3 lessons we can learn from Jeff Bezos and Amazon about making incredibly smart decisions

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Distinguish between high and low impact

Every day, we make big and small decisions in response to what our environment dictates.

These decisions demand time and attention, and much of the stress many of us experience on a day to day basis is a result of this constant pressure on our often limited resources. And then because of this stress, we get forced and rushed into making less than optimal choices.

The problem is that we intuitively judge the importance of our decisions based not on impact, but on random timing. Even if something is relatively unimportant, and even if it can wait, we feel the need to attend to it because of the surrounding circumstances.

As Jeff Bezos explained to Amazon shareholders in his 2015 letter, there are two categories of decisions. Type 1 are the mission-critical, high-impact choices that influence the larger strategy, while Type 2 are the lower stakes choices that can easily be reversed if need be.

At Amazon, by distinguishing between impact, they leave all Type 2 decisions to the teams and individuals on the ground, while the people higher up focus on Type 1 decisions.

Given that most large companies have a very fuzzy distinction between the two, they fall into the trap of immediacy and their ability to direct resources to the truly important things suffers.

It's a simple but effective system for choosing to leverage attention to where it's best used, because even in our own lives, it's easy to confuse what's important with what's present.

Most of your time should always be spent on Type 1 decisions. Type 2 decisions should either be delegated, or they should be batched together with other less critical choices for later.