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1/ How Amazon wins bigly through a portfolio of small bets.
(Thread) ↓
(Thread) ↓
2/ The secret sauce that allows Amazon to stay innovative can be explained by a mental model called Optionality.
Nassim Taleb popularized this term in his book Antifragile where he talks about things that gain from disorder.
Nassim Taleb popularized this term in his book Antifragile where he talks about things that gain from disorder.
3/ In an uncertain world where the conditions are always changing and information is limited, instead of trying to predict the future, thinking in options might be a better strategy for success.
4/ Optionality is a strategy where you pursue a large number of options where the potential downsides from errors are small while the potential upsides are large or in some cases unlimited.
5/ No one understands the power of optionality better than Jeff Bezos. At the core of Amazon is a philosophy that Jeff Bezos refers to as Day 1.
The internal slogan that drives the company culture is "It's aways Day 1 at Amazon".
The internal slogan that drives the company culture is "It's aways Day 1 at Amazon".
6/ This allows Amazon to have the courage to try new things, kill the ones that do not work, and move on to their next project taking the lessons they learned from past errors into the future.
7/ Nassim Taleb calls this the convexity bias.
Convexity bias happens when the difference between the results of trial and error in which gains and harm are asymmetric.
In simple words, the pain due to errors is small and the gains from wins are large.
Convexity bias happens when the difference between the results of trial and error in which gains and harm are asymmetric.
In simple words, the pain due to errors is small and the gains from wins are large.
8/ @JeffBezos said, "This kind of large-scale risk-taking is part of the service we as a large company can provide to our customers and to society. The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.”
9/ The same strategy is now being used by several creators to build an antifragile career path.
@dvassallo is a great example of someone who is building a portfolio of small bets through his various work and creative engagements.
@dvassallo is a great example of someone who is building a portfolio of small bets through his various work and creative engagements.
Read the full essay here ↓ https://visualwisdom.substack.com/p/amazons-secret-sauce-for-innovation
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