use a skill consistently until it’s ingrained in their work habits.

Don’t Reward A While Hoping for B

Effective Award Systems

We do what we are rewarded for doing. We are strongly motivated by the desire to maximize the positive consequences of our actions and minimize the negative consequences. Academics identify these aspects of behavioral psychology using the monikers “expectancy theory” and “operant conditioning.”

Flawed Reward Systems

Reward systems ought to commend positive behavior and punish negative behavior. But many organizations tend to reward one type of behavior when they really call or hope for another type of behavior. For instance,

  • A manager who wants his sales force to create long-term customer relationships mustn’t reward salespeople for new business from new customers, but for retaining customers and expanding sales to them.
  • A project manager focused on work quality shouldn’t reward a team for completing a project on time.
  • At institutions of higher learning, especially at prestigious universities, a professor’s primary responsibilities ought to be teaching and advising students. However, the academic rewards systems assert that the primary ways to achieve promotion and tenure are through successful research and publishing. Hence, given the constraints of time, a professor is likely to dedicate more time to research at the expense of quality teaching. Alas, mediocre teaching isn’t censured.
  • As I described in my article on “The Duplicity of Corporate Diversity Initiatives,” managers who extol the virtues of “valuing differences” stifle individuality and actively mold their employees to conform to the workplace’s existing culture and comply with the existing ways of doing things. Compliant, acquiescent employees who look the part are promoted over exceptional, questioning employees who bring truly different perspectives to the table.

“On the folly of rewarding A, while hoping for B”

In 1975, Prof. Steven Kerr wrote a famous article titled, “On the folly of rewarding A, while hoping for B” that’s become a management classic. Over the decades, this article has been widely admired for its relevance and insight. The article (the 1975 original is here and the 1995 update is here) provides many excellent examples of situations where the reward structure subtly (or sometimes blatantly) undermines the goal. The abstract reads,

Whether dealing with monkeys, rats, or human beings, it is hardly controversial to state that most organisms seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things, often to the virtual exclusion of activities not rewarded. The extent to which this occurs of course will depend on the perceived attractiveness of the rewards offered, but neither operant nor expectancy theorists would quarrel with the essence of this notion.

Nevertheless, numerous examples exist of reward systems that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all.

Idea for Impact: “Put Your Money Where Your Mouth Is”

Aligning Reward Systems If you see behavior in your organization that doesn’t seem right or doesn’t make sense, ask what the underlying reward system is encouraging. Chances are that the offending behavior makes sense to the individual doing it because of inefficiencies in your reward system.

Take stock of your reward systems. Effective systems should induce employees to pursue organizational goals by appealing to employees’ conviction (or intrinsic motivations) that they will personally benefit by doing so. To inspire employees, translate levers of extrinsic motivation at your disposal to intrinsic motivation as I elaborated in my previous article.

Idea for Impact: Make sure that you understand and clearly communicate expectations, and reward what you really want your employees to achieve. Don’t encourage a particular behavior while promoting an undesirable one through your rewards and praises.