Articulate and concise. Rossman offers short chapters and engaging, sometimes cringe-worthy, anecdotes to describe each principle. He's a good writer and conveys a lot in under 200 pgs.
| Quote | Page |
|---|---|
| Develop clarity and simplicity in what you are doing - and not doing The fundamental mistake leaders make in developing digital strategies is not seeking clarity regarding the customer experience. At Amazon, leaders write narratives of plans. They start with the end in mind via a future press release or deliberately assess how to measure long-term success of a capability of team. Begin with a clear, simple roadmap to the destination |
xii (Prolog) |
| In the 2015 shareholder letter, Bezos called Amazon "the greatest company to fail at". Amazon is doubling its number of experiments and has a clear portfolio mentality between "scaling investments" that have a clear ROI versus "bets" that often fail. The strategy is to lay lots of bets at an affordable price To avoid the ABCs (arrogance, bureaucracy and complacency), set the expectation and forcing functions to create a culture with a high Change IQ. |
xiii (Prolog) |
| Jeff asked me a deceptively simply question, "How many merchants have launched since the first of the year?". I responded, "Well, you see, as of right now-" Before I could finish, Jeff erupted. "The answer to that question begins with a number!" The ensuing rant is...an educational exercise that uses my situation as an opportunity to transmit a series of cultural, strategic, and operational messages to the leaders of the company. In the next five minutes Jeff touches on a half dozen principles as he describes my shortcomings in painful detail. I am chastised for my failure to sufficiently obsess over the customer, for not taking complete ownership of my project and its outcomes, for not setting higher standards for myself and my team, for not thinking big enough, for not possessing a bias for action and for not being firmly and vocally self-critical when it was clear my performance was lacking. |
pg 1 |
| Amazon's leaders work hard to make their thinking very clear - to be clear not only about what they decide but about precisely why they decide. The quest for clarity has created an organization whose actions are based on a specific philosophy and consistent set of values and principles. | pg 4 |
| 1 Obsess Over The Customer | |
| Two truths: 1) Unhappy customers tell their friends; 2) The best customer service is no customer service Jeff said, "in the old world, you devoted 30 percent of your time to building a great service and 70 percent of your time shouting about it. In the new world, that inverts" |
pg 8 |
| The Flywheel effect - Jeff doesn't focus on margins. He's more focused on free cash flow - that is, the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Customer loyalty and sales growth drive revenue that is invested back into "the holy trinity": price, selection and availability | pg 10 |
| Availability. Any time Amazon takes a customer's order, it offers a projected arrival time, "the promise". In business, there are heavy consequenses for those who don't have an item or can't get it to a customer quickly. | pg 16 |
| The Andon Cord - Concept taken from Toyota's lean manufacturing. The Amazon version of the Andon Cord started with an issue about how mistakes made by one set of employees, those working in the retail group, created headaches for a different set, those in the customer case department. "When people in the retail group enter a product description that's inaccurate the customer is disappointed with the purchase. That means they call customer care". The customer care group created their own version of the Andon Cord. When customers began complaining about a problem with a product, the product was simply taken down from the website and the retail group got an email, "fix the defect, or you can't sell this product". Amazon literally has a job titled "Senior Product Manager, Andon Cord". The role is to build cross-org processes and systems that detect and pull the cord when defects occur |
pg 19 |
| Interesting counter-example to lean product development: The Look Inside the Book feature was a huge logistical challenge. Jeff gave the go-ahead for a large-scale launch. The feature debuted with an astonishing 120,000+ books. "If we had tried it in a tentative way on a small number of books, it wouldn't have gotten the PR. There's an X factor: What will it look like at scale? It's a big investment and opportunity cost. Jeff is willing to take ghose gambles" |
pg 22 |
| If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering | pg 23 |
| 2 Take Ownership of Results | |
| When asking for a report on a failed project, all Jeff ever wanted to know was the following, "Here's what didn't work, why it didn't work, and how we're going to change" | pg 27 |
| You own your dependencies - At Amazon, one of your primary directives is to identify and tenaciously manage every potential business-derailing dependency you have. It is not okay to fail because of a breakdown of dependencies; that is a failure of leadership. You need rock-solid contracts, service level agreements and penalties in place. You can assume nothing | pg 28 |
| ...Jeff broke bown the process of managing dependencies: 1. Whenever possible, take over the dependencies so you don't have to rely on someone else 2. If that is impossible, negotiate and manage unambiguous and clear commitments from others 3. Create hedges wherever possible. For every dependency, devise a fallback plan - a redundancy in a supply chain, for example |
pg 29 |
| 3 Invent and Simplify | |
| Jeff Bezos understands the same thing Steve Jobs did: the best design is the simplest | pg 33 |
| Your job description is never limited to simply running things | pg 34 |
| Automation, algorithms and technology architechture are the engines behind game-changing platform businesses Jeff Bezo's 2011 shareholder letter entitled "The Power of Invention" is a manifesto about the undeniable impact of data science and computer science: "The most radical and transformative inventions are often those that empower others to unleash their creativity...This is the power of self-service platforms...I am emphasizing the self-service nature of these platforms because it's important for a reason I think is somewhat non-obivous: even well-meaning gatekeepers slow innovation" |
pg 35 |
