Image: Flickr
Image: Flickr

Forward wind the clock a few years – not many – and Jeff Bezos may well be the wealthiest man in the world.  But what is his secret?  He has been busy in letter writing mode and has now sent out his annual letter to shareholders.   So, does he say? 

 

It all boils down to the difference between day one and day two.

He keeps getting asked that question, he says, but adds that Amazon is still at the Day One stage – making it a pretty long day. Investors, critics, and the media keep asking, him, ‘what will day two be like?’

And now he has an answer: In Jeff’s book, day one must last forever – which really does make a long day.

“Day 2 is stasis,” said the Amazon boss in his letter, “followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

So, that’s a one day week at Amazon, a one- day year, and a one -day century. Sleep, it appears, is for wimps.

He continued.

“To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.”

So, it seems that Amazon wants to be a bit like the land of midnight sun – only forever.

He says “I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?”

In the world according to Bezos, the answer is not simple, but it has got a lot to do with the customer, or as Mr Bezos, or is that Sir, says “customer obsession.”

He also adds: a “sceptical view of proxies, the eager adoption of external trends, and high-velocity decision making,” helps too.

Customer obsession

He said “In my view, obsessive customer focus is by far the most protective of Day 1 vitality.”

And why?

He explains: “customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.”

So what is the answer? Mr Bezos says you need to “experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”

Proxies

Turning to proxies,  he says “As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.” He gives as an example: “process as proxy,” saying: “Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, ‘Well, we followed the process.’ A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.”

He then adds “market research and customer surveys” as another example, as proxies for customers. He gave as an example a survey that may find “Fifty-five percent of beta testers report being satisfied with this feature. That is up from 47 per cent in the first survey.’” He said “That’s hard to interpret and could unintentionally mislead.”

And continues: “Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.”

External Trends

The letter continues: “The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.

“These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence.

“Over the past decades computers have broadly automated tasks that programmers could describe with clear rules and algorithms. Modern machine learning techniques now allow us to do the same for tasks where describing the precise rules is much harder.

High-Velocity Decision Making

Finally he says “Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. “

This is “Easy for start-ups and very challenging for large organizations,” he says.

The solution: “The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too. “

So how do you  do that?

He has four tips: first he says remember “many decisions are reversible . . . so what if you’re wrong?”

Secondly,  “most decisions should probably be made with somewhere around 70 per cent of the information you wish you had. If you wait for 90 per cent, in most cases, you’re probably being slow. “

But he says “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.”

Thirdly he says, use the phrase “disagree and commit.” Explaining, he says:  “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.”

He qualifies, “ This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time.” He adds “ 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!”

Fourthly, he says “recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.”

Thanks Jeff