Jeff Bezos and Amazon
Jeff Bezos and Amazon
Stepping Back From Retail and Heading to the Moon
A little while back, someone asked me for a few people who I thought were the best product people ever. I forget the context, but I think I surprised us both when I put Jeff Bezos out there. I stood (and stand) firmly by that. You may think he’s amazing. Or you may think, for many good reasons, that he’s a villain.
Regardless, what Bezos built is incredible. It is intertwined in our lives. It has changed the landscape of commerce forever. But that is only one side of Amazon’s business, which is really multiple businesses inside a large company. Amazon not only sells us the comfy slippers, but also stands as a platform for millions of other sellers (the marketplace). It also is the backbone for a huge part of the internet, where many sites are hosted (AWS). Without which, many small and large businesses wouldn’t be able to function like they do today.
You don’t create a company like that without incredible vision, drive, and luck. While I haven’t worked at Amazon (and don’t ever intend to), I’ve been fortunate enough to work with many people from Amazon and have seen how it has shaped teams and work culture. It hasn’t always been the prettiest, but there are some great lessons we can learn from Amazon’s way of doing things.
(I’ve also started a Product Thinking podcast together with this newsletter. If you just can’t get enough, or would prefer to listen, check it out now. Or read on.)
Key Lessons from Amazon
Focus On The Long-Term
“We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.”
From the beginning, Jeff Bezos and Amazon focused on the long-term. This often meant cutting prices rather than raising them in order to establish customer loyalty. Amazon eschewed profitability for years, but set a massive flywheel turning, as Ben Thompson points out in his latest article.
Bezos rarely focused on the short-term. I’d argue that the best companies and people rarely focus on the short-term either. If you’re managing quarter to quarter, you’re missing the big picture and the best opportunities.
Customers, Not Competitors
Earth’s Most Customer-Centric Company
Bezos’s focus has been on customers from the beginning. You can see that from how Amazon continually improves for its users. We take for granted the fact you can get one-day, or even same-day shipping now on many things. But that’s the work of a massive distribution and logistics system. It’s incredible, and one of many innovations.
Their approach to product management and product development reflects that. You may be familiar with the Amazon Future Press Release. If not, I highly suggest it. The idea is to think about the future date when you launch your new product. How will your customers react? What is the most valuable to them? Why are you doing it? Write the press release, use quotes, and then work backwards from there to reach that launch.
I’ve used future press releases at several companies and they are one of the singular most effective tools in unifying everyone around a vision for a product or feature or future state.
And guess what? They have nothing to do with your competitors. You need to keep the competition in mind, but your focus should be on your customers and users.
Writing is Understanding
Adding to the idea above, Bezos banned PowerPoint in executive meetings. He replaced it with written narratives. Everyone writes out their ideas in 6-page documents, and the beginning of meetings has time allotted for everyone to read the document before discussing.
I’ve been in companies where this is the practice, and I wholeheartedly support it. Writing is understanding, as I wrote in the linked article. It is incredibly easy to bluff your way through a PowerPoint. But you can’t do that with a 6-page narrative. Writing out your ideas also helps ensure you understand them and you fully impart that understanding to others. There is far less room for misunderstanding and misinterpretation.
High-Velocity, High-Quality Decisions
“If you’re good at course correcting, being wrong is less costly than you think, whereas being slow is going to be expensive for sure.”
Speed is a competitive advantage. That is why creating an environment for high-velocity, high-quality decisions, as this Quartz article calls them, is critical.
To create that type of environment, you need teams that are small enough to move quickly. Amazon has long been famous for “two-pizza” teams. If a team is too large to feed with two pizzas, it is too big.
Another component of fast decision making is identifying your tenets. What are your core principles? Amazon did this at a company level. The most successful teams I’ve been on have done it on a team level too. Tenets allow us to decide quickly because we don’t have to debate each time. If one of our tenets is “delight the customer in every interaction”, then we know what we need to do when we face a decision that may force us to choose between an unpleasant experience for a customer and a delightful one.
We need to understand the difference between “one-way doors” and “two-way doors”. Decisions we can walk back don’t need to agonize over. And if we don’t have to have 100% certainty before we move forward, then we can move forward rapidly, knowing our choices won’t be fatal.
Finally, the principle of “disagree and commit”. We won’t always agree on the path forward, but we can support each other and take a chance. In the 2017 letter to shareholders, Bezos discussed this idea. The Amazon Studios team wanted to move forward with an original production. Bezos disagreed with the content, but committed to it and gave it the green light, cutting the red tape and weeks of convincing and cajoling that usually accompany such projects.
[U]se 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.
Take Risks and Experiment
You may remember the Fire Phone. Amazon launched it in 2014 and it failed soon after that. Phones are a tricky business, and Amazon poured a lot of money into a risky bet that didn’t pay off.
But from Bezos’s point of view, that was perfectly acceptable.
“We will work hard to make them good bets, but not all good bets will ultimately pay out. 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.”
Not only was it an acceptable failure, but what Amazon learned from the Fire Phone it leveraged into something much better: Alexa devices. In the 2019 shareholder letter, Bezos mentioned that everything the teams learned sped up the development of Amazon Echo and their machine learning capability. Which is now a dominant force. I’m sure any of us would take that trade-off any day of the week.
Stubborn On Vision, Flexible On Details
“We are stubborn on vision. We are flexible on details.”
In this quick video snippet, Bezos discusses a few of Amazon’s tenets, including being stubborn on the vision and flexible on the details.
This is an idea that is familiar to many of us. We set ambitious goals for ourselves, our teams, and our features, but we remain flexible in how we get there. It doesn’t matter (at least it shouldn’t matter) where we place the buttons on the screen as long as we’re making it easy for the user to do what they need to do.
This is also why I love the OKR framework. It allows us to create a vision and then be flexible on the details.
Focus On Inputs And Quantifiable Goals
“Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs. To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.”
In the 2009 letter to shareholders, Bezos discussed the fact that Amazon focuses its energy on the inputs, or things that it can control. The outputs, or results of the goals they set, are the outcomes. They stay focused on what they can control and stay away from goals that have to do with revenue or profit.
Amazon can add new categories of products, and make it easier to get items into the hands of customers faster, make checkout seamless, etc. And it can quantify each of those things. It can take the average shipping time from 36 hours to 34 hours. The number of product categories from 36,000 to 37,000. The hypothesis is that, over the long-term, that will lead to higher revenue and profitability. But that is the outcome.
Jeff Bezos and Amazon have taught us, and will continue to teach us, a tremendous amount. Both good and bad.
Most exciting for me as a science-fiction geek, we now have Jeff Bezos free to dedicate significant amounts of time to Blue Origin, which may mean the billionaire space wars will heat up. So see you on Mars?
Good Reads and Listens
Tips For Starting A UX Career or Design Team (podcast) - We recorded a create conversation on starting a UX career with David Broschinsky, who’s been in the industry since before it was an established industry.
Foundering - The WeWork Story (podcast) - I followed WeWork’s rise and fall at the time, but I wanted to go back and dive a little deeper, so I found this podcast series. It was interesting.