| Willingness to rethink policies, rules and other assumptions that are widely accepted in the business world is critical.This is where all types of resistance, both active and passive, will be experienced, requiring a response from strong executive leadership Jeff took a question about avoiding bureaucracy while still ensuring that certain rules were put in place. Jeff responded with, "Good process is absolutely essential. Without defined processes, you can't scale, you can't put metrics and instrumentation in place, you can't manage. But avoiding bureaucracy is essential. Bureaucracy is process run amok" Jeff understood that A-level performers hate bureaucracy and will leave organizations where it encroaches upon them. By contrast, C- and D-level performers, many of whom typically reside in middle management, love bureaucracy because they can hide behind it, acting as gatekeepers and frequently creating the kind of friction that can bog down an entire company. Strong processes with measurable outcomes eliminate bureaucracy and expose underperformers |
pg 37 |
| So how do you recognize bureaucracy and distinguish it from well-planned process? When the rules can't be explained; when they don't favor the customer; when you can't get redress from a higher authority; when you can't get an answer to a reasonable question; when there is no service level agreement or guaranteed response time built into the process; or when the rules simply don't make sense | pg 38 |
| One of the best examples of the principle of invent and simplify is the project that brought me to Amazon in the first place - the development of the third-party seller program. At the time, the dominant third-party selling marketplace was eBay. Their mentality was very laissez-faire; they simply connected buyers with sellers, taking little accountability for customer experience or trust between merchants and shoppers. By contrast, we defined three main design principles: 1 - Present the customer with a single item accompanied by an easy-to-compare list of offers to sell that item (customer experience) 2 - Make it possible for customers to trust our third-party sellers as much as they trusted Amazon.com itself (customer trust) 3 - Provide great seller tools to help merchants operate their businesses at Amazon.com (seller experience) Obviously, this was an ambitious program...we had to make the third-party marketplace self-service |
pg 42 |
| One of Jeff's favorite techniques is to create a forcing function - a set of guidelines, restrictions, or commitments that force a desirable outcome without having to manage all the details of making it happen. JBD note: Separate book but same subject: Nudge In Jeff's mind, these were the essential skills to build a scalable company: * System development engineers * Technical program managers * Vendor managers (people who negotiated contracts) |
pg 43 |
| We build a seller's Trust Index based on all the touch points between merchant and customer, as well as all the promises a merchant made. We used many functions and algorithms to reward high-performing sellers. In this way, the third-party marketplace evolved into a highly efficient, self-governing meritocracy. Equally important was the Item Authority. In order to increase item selection, availability and price competition, we signed up multiple sellers of the same item. The Item Authority forced sellers to compete while markedly improving the customer experience |
pg 44 |
| AWS is a prime example of Jeff's "Invent and simplicy" principle. 2011 shareholder letter Amazon Web Services has grown to have thirty different services and thousands of large and small businesses and individual developers as customers. One of the first AWS offerings, the Simple Storage Service, or S3, now holds over 900 billion data objects, with more than a billion new objects being added every day. S3 routinely handles more than 500,000 transactions per second and has peaked at close to a million transactions per second. All AWS services are pay-as-you-go and radically transform capital expense into a variable cost. AWS is self-service: you don’t need to negotiate a contract or engage with a salesperson – you can just read the online documentation and get started. AWS services are elastic – they easily scale up and easily scale down JBD note: This paragraph is metrics-dense and includes information about: * # of products * # of customers * # of objects (in S3) * Object growth rate (S3) * Average and maximum transaction rate (S3) * Shift from CapEx to OpEx for IT infrastructure * Self-service (i.e. low barrier to adoption) * Customer gains (easily scale up and down) |
pg 48 |
| Imitate the competition. In business, innovation is great - but it's clear that in many high-risk fields, mimicry pays off even better. The mimic has the benefit of an objective perspective and a willingness to course-correct as needed | pg 49 |
| 4 Leaders Are Right - A Lot | |
| The culture of learning, growth and accountability would be impossible without a high premium on clarity - ...goals...communication...metrics...and the use of those metrics | pg 51 |
| Great leaders like Bezos develop a strong, clear framework; then they constantly apply that framework and articulate it accurately to their team | pg 52 |
| Jeff also believes that successful leaders, when presented with new evidence and data, are able to adapt their perspective. Accordingly, he looks for people who are constantly revising their understanding and circling back on problems they thought they'd already solved. He also looks for leaders who can maintain a remarkably granular understanding their business through metrics, intensity and great program execution | pg 53 |
| The future press release - the announcement of the product written before its development even began, used for internal purposes only. Crafting this forced us to articulate what would be newsworthly about the product. Follow these rules to make them effective: * Discuss how customers and other key stakeholders benefitted * Set audacious, clear and measurable goals, including financial results, operating objectives and market share * Outline the principles that led to success. Describe the hard things accomplished, the important decisions along the way, and the design principles that led to success |
pg 54 |
| Repeatable, consistent performance reflected in metrics is the gold standard for success at Amazon You must embed real-time metrics from the very start of a program, because they are nearly impossible to retrofit "Did I have a good day today?" If your metrics are in place, they are real-time, and your team and processes use them, this question yields a simple "yes" or "no" answer JBD Note: There are great examples of metrics on the next couple of pages |
pg 57 |
| During my time at Amazon, it tracked its performance against roughly 500 measurable goals, ~80% of which had to do with customer objectives | pg 58 |
| Jeff Bezos and Amazon have a deep belief that small teams of world-class engineers can out-innovate massive bureaucracies | pg 60 |
| 5 Learn and Be Curious | |
| This is Day1 for the internet. We still have so much to learn Have a beginners mind-set: open, curious and humble JBD Note: He follows with an anecdote of a compliance director who kept saying "no". Her Amazon mentor |
pg 61 |